Real Estate Stocks Experience Significant Rally Following Union Budget 2026 Announcements
Realty stocks have demonstrated a remarkable surge of up to 15% over the past seven trading sessions, following the presentation of the Union Budget 2026. This substantial upward movement reflects renewed investor confidence in the sector, driven by several positive announcements made during the budget presentation.
Budget Presentation and Immediate Market Impact
Finance Minister Nirmala Sitharaman presented the Union Budget on Sunday, February 1, 2026. The market response has been overwhelmingly positive for real estate companies, with the Nifty Realty index climbing 8% on a month-to-date basis in February alone. On Monday, the index recorded a notable single-day gain of 2.75%, signaling strong momentum.
Leading performers in this rally include Godrej Properties, which has emerged as the top gainer with an impressive 15.15% increase. The stock moved from ₹1,576.80 on January 30 to reach a daily high of ₹1,821.40 by February 9. Following closely, Anant Raj shares jumped 13.62%, while Lodha Developers surged 12.67% during the same period.
Other significant gainers include Prestige Estates, Sobha, and DLF Limited, all of which have posted substantial increases. Remarkably, all ten constituents of the Nifty Realty index have remained in positive territory throughout this period of market activity.
Contextualizing the Current Rally
This recent surge comes after a challenging start to the year for real estate stocks, which had shed 11% during the month of January. The sector had closed 2025 with a 16.6% decline, following impressive returns of 35% in 2024 and 81% in 2023. The current rally represents a significant reversal of the earlier downward trend.
Beyond the budget proposals, the overall upbeat sentiment in the Indian stock market, fueled by a recent trade deal with the United States, has contributed to driving gains across multiple sectors, including real estate.
Key Budget Announcements Driving Real Estate Momentum
The Union Budget 2026 included several significant proposals specifically targeting the real estate sector:
- Increased Allocation to Affordable Housing: The government has proposed to allocate ₹3,000 crore to the Pradhan Mantri Awas Yojana, a substantial increase from the existing ₹300 crore. This move is expected to significantly boost urban housing supply, revive residential real estate demand, and drive higher activity for developers, construction companies, and allied sectors.
- Tax Holiday for Data Centers: The budget proposes a tax holiday until 2047 for any foreign company providing cloud services to global customers using data center services from India. This initiative is particularly positive for data center players such as Anant Raj, as it supports efforts to establish India as a major data center hub.
- Infrastructure Risk Guarantee Fund: The establishment of this fund is expected to strengthen the confidence of private developers by addressing risks during the infrastructure development and construction phases.
- Deepening the REITs Sector: The Finance Minister proposed accelerating the recycling of significant real estate assets of Central Public Sector Enterprises through dedicated Real Estate Investment Trusts. According to Kotak Institutional Securities, this would facilitate asset monetization for the government while deepening the REITs sector if new REITs were to get listed.
- Focus on Tier II and Tier III Cities: The budget also emphasized developing infrastructure investment trusts in smaller cities, which could benefit companies like Embassy Office Parks through enhanced investment in infrastructure and real estate investment trusts.
Industry Perspectives and Expert Analysis
Amit Goyal, Managing Director of India Sotheby’s International Realty, commented on the budget's implications, stating that the Union Budget 2026 underscores policy continuity and a sustained focus on infrastructure and urban development, both critical factors for real estate growth.
"A stable macro framework and fiscal discipline reinforce long-term confidence, especially in premium and luxury housing. For discerning buyers, improved urban livability and economic resilience remain key drivers, even as global uncertainties influence near-term sentiment," Goyal added.
Axis Securities noted that Embassy Office Parks might benefit from the upcoming enhanced investment in infrastructure and real estate investment trusts, while the brokerage highlighted the positive impact of the data center tax holiday on specific players in the sector.
The collective impact of these budget announcements has infused fresh momentum into the real estate sector, reversing earlier declines and positioning it for potential sustained growth in the coming months.
