Union Budget 2025: National Frameworks, Tax Cuts, State Incentives and Growth Funds - Why This Budget Makes Real Estate the Smartest Investment Choice This Year?

The Union Budget 2025 has brought forward a slew of reforms that directly impact the Indian real estate sector, making it more attractive for investors, homeowners, and rental income earners. As real estate advisors with expertise in investment strategies, we analyze how these key announcements will shape the real estate landscape and why this is a pivotal moment for those looking to build and expand their property portfolios.

1. National Framework for GCCs: An Amazing Opportunity to Enhance Commercial Real Estate Sector

In September 2024, we highlighted the significance of Global Capability Centers (GCCs) as a major driver of real estate demand and how the demand for Grade A office spaces is increasingly becoming more prominent in Tier 1 cities. 
The announcement of a National Framework for GCCs will further accelerate this trend by making India a preferred destination for multinational corporations seeking premium office spaces. According to a report published by CBRE; The year 2024 witnessed almost ~70mn square feet of Grade A office space in leasing. With greater regulatory clarity and incentives, the commercial real estate sector is set to thrive, presenting lucrative opportunities for institutional and retail investors alike for rental opportunities and capital appreciation.

2. Tax Relief on Two Self-Occupied Properties: A Residential Market Booster

One of the most investor-friendly moves in Budget 2025 is the tax relief on owning two self-occupied properties. Previously, tax benefits were limited to a single self-occupied property, but this reform will encourage the middle-class and salaried professionals to invest in a second home without worrying about the hassle of finding rent or the burden of tax on notional rent. This is expected to drive demand for residential properties, particularly in urban and suburban areas where capital appreciation in residential real estate is significant, making it an opportune time for first-time buyers and existing homeowners to expand their real estate holdings.

3. TDS Limit Increased to ₹6 Lakh: A Lifeline for Investors Focusing on Rental Income

The government has increased the TDS limit on rental income from ₹2.5 lakh to ₹6 lakh, which is a significant relief for property owners generating rental income. This move directly benefits landlords, especially those leasing out residential apartments, co-living spaces, and commercial properties. With higher rental yields and lower tax deductions, investors will find rental properties more appealing as a steady source of passive income. This reform is expected to encourage more individuals to enter the rental market, thereby increasing liquidity in the real estate sector.

4. SWAMIH Fund 2 will pave gateway for more Affordable Housing

The first phase of the SWAMIH Fund played a crucial role in reviving stalled housing projects, and the second phase is expected to inject more capital into the affordable housing segment. SWAMIH previous provided over 50,000+ Affordable Housing and SWAMIH 2 will not only provide relief to homebuyers waiting for project completions but also aims to commit towards 20,000 Affordable Housing every year.

With increased funding availability, developers can now focus on delivering quality housing, making the sector more attractive for first time homebuyers.

5. Urban Challenge Fund of ₹1 lakh crore 

The government’s decision to allocate ₹1 lakh crore towards the Urban Challenge Fund is set to transform India's urban infrastructure. Investments in mega infrastructure projects, including highways, railways, high-speed trains, corridors, and airports, will significantly impact land and property prices in and around these developments. Read more in our article: Eight Mega Infra Projects that are enhancing India's Real Estate Market.

For investors, this presents a strategic opportunity to capitalize on land banking by purchasing plots in emerging property markets that will see substantial appreciation over the next few years. Buying Plots, Residential and Commercial land in emerging markets is bound to provide steady capital appreciation in the coming decade as more than 40% of Indian population will be residing in newly developed urban landscapes.

Building on Past Reforms: A Positive Outlook for Indian Real Estate in Future

These Budget 2025 reforms appear to be part of an ongoing effort by present governance to boost the real estate sector. In 2024, we saw a reduction in Long-Term Capital Gains (LTCG) tax from 20% to 12.5%, making property investments more profitable.

Additionally, the continued strengthening of RERA regulations has enhanced transparency and trust, attracting more investors to the sector. Another landmark achievement by Indian Real Estate in 2024 was when JLL’s Global Transparency Index deeming Tier 1 real estate of India as a transparent sector.

With these new reforms complementing previous policy shifts, Indian real estate is poised for a golden period of growth ahead.

Why Is This the Right Time to Invest?

The combination of tax reliefs, infrastructure investments, and increased transparency makes real estate one of the most promising investment avenues in 2025. Whether you are an investor looking for high-yield rental income, or a homebuyer planning to purchase a second property.

Key Takeaways:

• Grade A office spaces will see increased demand due to the National Framework for GCCs.
• Tax relief on two self-occupied properties will boost residential investments.
• Higher TDS exemption limits make rental income a more attractive investment.
• SWAMIH Fund 2 will ease financing hurdles for affordable housing projects.
• Urban infrastructure projects will drive land and property appreciation.

As we step into a new era of real estate growth, now is the time to make informed investment decisions. Connect with us to explore the best real estate investment opportunities aligned with these policy shifts.