(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 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, DLF and Sobha 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)
