Budget 2026-27: Infrastructure, REIT Reforms, and Tier II–III Focus Boost Real Estate

The Union Budget 2026-27 has been widely welcomed by real estate industry leaders as a decisive, infrastructure-led roadmap for long-term urban and economic transformation. With a sharp increase in capital expenditure, a sustained push towards Tier II and Tier III cities, and a strong focus on connectivity through high-speed rail corridors and City Economic Regions, the Budget is expected to unlock new growth corridors beyond traditional metros. Industry experts believe the emphasis on REITs, asset monetisation, financial sector reforms, and simplified tax and compliance frameworks—especially for NRIs and foreign investors—will significantly improve liquidity, transparency, and investor confidence.

Mr. Prashant Sharma, President, NAREDCO Maharashtra, highlighted the Budget’s strong reinforcement of the government’s commitment to inclusive and sustainable growth. The significant increase in capital expenditure to ₹12.2 lakh crore, coupled with a continued focus on Tier II and Tier III cities, will act as a powerful demand catalyst for real estate beyond metros. These emerging growth centres are witnessing rising urbanization, aspirational housing demand, and increasing commercial activity, making them the next engines of India’s real estate expansion. For Maharashtra, improved connectivity, urban infrastructure funding, and the emphasis on growth corridors will significantly enhance housing demand and accelerate redevelopment in urban centres.

Equally encouraging is the Government’s balanced approach towards fiscal consolidation while maintaining momentum in infrastructure investment. Measures such as the expansion of REITs, asset monetization by CPSEs, and reforms aimed at improving ease of doing business will strengthen investor confidence and attract long-term capital into the real estate sector. Simplification of tax processes, especially for NRIs, and a more investor-friendly framework for foreign capital will further boost confidence. The Budget lays a strong foundation for inclusive urban growth, urging state governments to align policies to ensure faster project execution and improved housing supply.

Mr. Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory, noted that the Union Budget 2026-27 sends a clear and positive signal to homebuyers and investors by reinforcing economic stability, fiscal discipline, and long-term infrastructure development. The Government’s continued focus on capital expenditure, city-centric growth planning, and enhanced connectivity through high-speed rail corridors will significantly improve the livability and investment attractiveness of emerging urban markets. This will translate into improved end-user confidence and a more robust residential and commercial real estate market.

The government’s intent to strengthen the corporate bond market, encourage REITs, and streamline foreign investment norms will improve transparency and capital access for developers and investors alike. From a consumer standpoint, the emphasis on Tier II and III cities and the creation of City Economic Regions will unlock new housing opportunities and offer better value propositions beyond traditional metros. The simplified income tax framework and rationalised compliance mechanisms further enhance ease of doing business, making Indian real estate a more attractive and structured asset class for both domestic and global investors.

Importantly, the Budget also eases compliance for non-resident Indians by waiving the requirement for a separate TAN for TDS on immovable property sales and allowing resident buyers to use PAN-based challans, reducing procedural friction in NRI property transactions. Broader diaspora-friendly tax measures like rationalised TCS on overseas remittances further reinforce investor confidence and make Indian real estate a more attractive asset class for global Indians.

Mr. Kamlesh Thakur, Co-Founder & Managing Director, Srishti Group, emphasized that the Union Budget 2026-27 reinforces the Government’s intent to build inclusive and future-ready cities through sustained infrastructure spending and strategic urban planning. The sharp rise in capital expenditure and focus on Tier II and Tier III cities will encourage planned development in emerging urban centres, which is critical for meeting future housing demand. Additionally, reforms in NBFCs, improved banking health, and enhanced access to bond markets will support timely project execution and funding stability. Simplification of tax procedures and clarity for foreign investors further strengthen the sector’s outlook.

