Budget 2026 Hopes Rise for India’s Real Estate and Construction Sector

Mumbai, January 17, 2026:

As for Budget 2026 real estate expectations, construction and urban management sectors are preparing for initiatives that could shape the industry’s future. Despite global issues and trade conflicts, these sectors remain essential factors of employment, manufacturing, and wealth creation, contributing 7-8% of the gross domestic product (GDP) and expected to reach 13-15% by 2030.

Rental housing is at the top of industry demands. Naredco and CREDAI have asked the government to modify policies to increase affordable rental supply. CREDAI President Shekhar Patel emphasized the need to sustain residential supply and improve housing affordability in India, while NAREDCO Chairman Niranjan Hiranandani called for easing conditions under Section 80IBA(6)(da). These reforms, he noted, would give developers the confidence to expand high-quality rental stock and exempt rental income from stock-in-trade properties from taxation for five years.

Key Insights on Budget 2026 Real Estate Policies and Investment Trends

Affordable housing remains a priority. Government incentives currently target homes priced up to ₹45 lakh with carpet areas up to 60 sq m in metros and 90 sq m in non-metros. However, industry leaders argue that the limits unchanged since 2017 no longer reflect rising land and construction costs, reducing the effectiveness of tax deductions under Section 80IBA.

Stamp duty reform is another key ask. Hiranandani suggested raising the tolerance limit under Section 43CA from 10% to 25%, preventing developers from being taxed on unrealized income due to discrepancies between circle rates and actual transaction values.

Homebuyers could also see relief. CREDAI has proposed increasing the home loan interest deduction 2026 limit from ₹2 lakh to ₹5 lakh under the new tax regime, offering relief to homeowners amid rising property prices. GST rationalization on under-construction properties and better compliance clarity are also on the industry’s wishlist.

Read More: Smart Tax Strategies for Property Investors to Maximize Returns

Investment trends in 2025 indicate renewed confidence. Capital inflows into Indian real estate rose 25% year-on-year to $14.3 billion, with Mumbai leading at 24% of annual inflows, followed by Bengaluru (20%) and Delhi NCR (11%). Hyderabad outperformed during Q4 with a 21% share. Land and development sites dominated, accounting for over 46% of total inflows, while office buildings and warehousing attracted significant investor interest. Domestic investors contributed nearly 80% of inflows, supported by stable foreign participation.

Experts stress predictability and infrastructure alignment over short-term incentives. Ashwinder Singh of CII highlighted stable taxation and faster approvals as critical for urban growth, while Sukhraj Nahar of CREDAI-MCHI underlined the importance of integrating infrastructure investment with housing supply. Additionally, AI-ready data centers, logistics hubs, and green buildings are emerging priorities for future-ready real estate.

With urbanization, infrastructure development, and rising end-user demand driving growth, India’s real estate sector enters 2026 with momentum, backed by domestic capital, strategic reforms, and a diversified investor base poised to sustain long-term development.