Union Budget 2026: Infrastructure Boost Paves Way for Real Estate Growth in Tier-2 and Tier-3 Cities

The Union Budget 2026-27 has allocated a significant capital expenditure of Rs. 12.2 lakh crore, emphasizing the government's commitment to infrastructure development. This substantial investment is expected to have a profound impact on the real estate sector, particularly in Tier-2 and Tier-3 cities. Rajjath Goel, Managing Director of MRG Group, highlights the positive ripple effects of this infrastructure push. ‘The budget’s focus on infrastructure will not only make developments more viable but also enhance delivery timelines and asset quality. This predictable and well-planned infrastructure creates a stronger, more resilient market for developers, investors, and buyers alike.’

Pankaj Jain, Founder and CMD of SPJ Group, adds, ‘The Infrastructure Risk Guarantee Fund is a timely measure that will help ease financial constraints, particularly for projects linked to urban redevelopment and regional connectivity. When backed by the government’s increased capital expenditure, this financial assurance can significantly improve lender confidence and accelerate project execution. In metro cities, large-scale infrastructure upgrades will directly influence real estate viability, enhancing asset quality and unlocking redevelopment potential.’

Sanjay Sharma, Director of SKA Group, emphasizes the importance of execution efficiency. ‘The scheme to enhance construction and infrastructure equipment can help developers improve productivity, manage costs better, and deliver projects on time. This is increasingly important for homebuyers and investors. The expansion of infrastructure across metros, Tier-2, and Tier-3 cities will strengthen growth corridors, catalyzing residential and commercial development. Improved connectivity through high-speed rail will further integrate regional markets, widening the real estate opportunity landscape.’

Shyamrup Roy Choudhury, Founder & Managing Director of Aura World, points out the clarity provided for residential project planning. ‘The increase in capital expenditure to Rs. 12.2 lakh crore, along with initiatives such as City Economic Regions with Rs. 5,000 crore allocation per region over five years, provides clearer visibility for residential project planning. Improved connectivity and risk mitigation make non-metro cities more viable for real estate development. The setting up of the Infrastructure Risk Guarantee Fund will also accelerate further expansion.’

Sanchit Bhutani, Managing Director of Group 108, notes the positive impact on commercial real estate. ‘The Union Budget’s continued focus on infrastructure and capital expenditure is a positive step for commercial real estate. Initiatives like the Infrastructure Risk Guarantee Fund will help improve funding confidence and make large office projects more viable. Better connectivity through high-speed rail corridors will support the growth of Grade A office spaces across major business markets, creating a strong foundation for long-term demand.’

Yash Miglani, MD of Migsun Group, highlights the development potential in Tier-2 and Tier-3 cities. ‘The Union Budget 2026 represents a strong thrust towards the development of Tier-2 and Tier-3 cities, which will be the source of the next wave of growth in the urban and commercial sectors. Improved connectivity, urban services, and logistics will make these markets far more viable for organised commercial and mixed-use developments. The launch of the Infrastructure Risk Guarantee Fund is a welcome step, as it reduces funding risks and promotes private-sector investment in long-gestation projects.’

Saurab Saharan, Group Managing Director of HCBS Developments, views the budget as a balanced push towards infrastructure-led growth. ‘The introduction of dedicated REITs and the Infrastructure Risk Guarantee Fund is particularly significant, as it improves funding confidence and reduces execution risk for large-scale projects. Coupled with the increased capital expenditure of Rs. 12.2 lakh crore and continued focus on infrastructure development, these measures create a stable environment for the entire real estate sector. Improved connectivity and infrastructure in Tier-2 and Tier-3 cities are expected to unlock new residential and commercial opportunities.’

Mohit Batra, Regional Director of Realistic Realtors, sees the budget as a signal of policy continuity. ‘The budget provides a strong signal of policy continuity and long-term stability for the real estate sector. Measures such as the introduction of dedicated REITs and the Infrastructure Risk Guarantee Fund will help improve funding confidence and reduce execution risks for large-scale projects, making the sector more predictable for investors and developers. Combined with the increased capital expenditure and continued focus on infrastructure, the budget is likely to drive better connectivity, more organised urban expansion, and stronger fundamentals across both residential and commercial markets.’

Preksha Singh, CEO of Agrasheel Infratech, emphasizes the creation of new employment and business opportunities. ‘Supporting infrastructure and professional institutions in smaller cities through the budget will create new employment and business opportunities. When transport, roads, and urban amenities are strengthened together, the real estate sector witnesses balanced and sustainable growth. Measures such as REITs will help developers overcome funding constraints, making Tier-2 and Tier-3 cities better options for both end-users and investors.’

Ashok Singh Jaunapuria, MD & CEO of SS Group, underscores the acceleration of projects. ‘Budget 2026 has placed special emphasis on infrastructure, urban development, and the real estate sector. This will accelerate the pace of projects, strengthen investor confidence, and open up new opportunities across residential, commercial, and mixed-use segments. Overall, the budget will help propel the real estate sector towards sustainable growth and innovation.’

Viren Mehta, Founder & Director of ElitePro Infra, highlights the long-term real estate growth. ‘Recent policy initiatives outlined in the budget solidify infrastructure as the key driver of real estate growth in the next few years. Increased capital expenditure, focus on REITs for asset monetisation of CPSE lands, and the setting up of the Infrastructure Risk Guarantee Fund and City Economic Regions with Rs. 5,000 crore allocation per region over five years, including temple towns and tier 2 and 3 cities, will ensure that the real estate horizon expands well beyond its core areas. This budget envisages long-term real estate growth that capitalises on India’s economic development.’

The budget’s infrastructure-centric approach has created greater certainty for real estate planning and investment. With growth expected to spread to smaller cities and new economic hubs, developers are looking at a more balanced and sustainable growth opportunity. The focus on decentralisation in urbanisation is expected to bring about a paradigm shift in demand and create new opportunities in emerging markets.