A key structural reform announced in the Budget is the proposed Infrastructure Risk Guarantee Fund, aimed at moving infrastructure projects from announcement to execution.
The Union Budget 2026 has positioned infrastructure as the primary growth engine for the real estate sector, with the government maintaining a strong public capital expenditure outlay of Rs 12.2 lakh crore. While the Budget stopped short of announcing direct tax incentives or housing-specific sops, developers say the emphasis on sustained infrastructure investment sends a clearer and more durable signal for demand creation. From urban transport and connectivity to large-scale public works, the continued capex push is being viewed as a demand-enabling framework rather than a short-term stimulus, laying the groundwork for steady expansion across residential and commercial real estate segments.
Apart from the key statistics, players in the sector identify the continuity of capital expenditure as one of the most important factors that help instil confidence in the real estate sector. Public expenditure on infrastructure in the urban sector, including transportation networks and logistics routes, is viewed as providing long-term visibility to projects with longer development cycles, especially in larger cities and emerging growth nodes.
According to Sahil Agrawal, CEO, Nimbus Group, the Budgetโs pragmatic approach, which combines strong capital expenditure with targeted policy measures to strengthen the infrastructure ecosystem, is welcomed by the industry.ย
“The increased capex provides visibility and confidence for developers and investors, particularly for long-gestation projects in metros and emerging Tier-2 and Tier-3 cities. The introduction of dedicated REITs for public sector assets is a positive step towards unlocking capital, enabling reinvestment into new infrastructure and creating a more efficient funding cycle,’ Agrawal said.
Infrastructure Risk Guarantee Fund
A key structural reform announced in the Budget is the proposed Infrastructure Risk Guarantee Fund, aimed at moving infrastructure projects from announcement to execution. The fund will provide prudently calibrated partial credit guarantees to lenders, helping reduce construction and financing risks associated with large projects. Industry players say this is likely to enhance the bankability of infrastructure-linked real estate developments, facilitate easier access to capital, and support smoother execution. Over time, this could lead to faster project delivery, improved asset quality and greater confidence across the real estate value chain.
โThe Infrastructure Risk Guarantee Fund will mitigate execution and financing risks, making large-scale projects more viable and predictable. Together, these measures are likely to improve project delivery timelines, enhance asset quality, and support sustainable, infrastructure-driven growth across the sectorโ, adds Sahil Agrawal.
Developmental focus on tier 1 and 2 cities
Besides, the Finance Minister also underlined a sharper developmental focus on tier 1 and 2 cities. As urbanisation expands beyond metropolitan areas, the Budgetโs higher allocations for urban infrastructure, coupled with increased resource transfers to states, are also expected to broaden the real estate growth canvas.
Deepak Kapoor, Director, Gulshan Group, said, “The budget creates a stable and enabling framework for sustained real estate development. Its singular focus on infrastructure-led growth will be highly critical for the expansion of the real estate sector. The rise in capital expenditure, along with the emphasis on urban development, will lead to a conducive environment for the growth of residential and commercial segments. Moreover, the higher allocations for urban infrastructure and increased resource transfers to states will accelerate growth in tier 2 and tier 3 cities, expanding housing and commercial opportunities beyond metros.”
Moreover, translating policy intent into market outcomes, developers say improved connectivity is emerging as one of the most direct demand catalysts for real estate. Investments in rail corridors, highways, and urban transit networks are increasingly influencing homebuyersโ preferences and decisions regarding office and commercial space location. Well-connected peripheral and emerging micro-markets are gaining traction, as shorter travel times and improved accessibility to employment nodes increase the viability of these areas for premium residential and commercial space. Industry players note that connectivity-led development is now influencing demand patterns more decisively than pricing incentives alone.
โInfrastructure continues to be the single biggest enabler of housing demand, and the Budgetโs strong push in this direction is likely to reshape premium residential markets across metros and beyond. The sustained public capital expenditure of Rs.12.2 lakh crore will significantly improve connectivity, making peripheral and emerging micro-markets far more attractive for high-end homebuyers. In metro cities, this can accelerate the shift towards larger, luxury developments in well-connected outskirts, leading to a rise of aspirational, lifestyle-led housing. The focus on enhancing construction and infrastructure equipment also improves execution quality and delivery timelines. As infrastructure-led confidence improves and financing conditions ease, the real estate sector is likely to see deeper end-user demand rather than speculative interest, leading to more sustainable and well-planned premium residential growth across markets,โ said Salil Kumar, Director-Marketing and Business Management, CRC Group.
The Budget also proposed dedicated REITs for public sector real estate assets, a move that developers say could unlock capital and channel it back into new infrastructure projects. By enabling reinvestment and strengthening funding cycles, these measures are expected to enhance execution confidence and encourage greater institutional participation in the sector.