Aditya Virwani – Managing Director, Embassy Group 

The Union Budget 2026 has signalled that urban development and infrastructure creation remain at the heart of India’s economic strategy. While the Budget stopped short of sweeping tax incentives or redefinitions for affordable housing, it reinforced a sustained commitment to infrastructure expansion, asset monetisation, and the growth of emerging urban centres. These targeted measures directly address critical bottlenecks that have hampered the real estate sector’s potential in the past. 

The decision to raise capital expenditure to ₹12.2 lakh crore, nearly 9 per cent higher than last year, underscores the government’s conviction that infrastructure-led growth drives broader economic transformation. Roads, metro networks, industrial corridors, and freight connectivity, amongst others, directly influence where cities expand, where people choose to live, and where businesses choose to operate. Infrastructure has consistently proven to be one of the largest catalysts for real estate growth. The resurgence of commercial real estate over the past year, especially for Grade A offices, was driven partially by enhanced connectivity, such as the Mumbai Metro. 

Tier II and Tier III cities are now experiencing similar momentum, propelled by new airports, expressways, and other transit systems. The Budget’s emphasis on cities with populations above five lakh recognises that these centres are no longer peripheral markets, but rapidly evolving economic ecosystems supported by burgeoning manufacturing, services, education, and healthcare infrastructure. Expanded connectivity will unlock latent land value, bringing previously inaccessible areas into the development fold, while broadening the range of viable residential and commercial projects. 

Housing demand

Over the past few years, we have already seen robust housing demand and land value appreciation in cities beyond the traditional metros. Continued public investment will make these markets even more investable, enabling balanced regional growth rather than concentrating opportunity in only a handful of large cities. 

A forward-looking measure in the Budget is the proposal to accelerate monetisation of Central Public Sector Enterprises’ (CPSE) real estate assets through dedicated Real Estate Investment Trust (REIT) structures. This is a constructive step on two fronts: it unlocks value from underutilised public land and channels it into productive economic use through transparent market mechanisms, as well as deepening India’s real estate capital markets. REITs have already established themselves as a successful instrument for institutionalising ownership of income-earning real estate, and this initiative dovetails with recent regulatory changes – including the reclassification of REITs as equity-related instruments for mutual funds and specialised investment funds – that are designed to improve liquidity and broaden investor participation. 

infra risk Guarantee fund

The proposed Infra Risk Guarantee Fund is another significant and timely intervention. Large infrastructure, urban development, and real estate projects often face financing obstacles because perceived risks during early construction phases make lenders cautious. Under this proposal, the government will establish a fund to provide prudently calibrated partial credit guarantees to lenders financing infrastructure and construction projects, especially during the high-risk development and early construction phases. 

By mitigating early-stage risk, the fund also strengthens investor confidence, particularly in public-private partnership (PPP) models, where risk perception has dampened private capital participation in recent years. 

Alongside real estate, the Budget introduced measures that strengthen the tourism and hospitality ecosystem, which remains a vital driver of employment and local economies. Upgrading the National Council for Hotel Management and Catering Technology into a National Institute of Hospitality demonstrates a push toward professionalising and elevating India’s hospitality workforce. The parallel pilot scheme to upskill 10,000 tourist guides across 20 iconic destinations through a structured programme in collaboration with the Indian Institute of Management will go a long way towards India’s positioning as a global tourism destination. 

The Budget also highlighted the economic potential of India’s orange economy. In addition to animation, visual effects, and gaming, the rapid rise of India’s concert and live event ecosystem is reshaping how cities engage with culture, entertainment, and tourism. Large-format concerts, festivals, and live performances are increasingly drawing domestic and international audiences, activating stadiums, open grounds, convention centres, hotels, and more.  

By signalling policy support for these creative and live entertainment sectors, the Budget acknowledges their growing economic contribution. This momentum is already translating into increased demand for event-ready infrastructure, hospitality capacity, and mixed-use urban spaces that can host large-scale cultural gatherings. 

Overall, the Budget 2026 has provided long-term structural confidence. These measures not only strengthen India’s infrastructure backbone but can also unlock private capital, accelerate project delivery, and support more balanced urban and economic growth across markets. In particular, by enabling cross-sector collaboration, they also pave the way for more sustainable urbanisation and superior quality of life in both established and emerging cities. As infrastructure development continues to evolve, it will lay the foundation for a more resilient and globally competitive economy, ensuring that India remains a preferred destination for investment and growth in the coming decades. 

The writer is Managing Director, Embassy Group 

Published on February 2, 2026