Union Budget 2026: Signals renewed momentum for Real Estate and focus on Tier 1 and Tier 2 cities

In the Union Budget 2026–27, Finance Minister Nirmala Sitharaman has proposed a renewed optimism for India’s real estate sector, particularly for affordable housing, infrastructure-led development, and expansion across Tier 1 and Tier 2 cities. Presenting the Budget in the Lok Sabha, Finance Minister Nirmala Sitharaman emphasized that in the coming financial year the government will continue to prioritise “reforms over rhetoric,” as India charts its path towards becoming a Viksit Bharat.

In what may be considered an important announcement for the real estate and infrastructure ecosystem is the proposal to set up an Infrastructure Risk Guarantee Fund. The fund aims to provide prudentially calibrated public credit guarantees to lenders, especially during the high-risk phases of infrastructure development and construction. This move is expected to strengthen lender confidence and encourage greater private sector participation in real estate development. This move will address the long-standing concern around project financing risks, often faced by private developers.




For private developers, the measure could ease access to capital, improve credit flow, and reduce financing bottlenecks that often delay large-scale housing and infrastructure projects. The policy intent clearly signals the government’s focus on crowding in private investment rather than relying solely on public expenditure.

Another key highlight is the government’s push towards asset monetisation. Over the years, rights-based instruments have emerged as an effective tool for unlocking value from underutilised assets. The Budget proposes to accelerate the recycling of significant real estate assets held by Central Public Sector Enterprises (CPSEs) through the creation of dedicated rights structures. This could free up capital for fresh investments while improving the productive use of existing land and built assets.

Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE says, ""The decision to include assets of Central Public Sector Enterprises (CPSEs) into the Real Estate Investment Trust (REIT) structure is a significant shift and is likely to have a multi-layered impact on the asset class from deepening the market, as these entities have large assets, to increasing the participation of institutional investors, including mutual funds. Since CPSEs are often mandated to provide steady returns, their REITs are expected to focus on high-yield, stable income distributions."

Importantly, the Finance Minister also underlined a sharper developmental focus on Tier 1 and Tier 2 cities. As urbanisation expands beyond metropolitan centres, this emphasis could support more balanced regional growth, ease pressure on mega cities, and create new hubs for housing, employment, and infrastructure development.

Taken together, the Budget’s real estate-related measures point towards a more stable and confidence-driven environment for developers, lenders, and investors. While execution will remain critical, the policy direction suggests a year where affordable housing, infrastructure expansion, and asset monetisation could gain fresh momentum—particularly in emerging urban markets that are increasingly shaping India’s growth story.

Pyush Lohia Director Lohia Worldspace, says, "The Union Budget 2026 is news for the real estate and infrastructure sectors. It tells us that things will be okay. The government will spend money, ₹12.2 lakh crore on public projects. This should help get things done faster and make it easier to get around and finish projects on time. When infrastructure is good people want to buy houses. So the government spending money on infrastructure is a thing for people who want to buy homes. The Union Budget 2026 and its plans for infrastructure will help people feel confident about buying homes. The government has decided to create companies called REITs for the land owned by Central Public Sector Enterprises. This is an idea because it will help use land that is not being used properly and it will also make the commercial real estate market stronger. The new Infrastructure Risk Guarantee Fund is also a thing. It will help projects that take a long time to complete and need money for a long time."

Earlier, we spoke to real estate industry experts and they agreed that this year government should focus on the development of Tier 1 and Tier 2 Indian cities and make provision so that housing becomes affordable.

According to Dhruv Sarkar, Chief Business Operations & Sahil Marshall, Chief Wealth Maker at Bhaarat Wealth Group, "This Union Budget, the government should prioritise increasing the overall budget for roads connectivity and accessibility across the country, especially in areas that are in the process of becoming Tier 1 cities. This would not only enhance the land appreciation but also push towards structured infrastructure and facilities can be built around those areas improving the livability. Similarly on one hand connectivity increases the value creation for the society as a whole on the other hand there should be a policy around streamlining the land title clearance paperwork. Due to irregular title of land our government eventually faces a revenue hit from stamp duty, the owner of the land can never actually make the best value out of it, in such cases it is a loss loss scenario for everyone associated with it. Hence streamlining the title clearances should be considered in the Union Budget of 2026"