The Union Budget 2026-27 has underscored the government’s long-term vision for deepening capital markets and unlocking value in India’s real estate sector. By emphasizing asset recycling, infrastructure-linked investments, and regulatory reforms, the budget aims to strengthen the role of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) as mainstream investment vehicles. Analysts and industry experts believe these measures could reshape real estate financing, expand investor participation, and catalyze urban and regional development.
Saurabh Bhagat, Chief Financial Officer at Colliers India, explains the nuance, “AIFs and REITs typically invest through debt instruments and preference shares. The current proposal envisages Portfolio Investment by REITs (PROI) investing in equity instruments, which is likely to have a greater impact on the equity markets. AIFs and REITs are therefore unlikely to see any material impact, particularly as these investment vehicles already enjoy significant tax advantages, especially when investments are routed through GIFT City.”
Bhagat’s assessment suggests that while the equity markets may react to new inflows, the structural advantages of REITs and AIFs remain intact, preserving their appeal for long-term investors.
Asset Monetisation and Capital Market Deepening
Tanuj Shori, Founder and CEO of Square Yards, emphasized the transformative potential of REITs and InvITs in unlocking value from public sector real estate. “The Budget’s continued focus on capital market deepening and asset recycling, including monetisation of public sector real estate through REIT structures, reinforces the role of REITs and InvITs as mainstream investment vehicles. We are likely to see a steady rise in new REIT and InvIT listings over the medium term, covering office assets, retail centres, logistics parks, data centres, and infrastructure portfolios.”
Shori added that for retail investors, these vehicles expand access to high-quality, income-generating assets that were previously available only to institutions. “They offer the dual benefit of regular yield visibility and participation in long-term asset appreciation, while providing liquidity through listed markets. Over time, these investment engines will also improve transparency, valuation discipline, and governance across the real estate ecosystem, strengthening overall investor confidence.”
Strengthening Real Estate Growth Ecosystem
Shrinivas Rao, FRICS, CEO of Vestian, highlighted the broader strategic vision of the budget. “The Union Budget 2026 outlines a clear roadmap towards achieving Viksit Bharat by 2047, with emphasis on accelerating the digital economy, upskilling the future workforce, strengthening infrastructure, promoting tier-2 and tier-3 cities, and reforms to ease financing from foreign investors. The budget strengthens the growth ecosystem of the real estate sector by enhancing connectivity between emerging and established urban centres and by promoting the development of economic regions.”
Rao noted that these measures are likely to attract global corporate centres (GCCs) to tier-2 and tier-3 cities, unlocking cost efficiencies and long-term growth opportunities. Additionally, he highlighted the positive outlook for the data centre and hospitality sectors, driven by tax holidays and focused tourism initiatives.
Infrastructure-Led Growth and Capital Market Reforms
Sudarshan Lodha, Co-founder & CEO of Strata, described REITs as a critical bridge between infrastructure assets and long-term investors. “The Union Budget 2026–27 underscores the government’s long-term commitment to infrastructure-led growth and capital market deepening, key to sustaining India’s economic momentum. Proposals such as the Infrastructure Risk Guarantee Fund, asset recycling through dedicated REITs for CPSEs, and continued infrastructure development across Tier II and Tier III cities reflect a pragmatic approach to unlocking value from public assets while crowding in long-term private capital.”
Lodha added that measures to enhance market liquidity—including a market-making framework for corporate bonds and enabling Non-Resident Indians to invest in Indian equities—are equally encouraging. “Together, these reforms enhance capital efficiency and lay the groundwork for a deeper, more resilient capital market ecosystem,” he said.
Expanding Urban and Tier-2/Tier-3 Markets
Navin Dhanuka, Director at ArisUnitern, emphasized the geographical expansion enabled by the budget. “The Union Budget 2026 marks a clear shift from short-term cyclical support to building a durable growth backbone for Indian real estate. The emphasis on infrastructure, City Economic Regions, and industrial corridors creates a virtuous loop between jobs, housing, and urban expansion. By widening the geographical footprint of cities, the Budget enables housing growth beyond saturated urban cores into well-connected peripheral and Tier-2 markets.”
