Budget 2026 Sets the Stage for Next Phase of India’s Real Estate Growth

India’s real estate sector received important support in Union Budget 2026–27, with the government focusing on long-term reforms rather than short-term relief measures.
The Budget aims to strengthen urban infrastructure, improve capital flow and simplify real estate transactions, supporting steady growth in both housing and commercial property markets.

One of the key announcements is the government’s plan to accelerate monetisation of central public sector enterprise (CPSE) real estate assets through Real Estate Investment Trusts (REITs). REITs help unlock value from completed public assets while generating regular income and freeing capital for new infrastructure projects. This move is expected to attract greater institutional investment into the sector.

On the tax front, the government announced income tax exemption for individuals and Hindu Undivided Families (HUFs) on income received from compulsory land acquisition under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, except acquisitions covered under Section 46. The move is expected to reduce disputes and provide relief to landowners affected by public infrastructure projects.

Compliance rules have also been simplified for property transactions involving non-residents. Resident individuals or HUFs purchasing property from non-residents will no longer need to obtain a Tax Deduction and Collection Account Number (TAN) for deducting tax at source. Instead, transactions can now be reported using PAN, making the process easier and aligning it with resident-to-resident transactions.

Urban development also received renewed focus through the introduction of City Economic Regions (CERs), aimed at developing Tier II and Tier III cities as well as temple towns. The government proposed funding of ₹5,000 crore per CER over five years, to be deployed through a reform-linked, results-based mechanism. This initiative is expected to improve infrastructure and basic amenities in emerging cities while creating new economic growth centres.

The Budget also continues to support infrastructure development in cities with populations exceeding five lakh, many of which are evolving into key regional growth hubs. Improved connectivity and urban infrastructure are likely to unlock new real estate demand corridors beyond major metropolitan markets.

In addition, a Scheme for Enhancement of Construction and Infrastructure Equipment (CIE) has been proposed to strengthen domestic manufacturing of advanced construction equipment. The scheme will support equipment required for high-rise buildings, fire safety systems, and machinery used in metro and road projects, helping speed up project execution.

Another proposed amendment under the Income-tax Act, 2025 allows the annual value of a property to be treated as nil for up to two years, providing relief to property owners dealing with unsold inventory.

Industry experts believe that policy clarity, infrastructure expansion and asset monetisation initiatives will support long-term growth in the real estate sector and strengthen its contribution to India’s economic development.

Overall, Budget 2026–27 signals a shift toward structural reforms aimed at improving liquidity, easing compliance and strengthening urban infrastructure. The real impact, however, will depend on how effectively these measures are implemented and how quickly they translate into new housing supply, infrastructure creation and sustained investment growth across the country.

By Sana Khan
Executive Editor, Realty Quarter
Mumbai