By Karmrath News Desk
Mumbai: The Union Budget 2026–27 has signalled a structural pivot in India’s urban development strategy, prioritising fiscal de-risking and high-speed connectivity to decentralise economic growth. Finance Minister Nirmala Sitharaman’s announcement of a ₹12.2 lakh crore capital expenditure outlay for the upcoming fiscal year, coupled with a new Infrastructure Risk Guarantee Fund, aims to unlock private investment and address the chronic liquidity issues plaguing the construction sector.
Central to this year’s fiscal roadmap is the development of City Economic Regions (CERs), with an allocation of ₹5,000 crore per city over the next five years. This move is designed to transform Tier-II cities into self-sustaining hubs, reducing the burden on over-leveraged Tier-I metros.
"The Union Budget 2026 brings exciting news for real estate, particularly in Tier-II cities. Finance Minister Nirmala Sitharaman announced ₹5,000 crore per City Economic Region over five years to upgrade urban infrastructure in these growing hubs. Add to that the new Infrastructure Risk Guarantee Fund, dedicated REITs for recycling CPSE assets, and a massive ₹12.2 lakh crore capex for FY27. These steps will attract investments, fuel housing and commercial projects, and ensure balanced growth. Tier-II cities, especially cities like Sonipat-Kundli are set for a real estate boom this year," Rajat Bokolia, CEO, Newstone, told Karmrath.
The budget also puts a premium on transit-oriented development. The formalisation of seven high-speed rail corridors, including the Delhi-Varanasi route, is expected to create new micro-markets for luxury and commercial real estate.
“The Union Budget 2026–27 marks a decisive shift for India’s real estate sector, moving towards a high-velocity urban economy by prioritising structural efficiency over mere expansion. The announcement of seven high-speed rail corridors, including the Delhi–Varanasi route, will significantly reduce geographical friction and unlock new growth corridors. The introduction of the Infrastructure Risk Guarantee Fund and dedicated CPSE REITs brings much-needed financial security and institutional liquidity into the ecosystem. Additionally, incentivising domestic manufacturing of advanced equipment is a potential game-changer, helping shorten project timelines and reduce global dependencies. For the luxury real estate segment, enhanced connectivity and faster execution will transform emerging micro-markets into sought-after urban hubs for HNIs, NRIs, and global investors,” Rishabh Periwal, Senior Vice President, Pioneer Urban Land & Infrastructure Ltd, told Karmrath.
A key operational reform introduced today is the Infrastructure Risk Guarantee Fund. By providing a safety net against construction-phase risks, the government aims to lower the cost of capital and encourage institutional lenders to back large-scale projects.
“The Finance Minister’s decision to scale up public capital expenditure to ₹12.2 lakh crore and introduce the Infrastructure Risk Guarantee Fund is a major confidence booster for the real estate and infrastructure sectors. By de-risking the construction phase and improving credit availability, the move will accelerate project execution and crowd in private investment. Faster asset monetisation through REITs and enhanced freight connectivity will further unlock liquidity across the ecosystem. For the Delhi-NCR market, these measures will strengthen infrastructure-led growth, improve regional connectivity, and drive sustained demand across residential, commercial and logistics real estate, reinforcing NCR’s position as India’s most dynamic property market,” Navdeep Sardana, Founder, Whiteland Corporation, told Karmrath.
Furthermore, the budget emphasizes technological self-reliance. Provisions to incentivize the domestic manufacturing of specialized construction equipment, such as tunnel boring machines, are intended to compress project timelines and reduce the industry’s reliance on imports.
"Union Budget 2026 - 27 is a master plan in shifting India’s real estate sector from asset creation to asset efficiency. Integration of seven high speed rail corridors like Delhi - Varanasi, the government isn’t just moving people, but expanding the very boundaries of metropolitans like Delhi NCR. The introduction of the Infrastructure Risk Guarantee Fund and dedicated CPSE REITs provides institutional liquidity to the sector. Most crucially, the push for domestic manufacturing of high value equipment, from tunnel borers to firefighting systems will drastically compress project timelines. For the premium housing segment, these factors will help prime locations, turning high - speed transit hubs into the next prestigious address for a bespoke living. We are witnessing the beginning of a leaner, technologically superior, and self reliant Indian infrastructure," Jitendra yadav, Director, Roots Developers told Karmrath.
While the budget focuses on high-ticket infrastructure, it also maintains a steady hand on broader economic enablers. Measures to improve manufacturing competitiveness and income stability are being viewed as essential pillars for sustaining demand in the residential segment.
“The Union Budget 2026 reflects policy continuity through its sustained focus on infrastructure development and planned urbanisation, which together form the structural foundation for long-term growth in the real estate sector. The emphasis on urban mobility, integrated housing initiatives, and infrastructure-led expansion across Tier-1 and Tier-2 cities is expected to support orderly urban growth and strengthen regional market fundamentals over time. The Budget’s measured approach toward enhancing manufacturing competitiveness, through rationalisation of duties, cost efficiencies, and targeted sectoral support, addresses key structural aspects of domestic production. These measures may contribute to broader employment creation and income stability, which are important enablers for consumption-led sectors, including housing, over the medium term.Overall, the continued focus on infrastructure creation, economic stability, and spatial development corridors provides a constructive policy backdrop for stakeholders across the real estate ecosystem, including developers, lenders, and homebuyers,” Manik Malik, CEO, BPTP told Karmrath.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Karmrath. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.