Mr. Shilpin Tater, Managing Director, Superb Realty, highlighted the government’s intent to monetize and recycle under-utilized land and real estate assets of CPSEs and public entities through dedicated REITs as a landmark structural reform for the real estate sector. This move signals a clear shift from traditional ownership to efficient asset management, allowing high-quality public assets to be professionally managed, listed, and unlocked for investment. Dedicated CPSE REITs will significantly deepen India’s REIT market by introducing a sizeable pool of institutional-grade assets, improving transparency, liquidity, and pricing efficiency across the real estate ecosystem.

Backed by recent regulatory reforms such as SEBI’s reclassification of REITs as equity instruments, this initiative is expected to attract stronger participation from both domestic and global institutional investors. As capital is recycled through market-led vehicles, dependence on bank financing for real estate projects will reduce, governance standards will improve, and long-term project financing will become more sustainable. Over time, this mechanism can set valuation benchmarks, strengthen capital market integration with real estate, and support urban regeneration and commercial property demand across Tier I as well as emerging Tier II and III cities.

Additionally, investment incentives for digital infrastructure and data centres will open up new growth avenues for commercial real estate, particularly in urban and emerging city clusters. The Budget’s emphasis on infrastructure-led growth and urban expansion—through high-speed rail corridors, the push towards City Economic Regions, and continued infrastructure investments—will enhance last-mile connectivity, improve liveability, and increase the viability of residential and mixed-use developments in fast-growing locations and well-connected urban pockets.

Ms. Shraddha Kedia-Agarwal, Director, Transcon Developers, noted that the Union Budget 2026-27 underscores the government’s commitment to strengthening urban infrastructure and financial systems, which directly supports real estate growth. Increased capital expenditure and sustained infrastructure momentum will enhance connectivity, reduce congestion, and improve quality of life in urban centres, thereby boosting residential demand. The focus on financial sector reforms, simplified tax compliance, and investor-friendly policies will improve liquidity and transparency across the sector. Measures such as REIT expansion, municipal bond incentives, and simplified processes for NRIs will attract long-term capital and reinforce confidence in India’s real estate market as a stable, growth-oriented investment destination.

Mr. Gaurav Varma, Director, ORA Group, stated that Budget 2026-27 signals a clear commitment to infrastructure-driven urbanisation and regional development. The government’s continued focus on Tier II and Tier III cities will accelerate land development, planned townships, and long-term real estate appreciation in emerging markets. The proposed high-speed rail corridors will act as powerful growth catalysts, opening up new corridors for residential, industrial, and mixed-use development. Additionally, simplified compliance for NRI property transactions and incentives for digital infrastructure will attract both domestic and foreign investment into Indian real estate. Overall, the Budget lays a strong foundation for early movers in developing growth markets, reinforcing the long-term investment potential of India’s expanding urban landscape.

Mr. Dhruman Shah, Promoter, Ariha Group, emphasized that the Union Budget 2026-27 provides renewed momentum to the real estate sector through its strong infrastructure push and city-focused growth strategy. Improved urban connectivity, targeted investment in economic corridors, and enhanced municipal financing will help create more organized and liveable urban spaces. Continued focus on public capital expenditure will stimulate demand for quality housing and commercial spaces in emerging markets. The push towards REITs, municipal bonds, and improved banking health will enhance funding avenues and reduce execution risks for developers. Additionally, tax simplification and investor-friendly reforms for NRIs and foreign investors will broaden the buyer base, reinforcing confidence in India’s real estate sector. The Budget’s emphasis on economic resilience and urban infrastructure will translate into steady housing demand and improved buyer confidence.

Mr. Nihar Jayesh Thakkar, Founder, The Mandate House Pvt. Ltd., concluded that this budget signals structural maturity in India’s growth strategy. The scale-up of public capital expenditure, expansion of infrastructure financing through REITs and InvITs, and the focus on Tier II and Tier III growth centres indicate a shift from metro-centric development to a more balanced national urban ecosystem. The proposed Infrastructure Risk Guarantee Fund is a timely intervention that will de-risk infrastructure projects and attract more private investment. Overall, the Budget’s comprehensive approach to urban and economic development will drive sustainable growth and enhance the real estate sector’s long-term prospects.