Budget 2026: Realty Stocks Plunge Amid Budget Disappointments, REITs Rally

Realty stocks plunged sharply following the Budget 2026, which failed to introduce major incentives for the sector. The Nifty Realty index fell by 4.6%, with nine out of ten stocks in the index trading in the red. Developers were heavily impacted, reflecting unmet expectations in the housing market.

Among the top intraday losers were Lodha Developers and Prestige Estates Projects, whose shares declined by 10% and 8%, respectively. Other major players such as Godrej Properties, DLF, Sobha, Oberoi Realty, Phoenix Mills, Signatureglobal (India), and Brigade Enterprises also saw their stocks fall by up to 7%.

One of the primary expectations from the budget was an increase in the cap on deduction for interest paid on home loans under section 24(b) for self-occupied properties. The current cap is Rs 2 lakh, and the industry had hoped for it to be raised to Rs 3-5 lakh. This increase was seen as a potential boost to demand in the affordable and mid-income housing segments.

Another key demand was the redefinition of affordable housing. Nuvama Institutional Equities had anticipated that the government would redefine 'affordable' in terms of price band or unit size to attract a reduced 1% GST rate on the sale of under-construction properties. This change was expected to provide a significant stimulus to housing demand.

Bhavya Bagrecha, Fund Manager at Bharat Bhoomi Fund, suggested that the current cap on affordable housing at Rs 45 lakh should be increased to Rs 75-85 lakh for metro cities like Mumbai and Delhi-NCR, and Rs 60-65 lakh for non-metros. She noted that it is virtually impossible to find a home within the Rs 45 lakh limit in major urban centers, rendering many buyers ineligible for affordable housing benefits like lower GST rates.

The extension of the time limit and the deduction amount under section 80EEA was another demand. Nuvama believed that implementing this could give a fresh impetus to the affordable housing segment.

In contrast, Real Estate Investment Trusts (REITs) saw a positive trend, with shares of Brookfield India Real Estate Trust gaining 2.6%, Nexus Select Trust climbing nearly 3%, and Embassy Office Parks REIT up by 1%. Finance Minister Nirmala Sitharaman emphasized the government's continued focus on developing infrastructure in cities with over 5 lakh population, including Tier II and Tier III cities. She proposed accelerating the recycling of significant real estate assets of Central Public Sector Enterprises (CPSEs) through dedicated REITs.

Sitharaman highlighted the government's efforts over the past decade to enhance public infrastructure through new financing instruments such as Infrastructure Investment Trusts (InVITs) and REITs, as well as institutions like the National Investment and Infrastructure Fund (NIIF) and the National Asset Management Company (NABFID).