As Union Budget 2026 approaches, India's real estate and housing ecosystem is seeking comprehensive policy reforms to address affordability challenges, tax complexities, and infrastructure development needs. Industry leaders across residential, commercial, and emerging asset classes are calling for future-oriented measures that can sustain growth momentum while addressing sector-specific challenges.

Key Policy Expectations and Tax Reforms

The sector's primary focus remains on GST rationalisation and enhanced tax benefits for homebuyers. Sheeshram Yadav, Managing Director of Yugen Infra, emphasised the industry's expectation for tax breaks, improvements in the credit-linked subsidy framework, and a simplified GST structure. The sector is particularly seeking lower GST rates on luxury housing to boost buyer sentiment and attract long-term investment.

Harsh Gupta, Founder of Sipyatrra, highlighted investor expectations for capital gains tax rationalisation, especially on long-term equity and digital investment products. The sector is also seeking clearer regulations around alternative investment assets to strengthen trust and deepen India's investment culture.

Infrastructure Development and Regional Growth

Tier II and Tier III cities have emerged as significant growth drivers, with industry leaders emphasising their potential to compete with metropolitan markets. Yashank Wason, Managing Director of Royal Green Realty, noted that these markets are offering infrastructure-led projects, better amenities, and comparatively affordable pricing.

Rajat Bokolia, CEO of Newstone, specifically mentioned emerging destinations like Sonipat, which are benefiting from improved connectivity through metro extensions, RRTS, and expressway projects. The sector expects continued policy support for raising affordable housing limits and rationalising stamp duties in these markets.

Commercial Real Estate and Investment Framework

The commercial segment is seeking measures to strengthen both demand and investment frameworks. Ashish Bhutani, CEO of Bhutani Infra, called for rationalised taxation, expanded metro and expressway connectivity, and incentives for green and wellness-driven developments to enhance investor confidence.

Henam Khaneja, Additional Vice President at Elante Group, emphasised that higher tax deductions on home loan interest would provide meaningful relief to homebuyers amid elevated interest rates, strengthening both residential and commercial demand.

Sustainability and Future-Ready Development

The sector is increasingly focusing on sustainability and green building initiatives. Dhaval Ajmera, Director of Corporate Affairs at Ajmera Group, called for waiving caps on home loan tax benefits and introducing interest subvention schemes for green-rated real estate debt to reduce borrowing costs significantly.

Raahil Reddy, Director of Residential Projects at Fortune Primero, emphasised the need for progressive policies focused on sustainability, green buildings, and new-age construction technologies rather than short-term incentives. The industry is seeking policy frameworks that support India's Net Zero goals while maintaining commercial viability.

Market Momentum and Growth Outlook

Despite challenges, the sector reports strong fundamentals and sustained demand. Abhishek Raj, Founder and CEO of Jenika Ventures, noted that residential sales have posted strong double-digit growth across major cities. The industry expects measures like increasing home loan interest deduction limits and offering incentives for first-time homebuyers to broaden market participation.

Pradeep Aggarwal, Founder and Chairman of Signature Global (India) Ltd, highlighted that India's housing sector has maintained strong momentum, supported by easing borrowing costs and steady demand across mid-income and premium segments. The sector anticipates that continued policy support focusing on quality, sustainability, and timely execution will position real estate as a key driver of employment and urban growth.

India's real estate sector stands at a critical juncture, with industry leaders calling for comprehensive policy reforms in Budget 2026 to address a deepening housing divide. The sector, which contributes nearly 7% to India's GDP and employs over 70 million people, requires urgent fiscal intervention to maintain its role as a pillar of economic growth and urban transformation.

Growing Market Imbalance Threatens Housing Accessibility

Anuj Puri, Chairman of ANAROCK Group, warns of emerging structural imbalances creating a two-tier housing market. While luxury housing sales and prices capture media attention, homeownership is becoming increasingly unaffordable for large segments of the Indian population. Without decisive intervention in Budget 2026, Puri cautions that the gap between premium housing and basic affordable homes could widen further, potentially excluding millions from the ownership cycle.

Affordable Housing Requires Immediate Fiscal Support

The revival of affordable housing emerges as a central priority among industry recommendations. Puri emphasizes that reintroducing the 100% tax holiday for developers under Section 80-IBA could provide the most immediate and effective boost to supply. This incentive, which was withdrawn in 2021, had previously encouraged broader developer participation and accelerated affordable project launches.

Industry experts argue that without restoring such incentives and recalibrating affordability thresholds, both demand and supply in this critical segment will remain subdued.

Infrastructure Acceleration Critical for Housing Expansion

Infrastructure development represents another key area requiring immediate attention. While Puri acknowledges positive initiatives such as the National Infrastructure Pipeline and PM Gati Shakti, he highlights implementation speed as a persistent concern. Priority funding is needed for metro rail expansions, suburban rail networks, ring roads connecting peripheral regions, and integrated logistics corridors—all vital for unlocking new housing corridors and reducing pressure on urban cores.

Consumer-Focused Reforms to Boost Housing Demand

Anurag Mathur, CEO of Savills India, advocates for demand-side reforms that directly improve household affordability. His recommendations include:

• Raising the standard deduction for individual taxpayers
• Linking deductions to a percentage of income
• Implementing measures to increase disposable incomes

Mathur argues that higher disposable incomes can meaningfully support housing demand among middle-income and first-time buyers, particularly in urban centers.

Rental Housing and REITs as Affordability Solutions

Rental housing is increasingly viewed as a structural solution rather than a temporary measure. Mathur emphasizes the need for policy support to expand professionally managed rental housing, including enabling multi-family REITs. Such measures could improve affordability, enhance workforce mobility, and attract institutional capital into an underdeveloped segment despite rising urbanization.

Additionally, Mathur points to the importance of pragmatic land reforms and monetization of underutilized government land to address supply-side constraints, potentially lowering development costs and accelerating housing delivery.

Market Challenges Persist Despite Overall Resilience

Shishir Baijal, Chairman and Managing Director of Knight Frank India, notes that despite overall market resilience, affordable housing continues to underperform. He attributes this to declining affordability, rising input costs, and limited end-user support, warning that without timely policy recalibration, demand in this segment could remain structurally weak.

Baijal stresses the need to realign housing incentives with current urban cost structures, particularly in large cities where existing price thresholds no longer reflect market realities.

Infrastructure Investment for Inclusive Growth

Both Baijal and Mathur emphasize that sustained investment in mass transit and urban infrastructure is crucial for long-term inclusion. Improved connectivity to peripheral growth corridors can expand affordable land supply, while continued development of Global Capability Centers and office hubs in Tier II and III cities can drive decentralized job creation and promote more balanced urban growth beyond metropolitan areas.

Industry leaders agree that Budget 2026 represents a defining moment for India's housing sector. From restoring affordable housing incentives and accelerating infrastructure execution to strengthening rental housing and consumer affordability, experts emphasize that bold, coordinated policy action is essential to prevent a deeper housing divide and ensure India's urban growth remains inclusive and sustainable.