Budget 2026: Tier-II Cities and Premium Housing in the Real Estate Spotlight

As the Union Budget 2026 approaches on February 1, India’s real estate sector is looking beyond traditional metros and placing a sharper focus on Tier-II and emerging urban markets, alongside premium and luxury housing. Developers believe the upcoming Budget could play a defining role in shaping demand, investment flows, and long-term sustainability of the sector, especially as infrastructure-led growth reshapes housing preferences across the country.

Tier-II Cities Move Into the Spotlight

Industry leaders agree that India’s housing momentum is increasingly being driven by Tier-II cities, which offer a compelling mix of affordability, improving infrastructure, and rising employment opportunities. According to Rajat Bokolia, CEO, Newstone, cities such as Sonipat are emerging as strong real estate investment destinations within the NCR ecosystem.

“With better connectivity through RRTS, Metro extensions, UER-II, and the Sonipat Master Plan 2031, Tier-II cities like Sonipat are attracting both homebuyers and developers,” Bokolia says. He adds that compared to markets such as Gurugram or Noida, Sonipat offers more affordable pricing, while also benefiting from industrial growth and job creation.

From a policy perspective, Bokolia expects the Budget to consider raising affordable housing price limits, increasing home loan tax deductions, and rationalising GST or stamp duties. “Such measures would directly stimulate demand and accelerate growth in Tier-II cities, potentially leading to post-budget price appreciation and making these markets attractive for investors,” he notes.

Echoing this view, Abhay Mishra, President & CEO, Jindal Realty, believes the government must formally acknowledge the structural shift underway. “India’s housing growth is no longer metro-centric. Tier-II cities are now leading the next phase, supported by stable prices and strong infrastructure,” he says. Mishra expects Budget 2026 to prioritise urban infrastructure spending, homebuyer tax support, and affordable housing incentives to unlock faster growth in these markets.

He points out that Sonipat’s rise is closely linked to expressway connectivity, Namo Bharat (RRTS), and industrial expansion, which are steadily driving residential demand. “If policy attention and capital allocation flow toward emerging hubs like Sonipat, these cities can become the real engines of India’s real estate growth,” Mishra adds.

Infra-Led Growth and Policy Continuity

Developers operating across multiple geographies highlight that Tier-II and Tier-III cities are now competing with metros on lifestyle, amenities, and project quality, while remaining significantly more affordable. Yashank Wason, Managing Director, Royal Green Realty, says the upcoming Budget is a critical opportunity to reinforce this trend.

“These cities are offering infra-led projects, larger homes, and superior amenities at reasonable prices, attracting both end-users and investors,” Wason explains. He notes that large developers are increasingly entering non-metro markets, aided by policy easing and recent GST relief, allowing buyers to upgrade their lifestyles without migrating to bigger cities.

Looking ahead, Wason says the industry is seeking further tax incentives, clearer GST norms, and continued policy stability to ensure long-term investor confidence. “Sustained policy support is essential to make real estate a safe, transparent, and long-term investment avenue,” he adds.

Premium and Luxury Housing: A Shift in Expectations

While affordability and Tier-II growth dominate one side of the market, the premium and luxury real estate segment is also setting distinct expectations from Budget 2026. Navdeep Sardana, Founder, Whiteland Corporation, says the focus has shifted from basic tax sops to fiscal maturity and capital efficiency.

“After strong absorption in office and premium residential segments in 2025, the industry is now looking for policy measures that support high-value transactions,” Sardana explains. One of the key demands from ultra-high-net-worth individuals (UHNI) is the re-evaluation of the ₹10 crore cap on capital gains reinvestment under Sections 54 and 54F.

“Increasing this limit is crucial to enable smoother movement of uber-luxury properties and unlock liquidity at the top end of the market,” he says. Sardana also expects Budget 2026 to encourage ESG-compliant luxury developments and smart housing technology, potentially through green financing incentives or tax credits.

Liquidity, Financing, and NRI Flows

Access to capital remains another critical theme. Developers are hoping the Budget will introduce policies that simplify financing, improve liquidity, and lower barriers to capital access, especially for credible players. Sardana adds that for NRI investors, further rationalisation of TDS on property sales could significantly enhance foreign inflows into India’s residential market.

“With residential real estate expected to dominate the 2026 landscape, easing capital movement—both domestic and international—can provide a strong growth push,” he notes.

A Budget That Can Shape the Next Cycle

Taken together, industry expectations from Budget 2026 reflect a real estate sector at an inflexion point. On one hand, Tier-II cities are emerging as the next growth frontier, driven by infrastructure, affordability, and lifestyle upgrades. On the other hand, premium and luxury housing is seeking policy sophistication to support high-value transactions and sustainable development.

If the Budget manages to balance homebuyer incentives, infrastructure spending, financing reforms, and ESG-driven growth, developers believe it could set the tone for a long, stable upcycle in Indian real estate, with Tier-II cities firmly at its core.