Union Budget 2025 Real Estate Impact: Infrastructure Push, PMAY 2.0 and MSME Boost

Anuj Puri

The Union Budget 2025 under Modi 3.0 spans multiple sectors, including MSMEs, employment, skilling, youth, and the middle class, and is expected to generate mixed reactions across industries. However, from a real estate perspective, the most significant takeaway is the government’s continued focus on infrastructure investment.

With an allocation of over ₹11.11 lakh crore (3.4% of India’s GDP), infrastructure development remains a key growth driver. Strong infrastructure directly supports real estate growth in India by improving connectivity, boosting demand, and enhancing property values.

Affordable Housing to Benefit from Job Creation Initiatives

The government’s emphasis on rural and urban employment generation could provide a much-needed boost to the affordable housing segment, which has seen subdued performance since the pandemic.

If implemented effectively, these initiatives can:

• Increase housing demand across Tier 2 and Tier 3 cities
• Strengthen demand in the top 7 real estate markets
• Support end-user driven growth in the housing sector

PMAY Urban 2.0: Major Push for Housing Development

A key highlight of the budget is the announcement of PMAY Urban 2.0, with a plan to construct 1 crore additional homes backed by an outlay of ₹10 lakh crore.

This move aims to:

• Address housing needs of the urban poor and middle class
• Expand the reach of affordable housing in India
• Drive long-term growth in the residential real estate sector

Industrial Corridors to Drive Regional Real Estate Growth

The budget’s focus on Hyderabad–Bengaluru Industrial Corridor and Vizag–Chennai Corridor is expected to accelerate regional economic development.

These large-scale infrastructure projects will:

• Boost industrial activity and job creation
• Increase demand for residential and commercial real estate
• Create new real estate investment hotspots along these corridors

MSME Revival to Support Real Estate Demand

The government’s efforts to revitalise the MSME sector, including the introduction of a credit guarantee scheme, are expected to have a multiplier effect on the economy.

Since MSMEs play a critical role in employment generation, their recovery can:

• Improve income stability for homebuyers
• Revive demand for affordable housing
• Support overall growth in the real estate market

The pandemic severely impacted MSMEs, which in turn slowed housing demand in the affordable segment. A sustained recovery in this sector could help restore demand momentum.

Affordable Housing Segment Still Under Pressure

The need to support affordable housing is critical. The segment (homes priced under ₹40 lakh) has witnessed a decline:

• Share of total housing sales dropped to ~19% in H1 2024, from 38% in 2019
• Supply share declined to 18%, from nearly 40% pre-pandemic

Any policy support aimed at reviving this segment will play a crucial role in balancing India’s housing market.

Tax Relief: Limited Impact on Housing Demand

The increase in standard deduction to ₹75,000 under the new tax regime provides some relief to individual taxpayers. However, the savings may not be significant enough to directly boost housing demand.

Other Key Real Estate Highlights from Union Budget 2025

• 12 new industrial parks to be developed
• Rental housing (dormitory-style) for industrial workers under PPP model
• Brownfield redevelopment to unlock urban real estate opportunities
• Tourism development in Odisha and Bihar, boosting local real estate markets

Conclusion: Positive Long-Term Outlook for Real Estate

The Union Budget 2025 real estate impact is largely positive, driven by strong infrastructure spending, housing initiatives, and MSME support.

While immediate demand triggers may be limited, the long-term outlook remains strong. Sustained focus on execution, job creation, and affordable housing revival will be key to unlocking the full potential of India’s real estate sector.

Anuj Puri is Chairman, ANAROCK Group