The Union Budget 2025-26 has opened the doors for significant economic growth, with its key provisions on infrastructure, manufacturing, and entrepreneurship. But what does this mean for India's commercial real estate sector? It could be transformational-from a surge in office space demand to the expansion of warehousing and logistics. Let's explore the key highlights and how they shape the future of commercial real estate in India.

MSME Growth & Office Space Demand

The budget provides enhanced support to Micro, Small, and Medium Enterprises (MSMEs), thereby expanding the scope of incentive and funding. This will accelerate the growth of startups and small businesses, increasing demand for office spaces, particularly in co-working hubs and flexible office setups.

Furthermore, the National Manufacturing Mission and the capital expenditure amount of ₹11.21 lakh crore will promote industrial growth. In this respect, businesses would require larger office and commercial spaces in emerging urban centers and tier-2 cities.

Infrastructure Boom & Commercial Expansion

A strong emphasis on Public-Private Partnerships (PPP) in infrastructure development will accelerate urbanization, which will directly impact commercial real estate. With a three-year pipeline for major projects, new commercial hubs are likely to emerge, offering office, retail, and industrial spaces in well-connected locations.

The ₹15,000 crore SWAMIH Fund 2 will complete stalled projects, which will be beneficial for mixed-use developments combining commercial and residential real estate, making cities more business-friendly.

Startup Ecosystem & the Rise of Innovation Centers

To support the extensiveness of startup tax benefits and introduce the Deep Tech Fund, India's entrepreneurial ecosystem will be nurtured. More startups will lead to a higher demand for innovation hubs, co-working spaces, and prime office locations.

Apart from this, the development of a National Framework for Global Capability Centres (GCCs) will also encourage many multinational corporations to expand Indian operations, primarily in tier-2 cities. With a rise in demand for premium office space and IT parks, the momentum shall grow.

Sustainability & Clean Tech: A New Wave of Commercial Demand

This year's budget has sustainability as its focus, and that brings exciting opportunities for the commercial real estate sector. The National Manufacturing Mission for Clean Tech will drive investments in EV batteries, solar PV cells, and wind turbines, requiring specialized industrial parks, research hubs, and factory spaces.

The development of Small Modular Reactors in nuclear energy is expected to create demand for real estate in technology and industrial corridors, with private players entering this emerging sector.

Foreign Investment & Financial Hubs

A The most significant change is the increase in Foreign Direct Investment (FDI) in the insurance sector from 74% to 100%. This will create a perfect opportunity for global insurance giants to invest in India. It will further fuel the demand for Grade A commercial real estate in such financial hubs as Mumbai, Bengaluru, and Hyderabad.

The extension of the IFSC sunset date further strengthens India's financial services sector, attracting international firms that will need high-quality office spaces in Special Economic Zones (SEZs) and IFSC-designated areas.

The Road Ahead: A Booming Market for Commercial Real Estate

Rising investments, better infrastructure upgrades, and foreign interest are bound to make the Indian commercial real estate sector explode to unprecedented growth levels. Pushes toward sustainability and expansion in financial sectors along with startup incubations are sure to redefine demand at office spaces, industrial parks, and logistics hubs.

This budget opens the door for a new wave of opportunities and strategic expansion for investors, developers, and businesses. As cities expand and transform, commercial real estate will be the driving force in India's progress.

https://www.cushmanwakefield.com/en/india/insights/union-budget-2025

https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2098352