Infrastructure Push Powers India’s Next Realty Cycle

The Union Budget 2026–27 has reaffirmed the government’s commitment to infrastructure-led development, fiscal prudence, and balanced urban expansion—an approach that industry leaders believe will shape the trajectory of India’s real estate sector in the coming decade. While the budget stops short of offering direct fiscal incentives for property markets, it builds a strong macroeconomic foundation that could stimulate housing, commercial, logistics, and emerging asset classes through structural reforms and capital investment.

With public capital expenditure proposed at approximately ₹12.2 lakh crore, policymakers have signaled a continued reliance on infrastructure as the backbone of economic progress. This strategy is expected to enhance connectivity, unlock new micro-markets, and support demand across residential and commercial segments, particularly as India advances toward its long-term vision of becoming a developed economy.

Infrastructure as the Primary Growth Engine

Industry stakeholders widely interpret the budget as a statement of continuity in India’s macro-growth story. Shishir Baijal, international partner and CMD, Knight Frank India, observes that the fiscal blueprint preserves a stable environment for investors while maintaining a consistent infrastructure push. According to him, improvements in connectivity across urban economic regions and selective opportunities in emerging corridors provide a favorable backdrop for medium-term demand in residential and logistics markets.

Echoing similar sentiment, Robin Mangla, president, M3M India, points out, “Increased capital expenditure offers long-term visibility for urban expansion and project execution. Such clarity strengthens execution confidence while supporting sustained growth across key property markets.”

For Pradeep Aggarwal, founder and chairman, Signature Global, the higher capital outlay, reflecting a year-on-year increase, will accelerate project timelines and encourage private investment. Complementary initiatives such as high-speed rail corridors, new national waterways, and logistics enhancements are expected to improve efficiency across the broader infrastructure ecosystem.

Urbanization and the Rise of Emerging Cities

A defining feature of this budget is its emphasis on developing Tier II and III cities as future growth engines. Anshul Jain, chief executive—India, SEA, MEA & APAC office and retail, Cushman & Wakefield, describes this as an additional lever for the realty sector, particularly as capacity constraints begin to surface in select Tier I locations. Occupiers, including global capability centers (GCCs) and start-ups, are increasingly exploring these markets due to improving infrastructure, access to talent, and comparatively lower operating costs.

Sudhir Pai, CEO, Magicbricks, believes investments in regional connectivity, spanning rail networks, freight corridors, and waterways, will deepen housing demand by improving accessibility and supporting employment generation in emerging cities.

The government’s planned allocation for city economic regions (CERs) further underscores the push toward planned urbanization. According to Amar Sarin, MD & CEO, TARC Limited, sustained investments in freight corridors and infrastructure will create enduring value for high-end residential developments in Tier I cities while simultaneously generating a strong runway for mid-market housing in smaller urban centers.

Neelu Jain, director, SNN Raj Corp, weighs in, “Infrastructure expansion is catalysing new economic corridors where employment creation is influencing residential preferences. This interplay between jobs, connectivity and housing is fostering a more balanced development environment.”

Connectivity Projects to Reshape Regional Landscapes

Several announcements carry transformative potential for specific geographies. Rajat Rastogi, CEO—West & commercial assets—Pan India, Puravankara, highlights the Mumbai-Pune High-Speed Rail Corridor as a development capable of redefining residential and commercial patterns across the MMR and Pune. Enhanced intercity connectivity expands the geography within which people can live and work, effectively broadening housing catchments.

Anuj Mehta, director, Dhuleva Group, similarly believes that increased public expenditure combined with the CERs framework will reinforce demand in well-located micro-markets within Mumbai.

Cyrus Mody, founder & CEO, Viceroy Properties, emphasizes that deeper infrastructure across suburban growth nodes will consolidate Mumbai’s position as a long-term investment destination anchored in fundamentals rather than short-term incentives.

Capital Markets Reforms and Asset Monetization

Among the budget’s most discussed proposals is the plan to pool government land holdings and public sector real estate through dedicated real estate investment trusts (REITs). Experts view this as a significant step toward unlocking underutilized assets while broadening investor participation.

Jayesh Agrawal, partner, international tax and transaction services, EY India, remarks that monetizing public real estate should create additional avenues for institutional capital while recycling funds into productive use.

Hardeep Dayal, president—commercial, Bhartiya Urban, describes the move as an innovative, transparent pathway that could deepen liquidity and strengthen commercial real estate markets nationwide.

Similarly, Madhusudhan G, CMD, Sumadhura Group, suggests that bringing idle land into active circulation often acts as a catalyst for surrounding development, benefiting both residential and commercial ecosystems.

Financing Support Through Risk Mitigation

The introduction of the Infrastructure Risk Guarantee Fund (IRGF) has been widely welcomed as a structural reform capable of addressing financing bottlenecks. By partially de-risking construction lending, the mechanism is expected to improve credit flow and project viability.

Amar Sarin characterizes the fund as a step that could ease access to capital while encouraging private investment. Madhusudhan G adds that credit guarantees during construction may enhance funding continuity, supporting timely delivery and strengthening buyer confidence.

Prashant Solomon, director, Chintels Group & CREDAI NCR EC/GC member, also sees the initiative as a measure that could energize private participation while contributing to resilient urban development.

