Indian real estate firms cheer government's tax relief plan to boost consumption

Prestige Estates Projects

01/02/2025 09:56

Feb 1 (Reuters) - Shares of Indian real estate companies
rose on Saturday after the government announced measures to
boost the spending power of the middle class in Asia's
third-biggest economy, likely spurring investments in the
residential housing space.
    India's plan to cut income tax rates in the 2025-26 budget
was widely welcomed by investors and experts, as it boosts
disposable income in a country grappling with sluggish
consumption in recent quarters.
    The Nifty realty index  .NIFTYREAL  rose 3.3% and was set
for its best day in nearly eight months.
    Eight of the ten members in the sub-index were trading
higher, with realtors Prestige Estates  PREG.NS , DLF  DLF.NS 
and Sobha  SOBH.NS  climbing between 2% and 6%. 
    "This move is expected to strengthen demand for affordable
housing," said Anuj Puri, chairman of ANAROCK Group.  
    Middle-class homebuyers, landlords, and investors can now
benefit from reduced tax liabilities, better affordability, and
fewer compliance hassles, Puri added.
    Badal Yagnik, CEO of Colliers India, also echoed the
sentiment and said the rationalization of taxes and enhancement
of exemption limits can boost disposable income, spurring
consumption levels and real estate investments, particularly in
residential real estate and alternate financial instruments such
as REITs. 
    The government also made room for homeowners to claim two
self-occupied properties as tax-free, as compared to only one
earlier, a move likely benefiting residential real estate
investment.
    This step minimizes tax pressures, promotes homeownership,
and facilitates real estate investment, especially in second
homes and Tier 2 and 3 cities, Puri said.  
    Other consumption-linked sectors were also trading higher on
the day after the cut to income tax.

 (Reporting by Indranil Sarkar and Kashish Tandon in Bengaluru;
Editing by Eileen Soreng)
 ((Kashish.Tandon@thomsonreuters.com; 8800437922;))