Exports Cushion Domestic Weakness

The industry is projected to sell about 1.45 lakh units this fiscal, with domestic sales accounting for nearly 90% of total volume. However, in the first half of FY26, total volume slipped 1% year-on-year, cushioned by a 35% jump in exports.
Export orders from Africa and Latin America have provided critical support as domestic projects lag behind.

“Road construction, a key demand driver, is expected to slow to 23–25 km per day this fiscal from 34 km in FY24,” said Anuj Sethi, Senior Director, Crisil Ratings.
“Extended monsoon, weaker project awards, and stabilising real estate activity have all contributed. Faster awards and execution in the remainder of this fiscal will be crucial to complete the ₹11 lakh crore infrastructure outlay.”

Emission Norms Raise Costs, but Open Global Doors

The rollout of CEV-V1 norms from January 2025 — aligning Indian machinery with international environmental standards — has increased costs by 12–15% but also improved product reliability and export readiness.

“The new emission norms have enhanced product acceptability in advanced markets,” said Poonam Upadhyay, Director, Crisil Ratings.
“This opens doors to regions like Europe, North America, and Japan. India’s ability to leverage these opportunities amid global uncertainties will be key to sustaining exports.”

With domestic demand stagnating, the continuation of export momentum is expected to be the main driver of the forecasted 2–4% growth.

Revenue, Margins, and Credit Profile Stable

Despite the modest volume growth, industry revenues are expected to rise 6–8% this fiscal, supported by selective price hikes and firm export realisations.
Operating margins, however, are likely to contract slightly to ~11%, down from 12% last year, as manufacturers absorb higher compliance costs.

Crisil’s analysis of 17 manufacturers, covering nearly 75% of the market, indicates that capital discipline and stable steel prices will help keep leverage and credit profiles healthy.

Sector Mix and Growth Drivers

Roads account for 40% of equipment demand, followed by mining (25%), real estate (15%), and infrastructure segments such as railways, water, and power.
In terms of product mix, earthmoving machinery dominates with nearly 70% share, while material handling, concrete, and road equipment make up the rest.

Outlook: Exports to Lead, Domestic Recovery Key

The next fiscal will depend on faster infrastructure execution and sustained private capital expenditure.
While the government’s infrastructure push remains strong, execution bottlenecks and monsoon-related delays could continue to constrain equipment demand.
The industry’s medium-term recovery will hinge on how effectively India converts its export momentum into long-term global market access.

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Quarter-wise Institutional Investment Trends

Residential Sector Takes the Lead

The residential sector was the top performer, accounting for 62% of all institutional investments in Q1 2025, up from 41% in Q1 2024. Investment value surged 125% YoY, reaching USD 506.1 million.

Foreign Investment Skyrockets Over 3,000%

The biggest story of Q1 2025 is the resurgence of foreign capital. Foreign investors contributed USD 346.9 million, up from just USD 11 million in Q1 2024 — a staggering 3,054% increase. Their share jumped from 2% to 43%, signaling growing international trust in India’s real estate fundamentals.

Expert Commentary

Shrinivas Rao, FRICS, CEO of Vestian, commented:

“Investor confidence in India’s growth story remains strong, with both foreign and domestic players showing increased commitment to long-term investments. As investment activity gains momentum, we anticipate a significant uptick in future inflows, further reinforcing India’s position as a dynamic and attractive investment destination.”

Outlook

Despite a 63% drop in investments compared to Q4 2024, the long-term outlook remains highly optimistic. With rapid infrastructure development, macroeconomic resilience, and rising foreign participation, India’s real estate sector is poised for sustained institutional growth throughout 2025 and beyond.

Also Read: Institutional investments in alternatives cross USD2.0Bn in 5 years; foreign investments rise 6X since 2019

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In a significant move that spells good news for homebuyers across India, the Reserve Bank of India (RBI) has slashed the repo rate by 25 basis points to 6%, marking its second consecutive cut. The decision, aimed at supporting economic growth amid global uncertainties, has been widely welcomed by real estate stakeholders for its potential to stimulate housing demand and improve affordability—especially for end-users in the affordable and mid-income segments.

