Budget 2025 : Real Estate And FDI, What Are The Industry Expectations?

The real estate industry expects Budget 2025 to emphasize measures to simplify Foreign Direct Investment (FDI) norms, to enable easier access to foreign capital, and to enhance liquidity for developers.

Real Estate And FDI : Current State

Construction is the third-largest sector in terms of FDI inflow. FDI in the industry (including construction development & activities) stood at US$ 60.53 billion from April 2000-March 2024.

Foreign investors pump around US$ 3.1 billion yearly into Indian real estate, with a 37 per cent  YoY increase in foreign inflows in the first half of 2024, IBEF data reveals.

While, the Government has already allowed FDI of up to 100 per cent for townships and settlements development projects, however, a lot is left to be desired.  
Talking about the gap in FDI investment, Siraj Saiyed, Director, Arete Group said, “FDI in Indian real estate stands at nearly 10-12 % of the total inflows with targeted reforms and can be scaled up manifold.”, said

Real Estate And FDI : Industry Expectations

When it comes to real estate, industry experts have a plethora of suggestions and expectations from the upcoming Budget 2025.

Saurab Saharan, Group Managing Director, HCBS Developments said, “Streamlined compliance processes and relaxed regulatory frameworks will accelerate growth since NRIs and HNIs have shown a growing interest in Indian real estate.” The investments of NRIs is expected to contribute 20 per cent of the country's total real estate inflows.

Simplifying FDI norms would foster these long-term global partnerships, boosting investor confidence and establishing India as a preferred destination for real estate investment. By addressing these concerns, one can expect the government to propel economic growth across the country.

The real sector also wants the upcoming budget to enhance FDI norms to enhance liquidity among developers, notably in the commercial segment. “With India emerging as a hub for MNCs and startups, a review of FDI limits can attract domestic and foreign real estate investments and provide an opportunity for developers to raise the necessary working capital required for project execution.” Harsh Gupta, CEO, Sundream Group, said.

This will further accelerate the development of Grade-A office spaces, retail hubs, and mixed-use developments. Hence, we anticipate the government introducing such measures to sustain the commercial segment’s growth in the long run. “Such steps would also align with India's vision for urban development, making real estate a significant contributor to economic growth and employment generation.”, said Sunil Sisodiya, Founder, Geetanjali Homestate.

“Such interventions would help stabilize input costs, boost demand, and restore investor confidence, setting the stage for long-term sustainable growth in the sector.” Vishal Raheja, Founder and MD, InvestoXpert, said.