Dhanuka highlighted that deepening capital markets through REITs and municipal bonds improves long-term funding visibility. These initiatives reduce execution risk, strengthen buyer confidence, and support a resilient, end-user-driven real estate cycle.
Affordable, Sustainable, and Future-Ready Development
Monty Joshi, Co-founder of Sarvam Properties, sees the budget as a turning point for sustainable urbanisation. “The Union Budget 2026-27 marks a turning point for India’s real estate sector, setting the groundwork for sustained growth rather than short-term corrections. The strong thrust on infrastructure, city economic regions, and decentralised industrial development is expanding housing demand beyond metro cores into emerging Tier-2 and Tier-3 markets. For developers, capital access via REITs/municipal bonds, Infrastructure Risk Guarantee Fund, GST simplification, and faster approvals cut execution risks and costs.”
Joshi added that the emphasis on sustainable, green urbanisation aligns with the sector’s focus on affordable, future-ready homes. “As housing demand becomes more end-user driven and geographically diverse, this cycle offers durable value creation for shareholders,” he said.
Unlocking Value for PSUs and Investors
Apurva Muthalia, Business Head – Real Estate at Equirus Family Office, highlighted the benefits of monetising PSU-owned real estate. “The creation of REITs for PSU-owned real estate assets can be a structural positive for both the public sector and capital markets. It enables PSUs to free up capital from their balance sheets while retaining operational control over strategic assets. At the same time, it deepens the REIT market by offering investors access to stabilised, income-generating assets leased to quasi-sovereign entities.”
Muthalia added that this structure benefits retail investors, asset managers, and institutional investors alike, while unlocking significant value for PSUs holding multiple commercial office properties.
Medium-Term Outlook: Expanding Listings and Investor Participation
With the budget focusing on asset recycling and equity-based investments through REITs, experts predict a rise in new listings across asset classes including offices, retail, logistics, and data centres. Shori notes that these mechanisms offer investors predictable yields, liquidity, and participation in long-term asset appreciation. Over time, these structures are expected to enhance transparency, valuation discipline, and governance across the real estate sector, thereby improving investor confidence and market stability.
Sudarshan Lodha highlights that the integration of REITs with the Infrastructure Risk Guarantee Fund and market-making measures for corporate bonds strengthens the entire investment ecosystem. Institutional and retail investors now have safer, yield-generating avenues to participate in India’s growth story, making REITs and InvITs a cornerstone of capital market deepening.
Towards a Resilient, End-User Driven Real Estate Cycle
The combined effect of the budget measures—from infrastructure spending to capital market reforms—is likely to create a more resilient real estate sector. Dhanuka points out that widening the city footprint and supporting peripheral growth helps decongest metro cores while aligning supply with demand. Joshi and Muthalia underline that better access to capital, lower execution risk, and increased investment avenues through REITs and InvITs ensure that developers, investors, and end-users all benefit.
By linking infrastructure, capital markets, and sustainable urbanisation, the Budget 2026 creates a framework for long-term, geographically diverse, and end-user-focused real estate growth. Analysts expect that these measures will not only strengthen investor confidence but also support durable value creation in housing, commercial, and industrial segments across India.
REITs as a Structural Growth Engine
Union Budget 2026-27 marks a decisive step in integrating REITs and InvITs into India’s mainstream investment landscape. By enabling equity participation, unlocking PSU assets, and linking capital markets with infrastructure, the government has laid the foundation for a more transparent, liquid, and resilient real estate ecosystem.
With Tier-2 and Tier-3 markets gaining focus, and infrastructure-led urban development at the forefront, REITs and InvITs are positioned to drive long-term growth, benefit retail and institutional investors, and contribute meaningfully to the vision of Viksit Bharat. The budget’s measures signal a structural shift, moving India’s real estate sector away from cyclical corrections towards a more sustainable, growth-oriented trajectory.
