The Union Budget 2025-26 has arrived with a bold vision and strategic allocations that could redefine the landscape of Indian real estate. With a focus on infrastructure growth, urban development, and ease of doing business, this year’s budget signals a transformative era for the property sector. Whether you're a homebuyer, investor, or developer, the announcements hold immense relevance for the future of real estate in India.

Massive Boost to Infrastructure: Laying the Groundwork for Growth

One of the standout features of the Union Budget 2025-26 is the continued emphasis on infrastructure. The government has allocated a record ₹13 lakh crore towards capital expenditure, a 15% increase from the previous year. Key allocations include expressways, smart cities, metro rail projects, and regional connectivity. For the real estate sector, such infrastructure investment acts as a multiplier. Better connectivity improves land values, enhances livability, and drives demand for both residential and commercial properties. Cities like Gurugram, Pune, Hyderabad, and Bengaluru are expected to benefit directly, particularly in newly developing corridors linked to high-speed transport.

Affordable Housing Gets Renewed Focus

Affordable housing—critical for the government’s “Housing for All” mission—has received a major push. The Finance Minister announced an extended interest subvention scheme for first-time homebuyers in the EWS (Economically Weaker Section) and LIG (Lower Income Group) categories. A new ₹80,000 crore fund has been announced to support construction of 20 lakh affordable homes under the Pradhan Mantri Awas Yojana (PMAY). Additionally, the tax benefits for affordable housing projects under Section 80-IBA have been extended by another two years. This move is expected to incentivize developers to launch more budget-friendly projects, particularly in Tier 2 and Tier 3 cities where demand is surging.

REITs and InvITs: Enabling Greater Investor Participation

To improve liquidity and attract retail participation in real estate investment, the budget proposes tax rationalisation for REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts). The removal of double taxation on dividends and a simplified compliance structure have made these instruments more attractive. This is particularly significant as India’s rental housing and commercial real estate markets mature. Retail investors now have more incentives to participate in income-generating real estate assets without needing direct ownership.

Urban Development 2.0: Smart Cities and Sustainability

The Union Budget 2025-26 introduces Urban Rejuvenation Mission 2.0, an upgraded smart city program that emphasizes digital infrastructure, green energy integration, and inclusive urban planning. ₹50,000 crore has been earmarked for this initiative. With increasing focus on sustainable living and smart technology, real estate developers are likely to align their offerings with energy-efficient designs, solar installations, and smart home features. Gurgaon, Noida, and Ahmedabad are already seeing a rise in smart residential communities, and this trend is set to accelerate. This shift is expected to appeal particularly to NRIs and millennials looking for future-ready homes.

Focus on Rental Housing and Co-living

In response to urban migration and evolving lifestyle needs, the government has proposed incentives for building rental and co-living housing. Developers constructing projects under the Model Tenancy Act guidelines will benefit from lower taxes and expedited clearances. This move is expected to open new avenues for real estate players in cities like Mumbai, Delhi-NCR, Bengaluru, and Hyderabad where demand for rental homes and flexible living is robust among students, working professionals, and gig economy workers.

Conclusion: A Visionary Budget for a Transforming Sector

The Union Budget 2025-26 is a forward-looking and growth-centric roadmap for the real estate industry. With an emphasis on infrastructure, affordable housing, REIT reforms, sustainability, and digital governance, it lays the foundation for a more transparent, inclusive, and investor-friendly property market. For stakeholders across the board—from developers to investors, and from first-time buyers to global funds—this budget is not just policy; it’s a signal that Indian real estate is evolving rapidly and is set to become a cornerstone of the country’s economic revival and future urban landscape.