As the Union Budget 2026 approaches on February 1, India's Real Estate Sector is experiencing a strategic shift beyond traditional metros, placing increased emphasis on Tier-II cities and premium housing segments. Developers anticipate the upcoming budget will play a defining role in shaping demand patterns, investment flows, and long-term sector sustainability.

Tier-II Cities Emerge as Growth Drivers

Industry leaders report that India's housing momentum is increasingly driven by Tier-II cities, which offer an attractive combination of affordability, improving infrastructure, and expanding employment opportunities. Rajat Bokolia, CEO of Newstone, identifies cities such as Sonipat as strong real estate investment destinations within the NCR ecosystem.

Connectivity and Infrastructure Developments:

• RRTS (Regional Rapid Transit System) expansion
• Metro extensions
• UER-II (Upper Eastern Ring Road-II)
• Sonipat Master Plan 2031 implementation

Bokolia notes that compared to established markets like Gurugram or Noida, Sonipat offers more affordable pricing while benefiting from industrial growth and job creation. From a policy perspective, he expects Budget 2026 to consider raising affordable housing price limits, increasing home loan tax deductions, and rationalising GST or stamp duties.

Abhay Mishra, President & CEO of Jindal Realty, emphasizes that the government must formally acknowledge this structural shift. "India's housing growth is no longer metro-centric. Tier-II cities are now leading the next phase, supported by stable prices and strong infrastructure," Mishra states. He expects Budget 2026 to prioritise urban infrastructure spending, homebuyer tax support, and affordable housing incentives.

Infrastructure-Led Development and Policy Expectations

Developers operating across multiple geographies highlight that Tier-II and Tier-III cities now compete with metros on lifestyle, amenities, and project quality while maintaining significantly lower costs. Yashank Wason, Managing Director of Royal Green Realty, describes the upcoming budget as a critical opportunity to reinforce this trend.

Wason explains that these cities offer infra-led projects, larger homes, and superior amenities at reasonable prices, attracting both end-users and investors. The industry seeks further tax incentives, clearer GST norms, and continued policy stability to ensure long-term investor confidence.

Premium Housing Segment Seeks Policy Sophistication

While Tier-II growth dominates one market segment, the premium and luxury real estate sector has distinct expectations from Budget 2026. Navdeep Sardana, Founder of Whiteland Corporation, notes the focus has shifted from basic tax benefits to fiscal maturity and capital efficiency.

Following strong absorption in office and premium residential segments in 2025, the industry seeks policy measures supporting high-value transactions. A key demand from ultra-high-net-worth individuals (UHNI) involves re-evaluating the ₹10.00 crore cap on capital gains reinvestment under Sections 54 and 54F.

Premium Segment Expectations:

• Increased capital gains reinvestment limits
• ESG-compliant luxury development incentives
• Smart housing technology support
• Green financing incentives or tax credits

Financing and Investment Flow Improvements

Access to capital remains a critical concern for developers. The industry hopes Budget 2026 will introduce policies simplifying financing, improving liquidity, and lowering capital access barriers for credible players. Sardana adds that for NRI investors, further TDS rationalisation on property sales could significantly enhance foreign inflows into India's residential market.

Budget 2026: Shaping the Next Growth Cycle

Industry expectations from Budget 2026 reflect a Real Estate Sector at an inflection point. Tier-II cities are emerging as the next growth frontier, driven by infrastructure development, affordability, and lifestyle improvements. Simultaneously, premium and luxury housing segments seek policy sophistication to support high-value transactions and sustainable development.

Developers believe that if Budget 2026 successfully balances homebuyer incentives, infrastructure spending, financing reforms, and ESG-driven growth measures, it could establish the foundation for a sustained, stable growth cycle in Indian real estate, with Tier-II cities positioned as core drivers of this expansion.

As Union Budget 2026 approaches, leaders across real estate, infrastructure, energy, and manufacturing sectors are presenting a unified call for policy continuity while addressing sector-specific structural challenges. With infrastructure spending continuing to anchor India's growth story, stakeholders emphasize the need for sustained momentum rather than dramatic policy shifts.

Commercial Real Estate Emphasizes Stability Over Incentives

Commercial real estate leaders indicate that Budget 2026 does not require dramatic announcements, with policy stability and predictability taking precedence over new incentives. Utkarsh Kawatra, CEO and Co-Founder of myHQ by ANAROCK, highlights that companies are expanding cautiously and testing new markets before committing to large leases, making consistent policy framework more valuable than short-term benefits.

Infrastructure investment is reshaping office demand across transit corridors and Tier-2 cities, driving increased demand for flexible and managed offices. Despite strong growth momentum, the flex office sector still lacks formal regulatory recognition. Aashit Verma, Founder of Hanto Workspace, calls for a clearer GST framework, input credit clarity on leasehold capex, seamless digital registration of agreements, and formal recognition of flex operators as a distinct asset class.

Housing Sector Demands Affordability and Financing Reforms

The housing sector continues to face affordability pressures, with industry leaders calling for comprehensive reforms to address market realities. Shishir Baijal, Chairman and Managing Director of Knight Frank India, emphasizes that affordable housing remains under pressure due to elevated costs and outdated incentive thresholds, requiring realignment of housing incentives with current market conditions.

Developers including Pradeep Aggarwal of Signature Global, Ashok Kapur of Krisumi Corporation, Vikas Bhasin of Saya Group, and Ankur Jalan of Golden Growth Fund have reiterated demands for industry status for real estate, extension of the Credit Linked Subsidy Scheme, rationalization of GST and stamp duty, and higher home loan interest deductions to support end-user demand. The focus includes creating a formal rental housing ecosystem to unlock underutilized stock and attract institutional capital.

Infrastructure and Manufacturing Seek Sustained Capital Expenditure

Infrastructure players expect the government to maintain momentum on capital expenditure, with public spending continuing to serve as a growth anchor. Rajan Luthra, CFO of ACE-Action Construction Equipment, notes that public capex continues to drive growth, while GST rationalization, improved liquidity, and digital adoption can encourage private investment participation.

Mohit Jandu of J Infratech highlights the importance of continued focus on roads and highways, along with digital transformation across planning, construction, and tolling systems. Sanjay Choudhari, Chairman of SBL Energy, calls for duty rationalization on critical materials, incentives for green technologies, and streamlined approvals through single-window mechanisms to unlock private investment in infrastructure and mining sectors.

Energy and Sustainability Push for Structural Reforms

Renewable energy leaders emphasize policy continuity while seeking enhanced support for clean energy transition. Akshat Jain, CEO of KLK Ventures, identifies enhanced incentives for solar infrastructure, domestic manufacturing, energy storage, and smart grids as critical components for India's clean energy goals. The sector requires sustained policy support to maintain growth momentum and achieve long-term sustainability targets.

Raj Kumar Medimi of Trinity Cleantech stresses the need for transmission and distribution upgrades, quality benchmarks, and faster payments to MSMEs to support sector development. On sustainability priorities, Amit Banka, Founder of WeNaturalists, urges the government to treat water as a national priority, proposing large-scale investments in water capture and redistribution infrastructure to address scarcity-driven migration, urban stress, and livelihood disruption.

The collective expectations from industry leaders suggest that Union Budget 2026 should focus on maintaining policy consistency while addressing sector-specific challenges through targeted reforms, sustained capital expenditure, and structural improvements to support India's continued economic growth across multiple sectors.