Why Indian Real Estate is Structurally Protected and Poised for Growth
Investment banker Sarthak Ahuja explains why the Indian housing market is uniquely protected and favored by the government, making it a strong long-term investment.
Real EstateHousing MarketInvestmentTax BenefitsEmploymentReal Estate NewsJun 29, 2025
In a LinkedIn post, Ahuja explained why Indian real estate is uniquely positioned for long-term growth, bolstered by policy, demographics, and employment dynamics. “They will always keep making policy for its growth compared to all other children,” he wrote, likening real estate to a child the government persistently nurtures.
He starts with the tax structure, pointing out that no other asset class receives the kind of fiscal treatment real estate enjoys. Ahuja highlighted the 30% standard deduction on rental income—available without any documentation or proof of expenses.
He also emphasized the capital gains exemption that allows individuals to sell any long-term asset—stocks, gold, mutual funds—and reinvest the proceeds into residential property to avoid taxation.
Further, he noted the dual tax benefits available on housing loans: both the principal repayment and the interest paid are deductible from taxable salary income.
“How many other expenses can you reduce from your salary income for taxability?” he asked, implying that real estate is structurally incentivized.
Ahuja also brought attention to the demand drivers rooted in India’s unique demographic setup. With an average household size of nearly five members—compared to just two or three in developed nations—the pressure to increase housing stock is enormous.
“The government has the pressure to increase the supply of houses to almost double—not just for smaller families, but also for those who don’t yet have houses,” he explained.
On the jobs front, Ahuja reminded readers that real estate is the second-largest employer in the country. Given the prevailing skill levels of the workforce, the sector plays a critical role in employment generation. “They will need to continue boosting the sector to create more jobs,” he said, adding that the link between housing and livelihoods is too deep for policymakers to ignore.
In his view, the belief that real estate is overheated ignores these multi-layered fundamentals. “Anyone who says India’s real estate is in a bubble... can’t see what the sector will do in the next one decade.”
Frequently Asked Questions
What are the tax benefits of investing in real estate in India?
Investing in real estate in India offers several tax benefits, including a 30% standard deduction on rental income, capital gains exemption when reinvesting in residential property, and deductions for both principal repayment and interest paid on housing loans.
Why is the Indian government so supportive of the real estate sector?
The Indian government supports the real estate sector because it is the second-largest employer, plays a crucial role in employment generation, and addresses the significant demand for housing driven by the country's demographic setup.
How does the demographic setup in India impact the real estate market?
India’s average household size of nearly five members, compared to two or three in developed nations, creates a significant demand for more housing. This pressure to increase the housing stock is a key driver of the real estate market.
What is the role of employment in the real estate sector's growth?
The real estate sector is the second-largest employer in India, providing jobs for a large portion of the workforce. This makes it a critical sector for employment generation and economic stability.
Is the Indian real estate market at risk of becoming a bubble?
According to investment banker Sarthak Ahuja, the Indian real estate market is structurally protected and supported by multiple fundamentals, making it a strong long-term investment rather than a bubble.
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