Here’s what the real estate and financial leaders have to say:

A Welcome Move to Boost Buyer Sentiment

Prashant Sharma, President, NAREDCO Maharashtra, said the rate cut “comes as a welcome and timely move” and will act as a much-needed catalyst to revive both consumption and investment cycles. He emphasized its impact on improving affordability and boosting sentiment in the affordable and mid-income segments.

Shraddha Kedia-Agarwal, Director at Transcon Developers, called it a “strategic push” toward economic revival. “Lower interest rates make home loans more attractive, especially in metros like Mumbai. This will go a long way in supporting buyer sentiment and end-user driven purchases,” she added.

Boman Irani, President, CREDAI National, hailed the move as “pro-growth,” especially with inflation expected to moderate to 4.5%. He noted it would enhance borrowing capacity and uplift housing demand, particularly in rate-sensitive categories.

Transmission Still a Concern

Anuj Puri, Chairman, ANAROCK Group, struck a cautious tone. “Banks have not fully transmitted earlier rate cuts due to funding pressures and high NPAs. If they do now, it will help homebuyers—especially first-timers looking at affordable housing,” he noted. He also flagged a 17% average rise in housing prices across top 7 cities year-on-year, which makes rate transmission crucial for EMI relief.

Affordability and Access to Housing in Focus

Anurag Goel, Director, Goel Ganga Developments, said the move is especially beneficial for EMI-dependent homebuyers. “This will strengthen buyer confidence and improve conversion rates from inquiry to booking, particularly in Tier 1 and Tier 2 cities,” he noted.

Chintan Sheth, CMD of Sheth Realty, added that lower rates would “usher benefits across affordable, mid-income, and premium segments.”

Jash Panchamia, Promoter of Suraksha Smart City, emphasized the positive impact on PMAY beneficiaries and the EWS segment, saying it supports the government’s vision of ‘Housing for All’.

Real Estate Developers: Ready to Launch and Expand

Parthh K Mehta, CMD of Paradigm Realty, said this move creates opportunities in luxury housing, enabling developers to launch “iconic projects backed by favorable financing.”

Bhavesh Shah, JMD of Today Group, noted that the rate cut could significantly drive sales in growth hubs like Navi Mumbai.

Mohit Goel, MD, Omaxe Ltd., called it a “catalyst for demand revival,” adding that lower borrowing costs will ease financial burdens for both homebuyers and developers.

Macro Trends, Tariff Concerns, and Future Outlook

Vimal Nadar, Head of Research at Colliers India, explained that while global tariff escalations remain a concern, the RBI’s “accommodative” stance will help boost domestic consumption and housing demand.

Amit Goyal, MD, India Sotheby’s International Realty, agreed: “If passed on to borrowers, this cut will help the real estate sector navigate global economic uncertainty.”

Anshul Jain of Cushman & Wakefield emphasized the positive shift from “neutral” to “accommodative,” reinforcing the RBI’s growth-supportive intent and likely future rate cuts.

Shrinivas Rao, CEO of Vestian, said, “The policy shift and easing inflation suggest mortgage rates could drop further, enhancing real estate demand.”

Sanjay Daga, CEO of Anex Advisory, pointed out that further cuts may be needed to offset tariff pressures and stock market volatility.

For FD Investors: Time to Reassess Strategy

Aman Gupta, Director of RPS Group, warned that declining rates mean FD investors should revisit their strategies. He recommended exploring small finance banks for better rates, considering tax-efficient instruments like SCSS, and maintaining an emergency fund while diversifying into hybrid funds cautiously.

Bottom Line for Homebuyers:

• Lower EMIs could be on the horizon—if banks pass on the cut.
• First-time and budget-sensitive buyers stand to benefit the most.
• Developers gain breathing room, which may lead to new launches and faster project completions.
• Real estate remains a safe, long-term asset, especially amid global uncertainty.

Whether you’re looking to buy your first home or refinance an existing loan, this rate cut offers an opportunity to reassess your home finance strategy and potentially act before prices or interest rates climb again.

