Economic Survey 2024-25: India’s Real Estate Market Thrives on Infrastructure and Regulatory Reforms

The Economic Survey 2024-25 highlights the thriving state of India's real estate market, emphasizing the positive impact of infrastructure development, and regulatory reforms on the sector's growth. This report, tabled in Parliament by Finance Minister Nirmala Sitharaman reveals that the demand for real estate has expanded beyond tier 1 and tier 2 cities, reaching across the country. This growth can be attributed to a combination of factors, including improvements in infrastructure, the implementation of critical laws such as RERA (Real Estate Regulatory Authority) and GST (Goods and Services Tax), and the rise of real estate investment trusts (REITs).

Infrastructure Development Driving Real Estate Demand

The report underscores that the creation of physical infrastructure like roads, metro networks, and enhanced connectivity has played a crucial role in the increasing demand for real estate in India. Tier 1 cities such as Delhi, Mumbai, and Bengaluru have historically led the demand for housing and commercial spaces. However, with expanding metro networks and road infrastructure, smaller cities and towns are also witnessing a surge in real estate demand. These improvements not only make commuting easier but also open up new regions for both residential and commercial developments.

The rapid expansion of metro networks, especially in cities like Chennai, Hyderabad, and Pune, has made previously underdeveloped areas more accessible. The improved road networks and better connectivity have made it easier for people to commute to major urban hubs, creating a ripple effect in the demand for housing and commercial spaces in suburban and rural areas.

The Role of RERA and GST

The Economic Survey also acknowledges the significant role played by the Real Estate (Regulation and Development) Act, popularly known as RERA. The law, which aims to bring transparency and accountability to the real estate sector, has helped improve market conditions. Under RERA, builders are required to register projects with the regulatory authorities, ensuring transparency in terms of project timelines, quality, and payment schedules. This has protected consumers from fraud and delayed deliveries, thereby boosting buyer confidence.

Additionally, the implementation of Goods and Services Tax (GST) has simplified the taxation process in real estate transactions. By streamlining the tax structure and ensuring uniformity across states, GST has eliminated the multiple layers of indirect taxes that previously existed, thus making the process more efficient. This has also reduced the scope for tax evasion, encouraging proper documentation and invoicing.

The Survey notes that the combined effects of RERA and GST have not only brought more transparency but also enhanced market liquidity. According to the document, the enactment of RERA has helped India improve its ranking in the Global Real Estate Transparency Index, where the country ranked 31st out of 89 nations in 2024.

Residential Market Performance and Future Outlook

The residential real estate market in India has witnessed substantial growth, especially in 2024. The first six months of the year saw an 11-year high in sales volume, with a reported 11% year-on-year growth in sales across top cities. Housing demand is expected to continue its upward trajectory, with estimates predicting a requirement for 93 million housing units by 2036. This indicates a strong and sustained need for both affordable and premium housing, driven by urbanization, rising incomes, and changing lifestyle preferences.

The growth in residential sales is further bolstered by favorable market sentiments, supported by the overall economic stability and the assurance of project completion within timelines as mandated by RERA. Moreover, the demand for office spaces remains strong, driven by the expansion of the corporate sector and the need for more commercial real estate in both established and emerging business hubs.

Commercial Real Estate and the Rise of REITs

Another significant development in the Indian real estate market is the growth of the commercial real estate sector, spurred by the introduction of Real Estate Investment Trusts (REITs). These investment vehicles allow small investors to pool funds and invest in income-generating commercial properties such as office buildings, malls, and retail spaces. REITs have provided liquidity to the commercial real estate market and attracted institutional investors, thereby increasing the sector's overall growth prospects.

The Economic Survey notes that the growth of REITs has helped commercial real estate transition into a more structured and institutionalized sector, offering a steady stream of income for investors while simultaneously improving the liquidity of real estate assets. This has proven especially beneficial for large office complexes in prime locations, where demand from multinational companies and global corporations remains high.

Technological Advancements and Transparency

The digitalization of the real estate sector has also contributed significantly to improving transparency and reducing delays in project approvals. The implementation of online platforms for submitting and approving building plans has simplified the bureaucratic process, ensuring faster clearances and reducing the time required for project commencement. This has contributed to the overall efficiency of the sector, reducing costs and increasing the overall appeal of Indian real estate to both domestic and international investors.

The Digital India Land Records Modernization Programme, another government initiative, is working to create a transparent and accessible system for land record management. This move is expected to reduce disputes over land ownership and ensure that the titles to land are clear, making it easier to buy and sell property.

RERA Implementation and Progress

As of January 2025, approximately 1.38 lakh real estate projects and nearly 96,000 real estate agents have been registered under RERA. Additionally, over 1.38 lakh complaints have been resolved, further highlighting the effectiveness of the regulatory authority in addressing grievances and ensuring compliance. The survey also mentioned that RERA rules have been implemented in all states and union territories except Nagaland, which is expected to follow soon.

The robust framework provided by RERA has instilled a sense of security among homebuyers, knowing that the delivery timelines are regulated and that developers are held accountable. This has been a major factor in the increasing demand for housing and commercial spaces in the country.

The Economic Survey 2024-25 forecasts continued growth for India’s real estate market, driven by infrastructure development and regulatory reforms. Expanding metro networks and improved road connectivity are boosting demand in both urban and suburban areas. The implementation of RERA and GST has enhanced transparency and liquidity, while REITs are reshaping the commercial real estate landscape. Additionally, technological advancements in project approvals and land record management are improving efficiency and investor confidence. With these factors in play, India’s real estate sector is set for sustained expansion.

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