India's Office and Workspace Real Estate Gains Momentum from GST Cuts on Construction Materials
The Indian office and workspace market is experiencing robust growth, driven by demand from Global Capability Centres, IT services, and flexible workspaces. Recent GST cuts on construction materials are expected to further boost this sector, making new projects more attractive and affordable.
Gst CutsOffice Real EstateCoworking SpacesConstruction CostsIndiaReal Estate PuneSep 16, 2025
The recent GST Council has recommended tax cuts on key construction materials: the GST on cement has been reduced from 28% to 18%, and on marble, granite, travertine blocks, and materials like sand-lime bricks and stone inlay work, from 12% to 5%. These reductions are expected to provide a positive boost to India’s office and workspace sectors, says Archana Naidu, Board Member and Head of Business at iKeva.
Cement and finishing materials account for a significant portion of construction costs, typically ranging from 10–30%. With these GST reductions, developers and workspace operators are likely to save 3–5% on overall project costs. This improved cost structure directly benefits office development and fit-outs—especially for co-working spaces, where infrastructure and interiors are critical.
Co-working providers often invest heavily upfront and rely on Input Tax Credit (ITC). A reduced GST burden eases working capital constraints, enabling faster expansion and more competitive pricing for clients. This improved cash flow and scalability can significantly enhance the growth of co-working spaces.
The cost savings could be reflected in lower rental rates or more competitive leasing offers, giving organized developers an edge in the market. Reduced costs across the commercial real estate supply chain—from construction to interiors—could make co-working and retail-oriented office environments more accessible.
Lower input costs improve margins and overall project economics for office developers. This can translate to more competitive rental rates and better returns. For instance, a 3–5% reduction in construction costs can significantly enhance the financial viability of new projects, making them more attractive to investors and developers.
The simplified GST structure (now with two primary slabs: 5% and 18%) reduces classification disputes and streamlines tax compliance for workspace projects. This administrative and compliance relief can help developers and operators focus more on project execution and less on regulatory hurdles.
While the GST cuts on construction materials offer a significant boost to India’s office and workspace real estate sector, there are a few limitations to consider. The inability to claim Input Tax Credit (ITC) on rentals may partially dilute the benefits. Additionally, local levies and other administrative risks could impact the overall gains.
Overall, the GST cuts are expected to make the launch of new projects more attractive, reduce capital outlays, and fuel growth in co-working spaces through improved affordability and better financial manageability. As Archana Naidu, Board Member and Head of Business at iKeva, emphasizes, these changes are poised to drive the Indian office and workspace market to new heights.
Frequently Asked Questions
What are the key construction materials that have seen GST reductions?
The key construction materials that have seen GST reductions include cement, which has been reduced from 28% to 18%, and marble, granite, travertine blocks, and materials like sand-lime bricks and stone inlay work, which have been reduced from 12% to 5%.
How do these GST cuts benefit co-working spaces?
These GST cuts benefit co-working spaces by reducing construction and fit-out costs, improving cash flow, and enabling faster expansion. The reduced tax burden also allows for more competitive pricing for clients.
What impact do the GST cuts have on project economics?
The GST cuts on construction materials improve project economics by reducing overall costs, enhancing margins, and making new projects more financially viable. This can lead to more competitive rental rates and better returns for developers.
How do the simplified GST slabs help developers and operators?
The simplified GST slabs (5% and 18%) reduce classification disputes and streamline tax compliance for workspace projects. This administrative relief allows developers and operators to focus more on project execution and less on regulatory hurdles.
Are there any limitations to the benefits of these GST cuts?
Yes, there are limitations. The inability to claim Input Tax Credit (ITC) on rentals may partially dilute the benefits, and local levies and other administrative risks could impact the overall gains.
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