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As Finance Minister Nirmala Sitharaman prepares to table the Union Budget 2026 on February 1, the real estate sector is once again at the centre of policy expectations. After a period marked by strong premium housing demand, infrastructure-led growth and rising construction costs, the industry is looking to the Budget for reforms that can address affordability, speed up approvals, and align regulation with the sector’s expanding economic footprint.

From homebuyers seeking relief on home loan taxation to developers demanding industry status and faster clearances, Budget 2026 is being seen as a critical moment to shape the next phase of India’s urban growth.

A sector at an inflection point

The Indian real estate market has shown notable resilience in recent quarters, driven by robust end-user demand, rising aspirations and sustained government investment in infrastructure. Yet, challenges persist. Affordability remains a constraint for a large section of buyers, while developers continue to grapple with financing costs, regulatory delays and rising input prices.

Industry leaders argue that the sector’s role in employment generation and GDP warrants stronger policy recognition. A recurring theme across stakeholders is the long-pending demand to grant real estate formal industry status, which would unlock cheaper organised funding and streamline regulatory oversight.

Saurabh Saharan, Group Managing Director at HCBS Developments, believes Budget 2026 offers a chance to align policy with the sector’s true economic weight. He says recognising real estate as an organised industry would lower the cost of capital, particularly for large, long-gestation luxury projects that are increasingly capital-intensive and infrastructure-like in nature. He adds that predictable regulation and institutional financing are now as important to buyers as construction quality.

Dr Gautam Kanodia, Founder of KREEVA and Kanodia Group, echoes this view, saying industry status would improve financing efficiency and support long-duration housing projects. He also stresses the importance of interest rate conditions, noting that housing demand remains closely tied to liquidity and buyer confidence, especially in infrastructure-driven markets such as the NCR.

Tax relief and wider affordable housing

For homebuyers, tax incentives and affordability measures remain the most immediate concerns. A key demand is to raise the current deduction limit on interest paid on home loans from Rs 2 lakh to Rs 5 lakh a year. Industry executives say this would provide direct relief to middle-income households and revive end-user demand across urban markets.

There is also a strong case for expanding the definition of affordable housing in urban areas. Developers argue that existing price caps no longer reflect land and construction costs in fast-growing Tier 2 and Tier 3 cities, where housing demand is rising but formal benefits remain limited.

Rajesh Damani of Jamshri Realty expects Budget 2026 to prioritise infrastructure-led urbanisation, with higher capital expenditure on regional connectivity such as ring roads and metro extensions. He suggests raising the affordable housing price ceiling to Rs 75 lakh or Rs 80 lakh, which would allow more families in emerging cities to access credit-linked subsidies and tax benefits.

First-time buyers are another focus area. The industry is seeking interest subsidies for buyers who fall just outside existing affordable housing schemes. Developers believe such a move could significantly boost primary sales and broaden the base of formal homeownership.

Faster approvals and single-window clearances

Across residential, commercial and mixed-use projects, the demand for quicker approvals and single-window clearance systems is unanimous. Delays in project permissions continue to distort timelines, inflate costs and undermine buyer confidence.

Sahil Agarwal, CEO of Nimbus Realty, says while infrastructure creation must continue, equal attention is needed for industrial and commercial development. He argues that a single-window clearance mechanism, along with incentives for sustainable construction and smart technologies, could have a catalytic effect on both economic growth and real estate development.

Harsh Jagwani, Managing Director of Notandas Realty, believes digitisation of land records, cleaner land titles and stricter escrow enforcement under RERA would reduce transaction risks and financing delays. He also points to the need for digital registration and regulatory comfort for housing finance channels, particularly as demand shifts towards mid-premium and luxury housing.

Luxury, premium, and institutional capital

The growing tilt towards premium and luxury housing is another trend shaping Budget expectations. With mid-premium and high-end segments outperforming affordable housing in several markets, developers want policies that support institutional investment and long-term capital flows.

Kushagr Ansal, Director at Ansal Housing, says Budget 2026 should go beyond policy continuity and expand the infrastructure development network. He calls for lower interest rates, more attractive capital gains taxation on property sales, and incentives for land pooling and redevelopment of ageing urban stock.

Several developers also want a dedicated revival fund for stalled projects, both at the central and state levels. Such a fund, they argue, would fast-track completions, restore buyer trust and reduce the overhang of delayed supply, particularly in large urban clusters.

Retail, commercial, and the coworking push

Beyond housing, retail and commercial real estate players are seeking targeted tax and GST reforms.

Shriram PM Monga, Co-Founder of SRED Real Estate Advisory, highlights the retail sector’s potential as India moves towards a $2 trillion consumption opportunity. He says wider adoption of the Model Shops Act, priority status for food and beverage retail, easier MSME credit and rationalised taxation could significantly improve ease of doing business and deepen employment generation, allowing organised and traditional retail to grow together.

In the flexible workspace segment, Manas Mehrotra, Founder of 315Work Avenue, is calling for concessional, slab-based GST rates for coworking services, especially for startups and small businesses. He also wants the removal of blocked input tax credit on interior fit-outs and rationalisation of the 10 per cent TDS on coworking payments. According to him, better cash flow management and access to institutional finance are essential for scaling India’s coworking ecosystem, particularly in non-metro cities.

With hybrid work models becoming entrenched, industry leaders believe A-grade office spaces and agile real estate will remain a long-term strategic priority for corporates.

Infrastructure as the common thread

If there is one unifying theme across all expectations, it is infrastructure. From metro extensions and highways to regional connectivity and green building incentives, stakeholders see infrastructure spending as the single biggest driver of housing and commercial demand.

Sachin Bhandari, Executive Director and CEO of VTP Realty, notes that housing sales softened in 2025 due to rising input costs and selective buyer sentiment. He believes policies that improve affordability, reform GST and expand infrastructure investment could revive momentum across both value and luxury segments.

Praveen Sharma, CEO of REA India, says Budget 2026 is an opportunity to structurally boost housing demand as India enters the next phase of urban and Tier 2 expansion. He points to the need for sustained affordable housing support, more practical home loan tax benefits and faster approvals through digital governance.

A Budget that shapes the next decade

As Nirmala Sitharaman prepares to present Budget 2026 on February 1, the real estate sector is looking for more than incremental tweaks. The expectations span taxation, financing, regulation, infrastructure and sustainability.

At stake is not just housing demand, but the broader urban transformation that will define India’s growth over the next decade. With real estate acting as a multiplier for nearly 250 allied industries, industry leaders argue that a supportive, predictable and reform-oriented Budget could strengthen investor trust, improve affordability and place India’s property market on a more globally competitive footing.