The Union Budget 2025 lays a solid foundation for economic expansion through strategic investments in infrastructure, MSMEs, and futuristic urban development. A key highlight is the significant relief for the middle class, aimed at enhancing rural and urban consumption. While the budget falls short of delivering major reforms for the affordable housing segment, it remains growth-oriented with multiple direct and indirect benefits for the real estate sector. With provisions to support urban transformation, connectivity, and industrial growth, the budget is poised to drive a broad-based resurgence across the Indian economy.

Relief for Middle-Class Homebuyers

Income tax reforms have brought major relief for middle-income earners, boosting consumption and indirectly stimulating housing demand.

Zero Tax on Income up to Rs 12 Lakh: Individuals earning up to Rs 12 lakh annually are now exempt from income tax, increasing disposable income and affordability for housing.
Tax Reforms: Nearly 50% of the previous tax provisions remain intact, while personal tax reforms aim to rationalize TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) rates and thresholds, simplifying compliance.
These measures are expected to strengthen purchasing power, especially for first-time homebuyers, and support the real estate sector's growth.

Tax Incentives for Residential Property Investors

The budget includes favorable tax provisions that encourage residential property investments, particularly in secondary markets and rental housing.

Nil Valuation for Two Self-Occupied Properties: Investors can now claim tax exemption on two self-occupied properties, compared to one previously.
Reduced Compliance for Landlords: Simplified TDS on rent has lowered the compliance burden, improving cash flow for landlords and enhancing the appeal of rental properties in metros.
These tax incentives promote second-home investments in Tier-II and Tier-III cities, foster homeownership, and ease tax liabilities for middle-class investors.

Rs 1 Lakh Crore Urban Challenge Fund for Futuristic Cities

The creation of a Rs 1 lakh crore Urban Development Fund aims to catalyze large-scale infrastructure upgrades, unlocking real estate potential in rapidly urbanizing areas.

Urban Growth Hubs: This fund will focus on creating next-generation urban centers with robust transportation, housing, and social infrastructure.
Real Estate Transformation: Enhanced infrastructure will drive demand for residential, commercial, and industrial real estate in major metros and emerging cities.
These investments align with the government’s goal of positioning India’s cities as engines of economic growth.

SWAMIH Fund Expansion for Stalled Residential Projects

The allocation of Rs 15,000 crore to the SWAMIH Fund is designed to address the challenges faced by homebuyers and developers in stalled residential projects.

Completion of Stalled Units: Over 1 lakh housing units, particularly in the National Capital Region (NCR), are expected to be completed under this initiative.
Homebuyer Relief: This move provides long-awaited relief to homebuyers while restoring trust in the real estate market.
By accelerating the completion of stalled projects, the government aims to stabilize housing supply and foster confidence among stakeholders.

Revamped UDAAN Scheme for Connectivity Enhancement

Connectivity improvements under the restructured UDAAN scheme are set to drive real estate demand in secondary markets.

120 New Destinations: The scheme will connect 120 new locations, serving over 4 crore passengers over the next decade.
Development of Greenfield Airports: New airports, particularly in states like Bihar, will support tourism and logistics, creating opportunities for both residential and commercial real estate.
Enhanced regional connectivity is expected to increase demand for properties in Tier-II and Tier-III cities, contributing to balanced regional development.

PM Gati Shakti and Tourism Infrastructure Development

Opening PM Gati Shakti data to private players and developing 50 top tourist destinations will further expand real estate opportunities across India.

Tourism Collaboration: The initiative involves state governments collaborating on tourism infrastructure projects, benefiting real estate in major tourist hubs.
Warehousing Expansion: The inclusion of warehousing under tourism infrastructure will bolster logistics and industrial real estate demand.
These measures are designed to attract private investment, promote job creation, and improve India’s competitiveness as a global tourism destination.

Support for Global Capability Centres (GCCs)

A national guidance framework for Global Capability Centres (GCCs) aims to enhance India’s position as a hub for multinational operations.

Office Space Demand: The initiative will boost demand for commercial real estate in cities like Bengaluru, Mumbai, Hyderabad, and Chennai.
Expansion to Smaller Cities: Tier-II and Tier-III cities are also expected to benefit, supporting the decentralized growth of business infrastructure.
This strategy leverages India’s growing economic influence and its reputation as a destination for outsourcing and innovation.

Rs 1.5 Lakh Crore Support for MSMEs

The budget allocates Rs 1.5 lakh crore to the Micro, Small, and Medium Enterprises (MSME) sector, emphasizing capacity expansion and industrial growth.

Capacity Expansion: Increased funding will help MSMEs invest in facilities, technology, and human capital, driving demand for industrial real estate.
Ripple Effect: The enhanced productivity of MSMEs is expected to have a multiplier effect on supply chains, logistics, and infrastructure.
This initiative underscores the government’s commitment to fostering entrepreneurship and economic self-reliance under the Aatmanirbhar Bharat vision.

Impact on Affordable Housing

Despite its focus on urban infrastructure and middle-class welfare, the budget offered limited direct benefits for the affordable housing segment.

Unmet Expectations: Stakeholders had anticipated measures such as increased subsidies or tax incentives specifically for affordable housing projects.
Indirect Benefits: However, improvements in connectivity, infrastructure, and disposable income may indirectly support affordable housing demand in the medium term.
The sector will need continued policy attention to meet India’s growing housing needs, particularly for lower-income households.

Pro-Growth Budget Helps Real Estate Sector and Economy

The Union Budget 2025 is a pro-growth, investment-oriented framework aimed at accelerating economic development. Its emphasis on urban transformation, middle-class relief, and infrastructure development is expected to drive demand across residential, commercial, and industrial real estate segments. While affordable housing stakeholders may have been left wanting more, the budget's strategic initiatives offer a broad-based boost to real estate markets nationwide. By fostering connectivity, enhancing urban centers, and supporting key industries, the government is paving the way for long-term economic resilience and sustainable growth.