Also Read: RBI makes Homebuyers happy, Repo rates unchanged

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The allotted land, an amalgamated 6,019.10 sqm plot (C-44 & C-48) in G-Block, has been leased to NPCI for 80 years. The possession letter was officially handed over during Mumbai Tech Week 2025, an AI-focused event organized by the Maharashtra government.

NPCI Expands Presence in Mumbai’s Financial District

NPCI, which oversees retail payments and settlement systems in India, had requested MMRDA to allocate commercial space in BKC for its expansion. With this approval, the corporation is set to strengthen Mumbai’s position as a fintech and digital payments hub.

NPCI has played a key role in India’s digital payments landscape through platforms like Unified Payments Interface (UPI), RuPay, Immediate Payment Service (IMPS), Aadhaar-enabled Payment System (AePS), and National Electronic Toll Collection (NETC). The new headquarters is expected to support NPCI’s expansion in both domestic and international markets, reinforcing its role in global digital transactions.

Boost to Fintech and IT Sector

MMRDA’s decision is expected to attract fintech startups, technology firms, and investors focusing on digital payments, artificial intelligence, cybersecurity, and blockchain innovations. BKC, already a major financial district, is likely to see increased activity from businesses leveraging NPCI’s digital payments infrastructure.

The headquarters will serve as a collaborative hub for banks, fintech companies, and regulators to develop next-generation payment solutions. The move is expected to generate employment opportunities and foster advancements in real-time payments, cybersecurity, fraud prevention, and AI-driven financial services.

Government’s Vision for Mumbai as a Fintech Hub

The Maharashtra government has been pushing initiatives to position Mumbai as a leading global fintech destination. The allocation of commercial space for NPCI aligns with this vision, ensuring that the city remains at the forefront of financial technology developments.

Eknath Shinde stated that MMRDA has been focused on strengthening Mumbai’s financial and technological ecosystem, and NPCI’s presence in BKC will drive fintech innovation. Metropolitan Commissioner Dr. Sanjay Mukherjee emphasized that the move is part of MMRDA’s broader strategy to support institutions that drive economic growth and digital transformation.

The establishment of NPCI’s global headquarters in Mumbai marks a significant milestone for the country’s fintech sector and is expected to accelerate India’s leadership in digital transactions and financial technology innovation.

SFI Analysis

The allocation of land to NPCI in Bandra Kurla Complex (BKC) marks a strategic push to strengthen Mumbai’s role as a global fintech hub. As India’s leading digital payments entity, NPCI’s expansion will attract fintech startups, technology firms, and institutional investors, fostering innovation in AI-driven financial services, cybersecurity, and blockchain. The move aligns with India’s growing dominance in digital transactions, reinforcing its leadership in global payment solutions. By securing a presence in Mumbai’s financial district, NPCI is well-positioned to drive financial inclusion, enhance transaction security, and develop next-generation payment technologies, ensuring continued growth in India’s digital economy.

Also Read: MMRDA Appoints Contractors for Three Major Creek Bridges in Thane

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Key Findings of the Report

According to NHB, as of September 30, 2024, the total outstanding individual housing loans in India reached ₹33.53 lakh crore, marking a 14% year-on-year (YoY) increase. The report attributes this rise to growing urbanization, policy support, and an expanding mortgage market.

• Loan Disbursements: During the half-year ending September 30, 2024, ₹4.10 lakh crore in housing loans were disbursed, contributing to a total of ₹9.07 lakh crore disbursed in the financial year 2023-24.
• Segment-wise Loan Distribution: Affordable housing dominated, with the Economically Weaker Section (EWS) and Low-Income Group (LIG) segments accounting for 39% of outstanding housing loans. The Middle-Income Group (MIG) comprised 44%, while the High-Income Group (HIG) made up 17%.
• Housing Price Index (HPI) Trends: The NHB-RESIDEX index recorded a 6.8% YoY increase in housing prices as of September 2024, compared to a 4.9% rise in the previous year.

