Real Estate Stocks Plunge Amidst Budget Disappointment, REITs Gain Traction

Shares of real estate companies experienced a sharp decline following the presentation of the Union Budget for 2026. Investors reacted negatively to the absence of fresh incentives or policy measures specifically aimed at the sector. The Nifty Realty index recorded a drop of up to 10% during intraday trading, reflecting widespread disappointment among market participants over the budget’s limited addressal of the industry’s concerns.

Market analysts noted that expectations had been building for targeted support for the real estate sector, particularly in the form of tax relief, incentives for affordable housing, or regulatory easing to boost residential demand. However, the budget did not introduce direct benefits for housing developers or address several long-standing industry demands, leading to a selloff in realty-related stocks.

Among the hardest-hit companies were several prominent real estate developers whose shares fell sharply on the day. The declines came despite broader stability in the equity markets, indicating that the weakness was concentrated within the real-estate segment.

While property development firms faced pressure, Real Estate Investment Trusts (REITs) saw modest gains, with some units rising up to 3%. Market observers attributed this divergence to the budget’s sustained emphasis on urban infrastructure development and continued backing of asset monetization strategies. These policy measures are expected to benefit the commercial real estate segment, which is more directly tied to REITs.

The budget reiterated the government’s commitment to infrastructure spending, including urban renewal projects and transportation enhancements, which are likely to support demand for office space and logistics assets—areas in which REITs are commonly invested. In addition, provisions aimed at easing regulations around asset monetization through REIT structures were viewed positively by investors, supporting price increases in those instruments.

The undervaluation in developer stocks came despite earlier optimism that the budget would include measures to stimulate residential demand, ease liquidity constraints, and incentivize private investment in housing projects. Reform proposals related to stamp duty rationalization or increased tax deductions for homebuyers were notably absent, further dampening sentiment in the housing market.

Sector participants had also called for amendments to specific tax provisions and more clarity around the implementation of past policy announcements. With these issues unaddressed, analysts suggested that uncertainty remains for traditional real estate firms in the near term.

Despite the pressure on residential real estate developers, the budget’s broader push toward infrastructure and urban development could have long-term implications for commercial real estate. Investments in transport, smart cities, and digital infrastructure are likely to have an indirect impact on property markets by improving connectivity and increasing land values in select regions.

The broader equity market showed mixed trends, with indices outside the real estate sector experiencing modest movements. Industry experts said the market reaction suggests a divergence in outlook between primary real estate development and income-generating real estate assets such as those held by REITs.

As trading continued, volatility in the real estate sector remained elevated, with market participants closely monitoring subsequent policy updates and potential state-level initiatives that might support housing and development in the coming quarters.