Emerging Asset Classes Gain Momentum

Beyond traditional housing and office segments, the budget highlights future-facing industries poised to shape real estate demand. Data centers, semiconductors, healthcare, tourism, and education have emerged as focal points.

Anshul Jain accentuates that tax holidays and safe-harbor provisions for data centers could incentivize hyperscalers to expand capacity, though sustained growth will depend on adequate power, water, and infrastructure readiness.

Dr. Samantak Das, chief economist and head—research and REIS, India, JLL, states incentives for biopharma, electronics manufacturing, and rare earth mining as far-reaching, arguing that the measures collectively position India as a manufacturing and innovation-driven ecosystem.

Tourism infrastructure, particularly spiritual, cultural, and medical circuits, is another area expected to unlock opportunities across hospitality and allied real estate. Domestic and international tourist inflows already remain strong and new clusters could further accelerate sectoral expansion.

Manufacturing, Sustainability, and Industrial Growth

The budget’s emphasis on manufacturing competitiveness and domestic capacity building has implications for industrial real estate as well. Parth Jindal, president, Cement Manufacturers’ Association (CMA), is of the view that reforms spanning GST simplification, labor codes, and deregulation are measures likely to strengthen the investment climate for capital-intensive sectors.

He also points to the ₹20,000 crore allocation for carbon capture, utilization, and storage (CCUS) as a transformative step toward decarbonizing emissions-heavy industries such as cement, aligning with India’s net-zero commitment.

Anurag Mathur, CEO, Savills India, similarly underlines that advancements in industrial and logistics infrastructure, combined with clean energy initiatives and digital capacity building, underscore the government’s commitment to inclusive and sustainable development.

Strengthening the Digital and Innovation Ecosystem

The budget’s focus on AVGC (animation, visual effects, gaming, and comics) labs and design institutes is expected to support India’s technology ecosystem over the medium to long term. According to Mathur, such initiatives will bolster GCC expansion and reinforce demand for high-quality office environments.

Shivam Agarwal, VP—strategic growth, Sattva Group, adds that sustained support for digital infrastructure strengthens the case for office ecosystems beyond traditional metros, encouraging integrated development that is technologically prepared and future-ready.

Consumption Boost and Investor Confidence

On the demand side, income tax reforms and rationalized compliance measures are anticipated to enhance disposable incomes. Pradeep Aggarwal believes these steps will indirectly support housing demand while reinforcing investor confidence.

Sudhir Pai also points to measures easing foreign investment as a factor that could strengthen interest from non-resident Indians, who increasingly view Indian real estate as a long-term asset class supported by infrastructure-led growth.

A Balanced Yet Measured Policy Approach

Many developers interpret the budget as pragmatic rather than expansionary. Jagadish Nangineni, MD, Sobha Ltd., describes it as a balanced, long-term oriented fiscal plan that strengthens the foundation for sustained growth.

Manik Malik, CEO, BPTP, observes that policy continuity around planned urbanization and manufacturing competitiveness provides a constructive backdrop for stakeholders across the property ecosystem.

Sidharth Chowdhry, MD, Dalcore, adds that measures such as REIT-led monetization and the IRGF bolster investor sentiment, particularly in mature luxury housing micro-markets where connectivity and institutional confidence remain critical.

The Missing Piece: Affordable Housing

Despite widespread optimism, industry leaders express disappointment over the absence of targeted incentives for affordable housing. Baijal flags this as a key concern, noting that the segment has already been under pressure.

Boman Rustom Irani, CMD, Rustomjee Group, offers a sharper assessment: “The budget is notably restrained on affordable housing. With the current definition no longer reflecting market realities, the segment’s share of total housing supply risks declining from around 18% to nearly 12%. Rising land and construction costs, without targeted policy support, are making this segment increasingly difficult to sustain. Affordable housing should be viewed not merely as a social imperative but as economic infrastructure — one that directly impacts employment, rental affordability, commuting patterns and urban stability. Addressing this gap, alongside faster approvals and execution-led reforms, would have made the Budget more balanced from a real estate standpoint.”

Anurag Mathur similarly points to the need for policies that enhance disposable incomes and expand support for affordable homes, suggesting that these remain areas for further attention.

Amit Jain, CMD, Arkade Developers, adds that while infrastructure-led growth improves feasibility and demand visibility, outcomes will ultimately depend on execution timelines and regulatory efficiency, especially in mature markets.

Long-Term Vision Takes Precedence

Taken together, the budget reflects a strategic shift toward long-term capacity creation rather than short-term stimulus. The combination of infrastructure investment, asset monetization, financing reforms, and sectoral incentives signals a policy framework designed to foster sustainable urbanization.

For developers, the evolving environment rewards disciplined execution and alignment with infrastructure corridors. For investors, it offers greater transparency and maturing capital markets. And for homebuyers, improved connectivity and employment hubs could translate into more diverse housing choices.

As India progresses toward its “Viksit Bharat” ambition, the real estate sector appears poised to benefit from a policy landscape centered on structural growth drivers. While the absence of direct tax relief may temper immediate enthusiasm in some quarters, the overarching consensus remains clear: infrastructure is no longer just a supporting element; it is the foundation upon which the next chapter of India’s property market will be built.