How Policy Reforms and Infra Growth Will Shape Indian Real Estate

The Indian real estate sector has always been closely linked to government policies and infrastructure development. With growing demand for housing, urbanization, and economic reforms, the next 12 months could prove to be a turning point for the industry. A mix of policy measures such as tax benefits, affordable housing schemes, and GST rationalization, along with strong infrastructure investments like metro expansions and logistics parks, is expected to boost both demand and supply.

In this article, we’ll explore the key policy and infrastructure moves that could strengthen Indian real estate over the coming year. These reforms are not just about short-term growth; they are laying the foundation for sustainable, inclusive, and technology-driven urban development.

Enhanced Affordable Housing Support

Affordable housing has been the backbone of India’s real estate growth story, and it is likely to remain the focus in the coming year. The Pradhan Mantri Awas Yojana (PMAY) has already created momentum, but experts expect a significant push with a projected ₹10 lakh crore investment in the next 12 months.

Why it matters:

• Affordable housing addresses the needs of first-time homebuyers.
• It supports the government’s mission of “Housing for All.”
• It provides job creation in construction and allied sectors.

Key Moves Expected:

• Larger budget allocations for PMAY projects.
• Incentives to developers who focus on low- and mid-income segments.
• Easier financing and subsidies for buyers under affordable housing.

If these measures roll out as expected, the demand for affordable flats in metro and Tier-2 cities will surge, improving overall liquidity in the real estate market.

Tax Benefits and Definition Revisions

One of the most-awaited reforms is the expansion of tax benefits for homebuyers. With inflation and rising construction costs, financial relief in the form of tax deductions could make property ownership more attractive.

Anticipated Tax Reforms:

• Higher exemptions on home loan interest (Section 24) and principal repayment (Section 80C).
• Possible additional deductions for first-time buyers.

In addition, the definition of affordable housing is expected to change. Currently capped at ₹45 lakhs, the limit may be raised to ₹80 lakhs, making more buyers eligible for benefits.

This adjustment will better reflect today’s housing prices and encourage a wider middle-class segment to enter the property market.

Input Tax Credit and GST Rationalization

For developers, input tax credit (ITC) has been a long-standing demand. Currently, real estate projects without ITC face higher costs, which are ultimately passed on to buyers. The upcoming year may finally see policies that allow ITC for developers, helping reduce overall project costs.

Possible GST Reforms:

• Rationalization of GST rates for under-construction properties.
• Allowing ITC to encourage faster project completion.
• Lowering effective tax burdens to improve buyer affordability.

By addressing GST and ITC challenges, the government could unlock stalled projects and bring more transparency to the sector.

Attracting Investment through REITs and FDI

Foreign and domestic investments play a critical role in boosting real estate liquidity. The next 12 months could bring policy adjustments to attract more capital into the sector.

Key Investment-Friendly Moves Expected:

1. Ease in FDI norms for construction and rental housing.
2. Boosting REITs (Real Estate Investment Trusts):
   • Shorter holding periods.
   • Clearer tax treatment for investors.
   • Encouragement for retail participation.
3. Incentives for rental housing and co-living models, especially in metro cities with rising migration.

If implemented, these changes could channel significant funds into both commercial and residential real estate, strengthening long-term growth.

Infrastructure Expansion in Tier-2 and Tier-3 Cities

Beyond policies, infrastructure development is the real game-changer. Government investments in metros, highways, and smart cities are expected to create new growth corridors.

Major Infrastructure Boosts Anticipated:

• Expansion of metro rail networks in cities like Pune, Lucknow, and Ahmedabad.
• Faster construction of national highways and expressways.
• Urban renewal projects for better water, electricity, and digital infrastructure.

These projects improve liveability and directly impact real estate demand in surrounding areas. For example, housing demand near metro corridors or industrial zones typically rises by 15–20% within a few years of completion.

Industrial Hubs, Logistics Parks, and Smart Cities

Another significant driver will be the creation of industrial and logistics hubs. With India positioning itself as a global manufacturing hub, industrial corridors are attracting both businesses and workers, which in turn creates a demand for housing.

Examples of Impact:

• Delhi-Mumbai Industrial Corridor (DMIC): Has already boosted real estate around Neemrana and Ahmedabad.
• Logistics parks located near major ports and highways enhance job creation, thereby driving housing demand.
• Smart City Projects: With technology-enabled infrastructure, these cities are drawing young professionals and investors.

Together, these developments can help balance growth between metropolitan areas and emerging cities, thereby reducing pressure on existing urban centers.

Green and Sustainable Housing

With climate change and rising energy costs, green real estate is no longer optional; it’s becoming a necessity. Over the next year, the government is expected to push sustainability through subsidies and incentives.

Likely Policy Moves:

• Tax breaks for developers adopting eco-friendly designs.
• Subsidies for solar panels, rainwater harvesting, and energy-efficient construction materials.
• Green certifications for projects to encourage sustainable practices.

For buyers, this means more access to eco-friendly homes that reduce long-term living costs while supporting environmental goals.

Government Land Bank Utilization

Land scarcity has always been a challenge in metros like Mumbai, Delhi, and Bengaluru. To counter this, the government may strategically release government-owned land banks at concessional rates.

Impact of This Move:

• Lower project costs for developers.
• Affordable pricing for buyers.
• Increased housing supply in high-demand urban areas.

This could be one of the most impactful short-term measures to reduce property prices in key cities.

Conclusion

The next 12 months hold immense promise for the Indian real estate sector. From affordable housing incentives and tax benefits for homebuyers to infrastructure projects in Tier-2 and Tier-3 cities, the combined effect of these moves could accelerate growth, improve affordability, and attract large-scale investments.

If policies such as GST rationalization, expanded PMAY support, and green housing incentives materialize, India’s real estate market will not only recover but thrive. Infrastructure expansion, coupled with a focus on sustainability, will create long-term value for both developers and homebuyers.

For buyers and investors, this is the right time to start exploring opportunities. With the government’s strong push toward housing and infrastructure, the coming year may bring some of the best deals in Indian real estate.