In the Union Budget 2026–27, Finance Minister Nirmala Sitharaman has presented a vision of renewed optimism for India's real estate sector, with a strong emphasis on affordable housing, infrastructure-led development, and expansion across Tier 1 and Tier 2 cities. Presenting the Budget in the Lok Sabha, Sitharaman stressed that the government will continue to prioritize "reforms over rhetoric" as India advances on its path toward becoming a Viksit Bharat.
Infrastructure Risk Guarantee Fund: A Game-Changer for Real Estate
One of the most significant announcements for the real estate and infrastructure ecosystem is the proposal to establish an Infrastructure Risk Guarantee Fund. This fund aims to provide prudentially calibrated public credit guarantees to lenders, particularly during the high-risk phases of infrastructure development and construction. This strategic move is expected to strengthen lender confidence and encourage greater private sector participation in real estate projects.
For private developers, this measure could ease access to capital, improve credit flow, and reduce financing bottlenecks that often delay large-scale housing and infrastructure initiatives. The policy intent clearly signals the government's focus on crowding in private investment rather than relying solely on public expenditure, addressing long-standing concerns around project financing risks.
Asset Monetisation and Rights-Based Instruments
The Budget also proposes to accelerate the recycling of significant real estate assets held by Central Public Sector Enterprises (CPSEs) through the creation of dedicated rights structures. Over the years, rights-based instruments have emerged as an effective tool for unlocking value from underutilised assets. This initiative could free up capital for fresh investments while improving the productive use of existing land and built assets.
Focus on Tier 1 and Tier 2 Cities
Importantly, Finance Minister Sitharaman 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.
Industry Reactions and Expert Insights
Pyush Lohia, Director of Lohia Worldspace, commented, "The Union Budget 2026 is positive news for the real estate and infrastructure sectors. The government's capital expenditure target of ₹12.2 lakh crore on public projects should help accelerate project completion and improve connectivity. Good infrastructure boosts housing demand, so this spending is beneficial for homebuyers. The creation of REITs for CPSE-owned land is a smart move to utilize underused assets and strengthen the commercial real estate market. The new Infrastructure Risk Guarantee Fund is particularly valuable for long-term projects requiring sustained financing."
Earlier, real estate industry experts had advocated for a focus on Tier 1 and Tier 2 city development and affordable housing provisions. Dhruv Sarkar, Chief Business Operations, and Sahil Marshall, Chief Wealth Maker at Bhaarat Wealth Group, noted, "This Union Budget should prioritize enhancing roads connectivity and accessibility, especially in emerging Tier 1 cities, to boost land appreciation and livability. Additionally, streamlining land title clearance paperwork is crucial to prevent revenue losses from stamp duty and enable optimal land value realization."
The Union Budget 2026–27 thus sets a promising stage for the real estate sector, blending financial safeguards with strategic urban development to fuel India's economic progress.