Government Initiatives Driving Growth

The NHB report highlights the impact of major government schemes such as the Pradhan Mantri Awas Yojana (PMAY-U and PMAY-G), the Affordable Rental Housing Complexes (ARHC) scheme, and the Urban Infrastructure Development Fund (UIDF). The anticipated rollout of PMAY 2.0 and the increased focus on transit-oriented development are expected to sustain sectoral growth.

Challenges and Future Prospects

While the housing sector has witnessed robust expansion, the report underscores challenges such as regional disparities in credit access, affordability concerns, and climate-related risks. However, advancements in construction technology, digitization of land records, and policy support provide promising avenues for continued growth.

SFI Analysis:

The NHB report reaffirms the strength of India’s housing sector as a key driver of economic growth. The 14% YoY surge in individual housing loans indicates a resilient demand for homeownership, supported by affordable financing options and government incentives. The dominance of the MIG and affordable housing segments underscores the growing aspirations of India’s middle class. Additionally, the 6.8% rise in housing prices suggests sustained investor interest and confidence in real estate. However, ensuring equitable credit access across regions and mitigating economic uncertainties remain critical for long-term stability. Moving forward, integrating technology-driven solutions and sustainable housing practices will be pivotal in shaping India’s housing market trajectory.

Also Read: Seeking A Housing Loan? Read This New RBI Policy

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Dr. Hiranandani emphasized the need for targeted measures to address pressing challenges in the housing and infrastructure domains, outlining several key proposals:

1. Increased Funding for Affordable Housing
NAREDCO urged the government to allocate additional funds to the affordable housing segment, which is currently experiencing negative growth. Enhanced funding would stimulate inclusivity and sustainable urban development.

2. Higher Home Loan Tax Deductions
The organization proposed raising the tax deduction limit on home loan interest payments from ₹2 lakh to ₹5 lakh, aiming to make homeownership more affordable and boost market demand.

3. Infrastructure Status for Housing
Granting infrastructure status to the housing sector was identified as a critical step. According to NAREDCO, this move would unlock new investment avenues and position housing as a key pillar of national infrastructure.

4. Urban Infrastructure Development
NAREDCO stressed the importance of improving energy and transportation infrastructure to complement housing development, ensuring sustainable urban growth and enhanced quality of life.

5. Rental Housing Expansion
To address rental affordability, the council recommended removing notional income from house properties held as stock-in-trade, facilitating the creation of a robust rental housing stock in line with the government’s “Housing for All” mission.

6. Incentives for Rental Housing Investment
The council proposed deleting provisions that discourage rental housing investment by restricting loss set-offs from house property income.

7. Safe Harbour Adjustments for Ready Reckoner Rates
NAREDCO suggested increasing the safe harbour for differences between Ready Reckoner rates and market values from 10% to 25% to better align with market realities.

8. Rationalized Tax Rates and Capital Gains Reforms
Recommendations included reducing individual tax rate slabs from 37% to 25% to boost disposable income, lowering dividend taxation for resident investors to 10%, and reforming capital gains tax rules to encourage the purchase of multiple homes.

9. Slum Redevelopment Incentives
The council proposed targeted initiatives to accelerate slum redevelopment, particularly in cities like Mumbai, with a vision of eliminating urban slums within five years.

Dr. Hiranandani underscored the transformative potential of these measures, stating that their implementation would drive housing demand, enhance affordability, and contribute to the nation’s economic growth. NAREDCO has called on the government to prioritize these recommendations in the upcoming budget to ensure the long-term stability and prosperity of the real estate sector.

Also Read: Hiranandani Communities launches 1mn sqft of Residential Sector at Hiranandani Fortune city, township in Panvel in FY 23 

The post NAREDCO Submits Budget Recommendations to Boost Real Estate Sector appeared first on Square Feat India.

Focus on Infrastructure and Economic Growth
Despite declining real estate activity in the second half of 2024, the sector anticipates the government will prioritize robust infrastructure development, a long-term driver for real estate growth. The budget is also expected to include measures to stabilize the economy and enhance GDP growth, with a focus on supporting SMEs, MSMEs, job creation, and skilling initiatives.

