Budget 2026: Affordability focus, tax rationalisation; what else does real estate sector want?

Kolkata: The real estate sector is an extremely important sector in terms of the bigger picture. If the real estate sector improves, it triggers benefits for a number of labour-intensive domains such as cement, steel, bricks, electricals, decorative paints, sanitaryware, consumer durables, furniture, wood and last but not the least, the construction industry. Therefore, policymakers are usually eager to pave the way for a buoyant real estate sector.

Before approaching the subject of real estate sector, it must be borne in mind that in the GST rejig in September 2025, the indirect taxes on cement has been brought down, the taxes on wood has come down too, boosting the sector. The overall construction costs has come down by about 3-4% indicated reports, which has helped the affordable housing segment directly.

Therefore, one goes to the Budget with the realisation that affordability issues continue to plague the real estate sector but the premium segment flourished. On the commercial real estate front, emerging sectors such as student/health housing attracted significant investment. The real estate sector is now urging for continuity of policy and targeted benefits.

Significantly, there is no expectation of big bang announcements from the real estate sector. Rather, experts are looking for policy stability and smooth execution. Continued spending on infrastructure targeted fiscal benefit and lower cost of capital can continue to boost the sector as well as support employment generation, says analysts. "The lowering of interest rates by the Reserve Bank can go a long way in improving demand for the affordable sector, which is an important aspect," says investment strategist and Wishlist Capital director Nilanjan De, though he pointe out that it does not fall in the purview of the budget.

Experts pointed out that spending on infrastructure remains central to expectations in related industries. Rajan Luthra, CFO of ACE-Action Construction Equipment has pointed out that continued capital expenditure should support economic activity. It would also revive demand for construction equipment. On the construction front, private capex, exports and large projects such as airports, railways and freight corridors can boost demand in real estate. Luthra also emphasised lower interest rates can encourage investment. Mohit Goel, managing director of Omaxe told the media that they can see robust potential in Tier 2 and Tier 3 cities. Improving urban infrastructure and better connectivity are stimulating this demand.

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Some analysts also pointed to tax rationalisation for homebuyers as a crucial to creating demand. Binitha Dalal, founder and managing of Mt. K Kapital has told the media that affordability in housing, GST rationalisation for construction and redevelopment and clearer REIT norms could go a long way to boost this sector. She also thinks the government will provide incentives for green buildings and sustainable construction.