Industry status for real estate a priority: Grant Thornton survey

The real estate sector has been advocating "industry" status for the past two Budget sessions and is making it a priority once again this year, noted Grant Thornton Bharat's Union Budget 2025 expectations survey. As India prepares for the session, the survey highlights key reforms that could drive investment, spur innovation, and enhance economic growth.

 

India is poised to become the world's fourth-largest economy by 2026 and achieve the $5 trillion mark by 2028, according to the pre-Budget survey, which reflects strong optimism about the country's economic trajectory. The survey indicates that most respondents expect growth between 6-6.9 per cent in FY 2025-26, while 22 per cent project an even higher expansion of 7-7.9 per cent.

 

The survey further urged that granting industry status to the housing sector would enhance funding access, attract investment, and boost affordable housing. This move would stimulate construction, create jobs, and drive economic growth, reinforcing the industry’s role in national development.

 

“The Union Budget 2025 comes at a pivotal time for the real estate sector, amid an urban slowdown, rising fiscal deficits, and global uncertainties. Simplifying GST on under-construction properties, rationalising stamp duties, and enhancing tax incentives for affordable housing are essential to boost demand,” said Shabala Shinde, partner and real estate industry leader, Grant Thornton Bharat.

 

Moreover, integrating the real estate sector with tokenisation through blockchain technology is the way forward. According to the report, this requires fostering innovation and investment while establishing clear regulations for tokenising real estate transactions, records, and related processes.

 

To address rising housing demand and costs, the government should prioritise funding and incentives for rental development. Expanding affordable rentals will benefit more people, attract private investment, and alleviate shortages, enhancing urban affordability and housing accessibility.

 

Focusing on real estate investment trusts (REITs), proposals have been made to boost investment by exempting capital gains tax on share transfers in asset-holding SPVs to REITs. However, direct asset transfers remain taxable and should also qualify for exemption to encourage sector growth. Additionally, capital gains from specified listed securities held by REITs should be taxed at a rate of 12.5 per cent.

 

Grant Thornton's survey affirms that allowing charitable and religious institutions to invest in REITs and small and medium (SM) REITs enhances portfolio diversification, mitigates risk, and boosts returns while helping REITs raise funds efficiently, fostering competition and sector growth.

 

“Encouraging rental housing, REITs, and FDI can improve liquidity and catalyse investments. Strengthening urban infrastructure, smart cities, and digitised land records will enhance transparency and operational efficiency. The Budget must address these challenges to unlock housing accessibility, support long-term growth, and leverage real estate’s potential,” added Shinde.

 

To add to the list, proposals have been made to address inconsistencies by extending provisions to subsidiaries of listed REITs, ensuring equitable tax treatment and a fairer business environment. Expanding tax neutrality to transfers between REITs and their SPVs streamlines reorganisation, enhances operational efficiency, and supports business growth, fostering a more competitive real estate market.