Affordable Housing in Need of Revival
Affordable housing, a once-thriving segment, has struggled post-pandemic, with its sales share in the top seven cities dropping to 18% in 2024 from over 38% in 2019, according to ANAROCK Group data. The supply of affordable homes has also declined significantly.

To address these challenges, industry experts are calling for targeted government intervention, including:

• Reintroducing the Credit-Linked Subsidy Scheme (CLSS): This scheme, which expired in 2022, provided financial incentives for first-time buyers of affordable homes. Its revival could stimulate demand in this segment.
• Restoring the 100% Tax Holiday for Developers: Developers previously benefited from tax exemptions under Section 80-IBA of the Finance Act, 2016, which helped increase affordable housing supply. Reinstating this provision could boost developer interest in such projects.
• Revising Affordable Housing Criteria: Current definitions of affordable housing, particularly the price cap of INR 45 lakh, are considered outdated in high-cost markets like Mumbai. Experts suggest raising the price cap to INR 85 lakh in Mumbai and INR 60-65 lakh in other metros to reflect market conditions.

The Road Ahead
ANAROCK Group Chairman Anuj Puri noted that centrally controlled land managed by agencies such as Indian Railways and the Port Trusts could be released for affordable housing projects, addressing land scarcity issues.

The slowdown in 2024 saw housing sales in the top seven cities decline by 4% to approximately 4.46 lakh units, while new launches dropped by 7% to around 4.13 lakh units. However, stakeholders believe that with the right incentives, 2025 could mark a turnaround for the residential real estate market.

The Union Budget 2025-26 holds the potential to reinvigorate the sector, fostering growth and ensuring housing remains affordable for all.

Also Read: Nirmala Sitharaman to present the union budget

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The announcement was made during CLI’s 30th anniversary celebration in Mumbai, where the company outlined its growth strategies and commitment to the Indian market. India is recognized as a key strategic market for CLI, reflecting its rapid growth and evolving economic landscape.

Strategic Expansion and Diversification

CLI’s expansion plans in India will leverage its expertise across various asset classes, including business parks, logistics, data centers, and lodging. The company will focus on several key areas:

1. Business Parks: CLI will enhance its presence in India’s business parks sector, with a current land bank of over 16 million square feet. The company plans to accelerate development activities to meet rising demand for premium office spaces in major metropolitan areas. CLI’s listed CapitaLand India Trust (CLINT) will continue to acquire prime assets, supporting sustained growth in this sector.
2. Logistics and Industrial Portfolio: Since entering the logistics market in 2016, CLI has grown its portfolio to 9.1 million square feet. The company aims to expand this segment through new private funds and joint ventures. Ascendas-Firstspace (AFS), CLI’s logistics platform, will drive growth in Tier 1 markets, focusing on high-quality logistics and industrial infrastructure.
3. Data Centers: CLI’s data center strategy includes developing four new state-of-the-art facilities across Mumbai, Chennai, Hyderabad, and Bangalore, with a total gross power capacity of 244 megawatts. The company’s first data centers in India are expected to begin operations in 2025.
4. Lodging Portfolio: Under The Ascott Limited, CLI will expand its lodging portfolio in metro cities, Tier 2 markets, and leisure destinations. Ascott plans to add eight new properties in India over the next few years, building on its existing seven properties across six cities.

Exploring New Opportunities

CLI is also exploring opportunities in renewable energy and real estate private credit. The company is investing in renewable energy to support its data centers and business parks, aiming to increase green energy usage and reduce carbon emissions. Additionally, CLI is considering entry into the real estate private credit market, which presents significant growth potential given the US$170 billion financing opportunity projected for the Indian real estate sector between 2024 and 2026.

Also Read: India Achieves Landmark Transparency in Global Real Estate Market

Conclusion

CapitaLand Investment’s plans to significantly increase its investments in India reflect the country’s strategic importance and the company’s commitment to contributing to India’s economic growth. With a diverse portfolio and a focus on sustainable and strategic expansion, CLI is set to play a major role in India’s real estate and infrastructure development over the coming years.

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Also Read: BSE Realty Index – A Historic Growth Story

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