Budget 2026: A defining moment for India’s real estate, urban future
As India stands at the cusp of Union Budget 2026, the global landscape is anything but predictable. Trade tariffs, geopolitical tensions and economic realignments are reshaping markets worldwide. In such times, India’s resilience will depend not on reacting to external shocks, but on strengthening sectors that generate employment, build assets and power long-term domestic growth. Real estate is one such cornerstone.
Contributing nearly 7–8% of India’s GDP today and employing millions directly and indirectly, real estate is projected to account for 13–15% of GDP by 2030. Few sectors offer this scale of multiplier impact—spanning construction, manufacturing, finance, infrastructure, technology and urban services. Budget 2026 therefore presents a crucial opportunity to reinforce real estate as a driver of economic stability, inclusive growth and the vision of Viksit Bharat 2047.
Affordable and rental housing
India’s urban story is being rewritten. Rapid migration, a young workforce and evolving family structures are redefining housing demand. Yet, affordable housing—the backbone of inclusive urbanisation—has slowed, even as luxury and premium segments have surged. FY25 saw residential sales value and volumes rise by nearly 15%, aided by a cumulative 120 basis point repo rate cut. However, this growth was skewed towards higher-ticket homes and branded residences, while affordable housing struggled with cost pressures and regulatory bottlenecks.
Budget 2026 must correct this imbalance. Boosting affordable and rental housing is no longer a welfare consideration—it is a national economic necessity. Rental housing, in particular, supports labour mobility, industrial growth and urban productivity. Targeted tax incentives, viability gap funding and faster approvals can revive supply and improve affordability for India’s middle and aspiring classes.
Tax relief and regulatory rationalisation
A key expectation from the upcoming Budget is meaningful tax relief. Capping personal income tax at 25% would provide immediate disposable income relief to the middle class, translating into higher consumption and housing demand. On the supply side, rationalising stamp duties and reducing regulatory friction can unlock stalled projects and attract fresh investment.
India has made progress with reforms like RERA and digitisation of land records, but execution gaps remain across states. Simplifying compliance, ensuring single-window clearances and promoting transparent approval systems will significantly enhance ease of doing business for developers and investors alike.
Infrastructure as the growth catalyst
If there is one consistent lesson from recent years, it is that infrastructure fuels real estate growth. The revival of commercial real estate in FY25—especially Grade A assets—was driven by improved connectivity, metro expansions and last-mile infrastructure. Mumbai’s metro revolution is a prime example of how transport infrastructure reshapes real estate demand, decentralises growth and improves quality of life.
Tier 2 and Tier 3 cities are now witnessing similar momentum, powered by new airports, expressways and metro corridors. Budget 2026 must sustain this momentum through continued capital expenditure on urban infrastructure, smart cities and transit-oriented development.
Investment, employment and the global context
Despite global geopolitical uncertainties, including recent “Trump shockwaves” in international markets, India’s commercial real estate sector has remained resilient. Rising FDI, private equity inflows, and the expansion of GCC offices and data centres underline global confidence in India’s growth story. Capital market profit booking is increasingly being redirected into real assets, with NRI investments showing a strong uptick.
BFSI, NBFCs and housing finance companies expanded retail home loan funding by 15% in FY25—clear evidence of a robust real estate cycle. This translates directly into employment across construction, materials, design, technology and facility management.
Technology, AI and the Future of Urban India
As we look towards 2047, technology will define India’s competitiveness. Data centres, AI-driven infrastructure and sustainable urban solutions will be integral to real estate development. Budget 2026 should encourage investments in green buildings, digital infrastructure and smart urban ecosystems that align with India’s self-reliance agenda.
In conclusion, Union Budget 2026 is not just about fiscal arithmetic—it is about shaping India’s economic trajectory. A focused push on affordable and rental housing, tax rationalisation, infrastructure investment and technology-led development can transform real estate into a powerful engine of jobs, growth and global relevance. At a time of global uncertainty, India has the opportunity to reinforce its foundations—and real estate must be central to that vision.
Author is chairman of Hiranandani Group and Naredco