Real estate: How new labour laws could affect the property market

The Modi Government announced new labour laws which are expected to bring big differences in India's labour market. The four Labour Codes — the Code on Wages, 2019; the Industrial Relations Code, 2020; the Code on Social Security, 2020; and the Occupational Safety, Health and Working Conditions Code, 2020 — became effective on November 21, 2025, have simplified, codified, and modified 29 Central labour laws, some of which date back to the pre-Independence era.

The country's real estate sector with an estimated size of $385.18 billion in 2024 is projected to grow to about $1 trillion by 2030 and potentially $5.17 trillion by 2047. The new labour codes are expected to uplift the real estate sector, especially the low cost housing market. 

Ashwinder R. Singh, Chairman, CII Real Estate Committee says, "The sector will move from an informal, contractor-driven ecosystem to a more stable, institutional workforce. Compliance under the new codes means knowing exactly who works on your site, how they are paid, and how they are protected — not just at the developer level, but across the entire contractor chain. Over the next 6–18 months, timelines may stretch as the ecosystem adjusts. But in the long run, safer and better-governed labour will reduce churn and actually improve execution. The costs will rise in the short term — but the cost of non-compliance will be far higher. In a 10-year view, good labour practices will strengthen India’s credibility as a global-grade real estate market.”

Akash Kholi, Founder & CEO of Elante Group said, “The revised labour codes mark a decisive step toward formalising the real estate and infrastructure workforce. Benefits like one-year gratuity and enhanced overtime compensation will improve worker morale and retention, which is crucial for project continuity. However, these changes will require companies to recalibrate their cost structures and staffing models. For MSMEs, especially subcontractors, the transition may feel challenging but ultimately necessary. The emphasis on compliance, structured working hours, and transparent wage practices will push the sector towards higher efficiency and a more equitable labour ecosystem in the long run.”

Deepak Rai, Founder & Managing Director of  BOOTES says,"Stronger labour security under the new codes will directly uplift the real estate sector, especially the low-budget housing market. When workers feel financially protected through benefits like quicker gratuity eligibility and structured wage reforms, they gain the confidence to make long-term commitments such as buying a home. This increased sense of stability among employees will translate into higher demand in affordable housing." 

"Overall, the reforms are expected to create a positive ripple effect across the real estate market, driving both growth and greater financial inclusion,” he added.

Salil Kumar, Director – Marketing and Business Management, CRC Group believes that this was a much-needed step for a sector like real estate that relies on a large and diverse workforce. "We already pay our labour force wages that are at par with the best in the industry, so we foresee the overall impact to be marginal. The new labour codes mark a structural upgrade in how India manages its construction workforce. The emphasis on formal wages, social security, and safety will require developers to strengthen documentation, streamline payroll practices, and invest more deeply in on-site welfare. However, in the short term, we may see minor adjustments in construction timelines as companies adapt to the new reporting and contractual norms. But these shifts are offset by fewer disputes, better retention, and smoother operations."