Union Budget 2026: What real estate developers want on affordability, policy stability and REITs boost

As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2026 on February 1, India’s real estate sector is seeking a fine balance between affordability-driven demand, long-pending structural reforms and policy continuity to sustain its growth momentum amid global uncertainty.

Real estate is the second-largest source of employment after agriculture. It has emerged as a significant pillar of India’s economic and social framework, with industry developers arguing that supporting the sector goes beyond boosting construction activity—directly impacting livelihoods, urban liveability and long-term household financial security

Union Budget 2026: Here’s what industry developers seek

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“Real estate is more than just numbers; it is the second-largest source of livelihoods in India,” said Vikas Bhasin, managing director of Saya Group. “By supporting real estate, the government will be able to support the families and workers who build our nation, while providing stable, long-term security for those seeking a place to call home.”

According to Bhasin, infrastructure-led development must remain central to the government’s growth strategy. “Our primary hope is that the government continues to invest in infrastructure that truly connects people—making our cities more liveable, efficient and accessible for everyone,” he said, adding that expanding the Credit Linked Subsidy Scheme (CLSS) would help more families achieve home ownership.

Also Read: Budget 2026: Real estate industry seeks policy support to revive affordable housing

Affordability and industry status top residential wishlist

From a developer’s perspective, Bhasin flagged industry status as a long-pending demand. “Granting industry status to real estate would improve access to institutional finance, lower borrowing costs and bring greater transparency and professionalism to the sector,” he said.

He also called for tax relief for homebuyers. “Affordability continues to be the biggest lever for demand. GST and stamp duty together add nearly 12–15 per cent to the cost of buying a home, especially impacting mid-income and affordable segments,” Bhasin said. “Any rationalisation on this front would directly improve purchasing power.”

On housing loans, he said the existing tax benefits no longer reflect market realities. “With property prices and loan sizes having increased substantially, increasing the home loan interest deduction to at least Rs 5 lakh would provide meaningful relief and improve EMI affordability,” Bhasin added.

Mid-income housing to anchor next growth phase

Highlighting changing market dynamics, Tanuj Shori, founder and CEO of Square Yards, said the housing market is entering a more balanced phase. “The Indian housing market is clearly moving out of a luxury-led upcycle and into a more value-driven phase, with the mid-income segment poised to anchor growth as premium demand begins to stabilise,” he said.

Shori said Budget 2026 should sharpen its focus on affordability. “One should expect a stronger focus on enhanced tax relief for mid-income homebuyers, higher interest deduction limits and sustained investment in urban infrastructure,” he said, adding that policy support was needed to correct the skew towards high-ticket launches. “Recent supply has been disproportionately tilted towards higher ticket sizes.”

REITs, affordable housing criteria need review

On institutional capital and policy direction, Badal Yagnik, CEO and managing director of Colliers India, said the upcoming Budget could balance growth and fiscal discipline. “Budget 2026 is expected to prioritise growth across economic sectors and usher in equitable real estate development through policy incentives and tax rebates,” he said.

Yagnik said affordable housing norms need updating. “Standardisation and revision of affordable housing criteria to reflect the price reality of Tier-I cities can provide a demand-side boost to residential real estate,” he said, adding that infrastructure-led capacity building would trigger long-term growth across segments.

He also pitched for deeper capital markets. “Real estate democratisation and retail investor participation can be encouraged by making REITs and SM-REITs more attractive,” Yagnik said, while calling for incentives to promote sustainability adoption in built structures.

Also Read: Indian real estate sees record $8.5 billion institutional inflows in 2025: Colliers

Commercial real estate bets on stability

In the commercial real estate space, Utkarsh Kawatra, CEO and co-founder of myHQ by ANAROCK, said continuity mattered more than incentives. “The Union Budget this year is unlikely to bring dramatic announcements for commercial real estate, and that is not necessarily a negative,” he said. “For offices, stability and predictability matter far more than incentives.”

Kawatra said infrastructure investments are reshaping office demand. “Improved metros, roads and urban connectivity are creating new micro-markets along transit corridors, and Tier-II cities are increasingly becoming first-office destinations,” he said.

He added that companies are expanding cautiously. “Businesses are approaching long-term commitments in phases, testing teams and markets before signing large leases,” Kawatra said, noting that this gap between intent and commitment is driving demand for flexible and managed offices.

Highlighting the growth of flexible workspaces, Kawatra said the segment is expanding rapidly but lacks policy clarity. “Despite over 30 per cent year-on-year growth and over Rs 10,000 crore in overall revenue, the flex office sector continues to operate without a formal definition or regulatory recognition,” he said. “It is time for the government to acknowledge flexible workspaces as a distinct real estate asset class,” Kawatra added, saying this would improve ease of doing business and support startups, MSMEs and enterprises navigating hybrid work models.

A Vestian report pointed to significant headroom for growth in listed real estate. “REITs currently cover only 19 per cent of India’s listed real estate value,” the report said. It added that market capitalisation is projected to rise from $18 billion in 2025 to $25 billion by 2030, while REIT-able office assets are expected to double from Rs 8.2 trillion to Rs 16 trillion over the same period.