Union Budget 2026–27 is best read as an exercise in balance rather than bold experimentation. Finance Minister Nirmala Sitharaman has opted for continuity in macroeconomic policy, prioritising fiscal discipline while continuing to channel public money into long-term growth drivers. For the real estate sector, the Budget does not deliver immediate relief measures, but it reinforces the structural pillars that underpin demand, capital formation and urban expansion.
Industry leaders broadly agree that this is a capex-driven, asset-centric Budget. It seeks to create enabling conditions for growth rather than directly stimulate consumption. In doing so, it places infrastructure, manufacturing, digital capacity, tourism and decentralised urbanisation at the centre of India’s medium-term economic strategy.
Infrastructure As The Anchor Of Economic Confidence
The most consistent thread running through Budget 2026 is the sustained push on infrastructure. The capital expenditure outlay has been increased to Rs. 12.2 lakh crore for FY27, signalling the government’s commitment to long-term asset creation despite global uncertainty.
Shishir Baijal, Chairman and Managing Director of Knight Frank India, sees this as a stabilising force for the economy. According to him, the Budget signals continuity in India’s macro-growth trajectory, maintaining a stable environment for investors and keeping buyer sentiment measured and pragmatic. The focus on connectivity and urban economic regions, especially in tier-2 and tier-3 growth corridors, provides a supportive backdrop for residential and logistics demand over the medium term.
From a real estate lens, infrastructure spending directly influences land viability, project feasibility and absorption cycles. High-speed rail corridors, dedicated freight corridors, inland waterways and urban cluster development together reshape how cities expand and how capital flows into property markets.
Tier-2 And Tier-3 Cities Move From Fringe To Focus
A notable shift reinforced by this Budget is the growing importance of tier-2 and tier-3 cities. As capacity tightens in select tier-1 markets, occupiers and investors are increasingly evaluating emerging cities as viable alternatives.
Anshul Jain of Cushman & Wakefield notes that the Budget places growing emphasis on these cities, creating an additional growth lever for real estate alongside tier-1 markets that continue to anchor activity across asset classes. He highlights that GCCs and start-ups are already assessing tier-2 locations, supported by emerging talent pools, relatively lower real estate costs, improving infrastructure and a better quality-of-life proposition.
This decentralisation of demand is expected to support office, residential, logistics and mixed-use developments, particularly along new infrastructure corridors. The shift also reduces pressure on over-saturated metros, allowing for more balanced urban growth.
Manufacturing And Industrial Real Estate Gain Momentum
Manufacturing remains central to the government’s growth strategy. Budget 2026 outlines targeted support for sectors such as biopharma, electronics manufacturing, rare earth mining and container manufacturing, all of which have strong real estate linkages.
Badal Yagnik, CEO and Managing Director of Colliers India, describes the Budget as a measured attempt to balance long-term growth ambitions with inclusivity across regions and economic segments. He points out that manufacturing scale-up, infrastructure augmentation and the development of city economic regions will directly benefit Indian real estate.
According to him, the budgetary focus is likely to drive demand from sectors such as textiles, healthcare, semiconductors, rare earths, as well as firms in the AVGC and artificial intelligence domains. This translates into rising demand for industrial parks, R&D centres, logistics facilities and specialised commercial assets.
Data Centres Emerge As A Strategic Real Estate Asset
One of the most consequential announcements for commercial real estate is the tax holiday for foreign cloud service providers till 2047, coupled with safe-harbour provisions.
Anshul Jain calls this a particularly significant move for India, which remains structurally under-penetrated in data centre capacity relative to its digital consumption. He believes the measure will incentivise global hyperscalers and accelerate capacity build-out, although sustained growth will depend on parallel progress in power availability, water security and infrastructure readiness.
Anuj Puri of ANAROCK adds that while tier-1 cities such as Mumbai, Chennai and Bengaluru will continue to dominate data centre development, tier-2 cities like Jaipur and Vijayawada are likely to see increasing traction. Over time, this could reshape commercial real estate demand patterns across regions.
REITs And Asset Monetisation: Deepening Capital Markets
The Budget’s proposal to monetise CPSE-owned assets through REITs is being viewed as a structural positive for both capital markets and real estate.
Anuj Puri highlights that nearly Rs. 10 lakh crore worth of assets across railways, ports, power transmission, telecom towers and government properties could be unlocked through this route. The objective is to attract institutional capital without surrendering control over strategic assets, while generating recurring revenue for CPSEs.
Anshul Jain also flags the potential of pooling government land and real estate holdings in prime metropolitan locations through REIT structures. If executed effectively, this could significantly deepen the REIT market, improve transparency and create new investment opportunities for both institutional and retail investors.
Tourism, Education And Alternative Assets Gain Ground
Beyond core real estate segments, Budget 2026 places strong emphasis on tourism, education townships and medical value tourism.
Dr. Samantak Das of JLL describes the Budget as a three-pronged blueprint focused on growth sectors, infrastructure and services. He points out that incentives for biopharma, electronics manufacturing, education townships and medical tourism hubs are far-reaching in their impact.
Tourism-focused initiatives, including the development of iconic sites and temple towns, are expected to drive demand for hospitality assets such as hotels, guest houses and allied infrastructure. Badal Yagnik adds that the focus on training, skill development and tourism infrastructure will have a positive domino effect on primary housing and second homes in these regions.
Affordable Housing: A Persistent Blind Spot
Despite its wide-ranging scope, the Budget leaves a critical segment largely untouched. Affordable housing, which once accounted for a significant share of residential sales, receives no direct fiscal incentives.
Anuj Puri notes that the segment’s sales share has fallen sharply since the pandemic, declining from over 38 percent in 2019 to around 18 percent in 2025. He argues that the absence of interest stimulants or high-impact measures for buyers and developers represents a missed opportunity, particularly given affordable housing’s role in inclusive growth.
Shishir Baijal echoes this concern, stating that while infrastructure-led growth is welcome, the lack of real estate-specific fiscal incentives, especially for affordable housing, remains disappointing.
A Budget That Strengthens Foundations, Not Short-Term Sentiment
Union Budget 2026 is not designed to deliver immediate relief to the real estate sector. Instead, it focuses on strengthening the economic and infrastructural foundations that sustain long-term demand.
As Anshul Jain summarises, the Budget supports real estate by reinforcing structural drivers such as infrastructure, manufacturing, digital capacity and decentralised urban growth. While the absence of direct housing incentives is notable, the broader policy framework signals stability, continuity and long-term opportunity for real assets across India’s evolving urban landscape.
