Delhi NCR, India | 2nd February 2026: The Union Budget 2026 signals more than incremental fiscal support — it reinforces a long-term policy roadmap that places urbanisation and infrastructure development at the centre of India’s growth strategy. By increasing public capital expenditure to Rs. 12.2 lakh crore and maintaining an infrastructure-first approach, the government is strengthening the foundations required for city expansion, emergence of new urban centres, and balanced regional development.
Industry leaders believe that continuity in infrastructure investment, regional connectivity, and urban development policies will create the structural conditions needed for the next phase of India’s urban transformation — where Tier-2 and Tier-3 cities evolve into independent economic hubs rather than satellite extensions of metros.
Infrastructure Spending Boosts Real Estate Momentum
Manoj Gaur, CMD, Gaurs Group, says,
“The Budget’s focus on infrastructure-led growth and financial stability, along with the increase in public capex to Rs. 12.2 lakh crore, carries forward the strong momentum seen in the real estate sector over the past few years. Continued infrastructure spending will support office, retail, and mixed-use projects while strengthening job creation and demand generation. The Infrastructure Risk Guarantee Fund will further accelerate expansion, especially in Tier-2 and Tier-3 cities, unlocking new real estate markets beyond major metros.”
Urbanisation is now being shaped not only by physical infrastructure but also by improved financing mechanisms that reduce risk and enable long-gestation developments.
Sahil Agrawal, CEO, Nimbus Group, says,
“The Budget combines strong capital expenditure with targeted policy measures to strengthen the infrastructure ecosystem. Increased capex offers greater visibility and confidence to developers and investors, particularly for long-term projects in metros and emerging cities. Dedicated REITs for public sector assets will unlock capital and improve funding cycles, while the Infrastructure Risk Guarantee Fund will mitigate execution and financing risks, making large-scale projects more predictable and viable.”
Tier-2 and Tier-3 Cities Gain Development Push
Higher allocations for urban infrastructure and increased fiscal transfers to states are expected to accelerate both housing and commercial real estate development in emerging urban regions.
Deepak Kapoor, Director, Gulshan Group, says,
“The Budget creates a stable and enabling framework for sustained real estate growth. Its focus on infrastructure-led development will be critical for expanding residential and commercial segments. Higher allocations for urban infrastructure and stronger resource transfers to states will drive growth in Tier-2 and Tier-3 cities, widening housing and commercial opportunities beyond metros.”
Connectivity as a Catalyst for Urban Growth
Connectivity upgrades are emerging as major drivers of urbanisation, reshaping commuting patterns and development corridors.
Uddhav Poddar, CMD, Bhumika Group, says,
“The continued emphasis on infrastructure development, especially in Tier-2 and Tier-3 cities, is a positive signal for the sector. The announcement of seven high-speed rail corridors will improve accessibility between major cities and emerging urban centres, unlocking new residential and commercial micro-markets. Enhanced construction equipment schemes will improve execution efficiency and reduce project timelines. With capex raised to Rs. 12.2 lakh crore, the multiplier effect on roads and urban infrastructure will accelerate growth beyond metros.”
New Job Centres and Commercial Ecosystems
As infrastructure creates new employment zones, commercial real estate activity is expected to deepen beyond traditional central business districts.
Harinder Singh Hora, Founder Chairman, Reach Group, says,
“Increased government spending on infrastructure and urban development will act as demand drivers for offices, logistics parks, business hubs, and mixed-use commercial assets. The focus on City Economic Regions with Rs. 5,000 crore allocation per region over five years will help develop new job centres outside metropolitan areas, boosting demand in emerging markets.”
Improved Asset Quality and Institutional Interest
Better infrastructure quality and longevity are also expected to reduce development risks and strengthen institutional participation.
B.K. Malagi, Vice Chairman, Experion Developers, says,
“Budget 2026 sends a strong message of policy continuity and commitment to infrastructure-led growth. Sustained public capital expenditure and improved construction capabilities enhance the feasibility of large-scale developments across metros and emerging cities. Improved connectivity will drive demand for residential, office, logistics, and mixed-use developments along growth corridors, while financing reforms will support greater institutional investment.”
Structural Enablers Over Short-Term Incentives
While the sector continues to seek tax rationalisation and faster approval mechanisms, the Budget prioritises long-term structural drivers of urbanisation over short-term demand stimuli.
Sandeep Chhillar, Founder & Chairman, Landmark Group, says,
“The Budget has clearly positioned infrastructure as the primary growth lever for real estate. High-speed rail corridors will transform commuting and unlock peripheral residential markets while attracting businesses and talent. The focus on upgrading construction and infrastructure equipment will improve execution efficiency and delivery quality. Backed by a capex outlay of Rs. 12.2 lakh crore, these measures support sustainable, infrastructure-led real estate growth rather than speculative demand.”
Emerging Cities to Become Self-Sustaining Urban Economies
Emerging cities are expected to transition from peripheral growth zones into independent economic ecosystems.
Bhupindra Singh, COO, RISE Infraventures, says,
“The Budget delivers a decisive push for Tier-2 and Tier-3 cities through sustained infrastructure investment. High-speed rail corridors will improve accessibility and attract businesses seeking cost-efficient expansion. Demand for new commercial hubs and organised office and retail ecosystems will grow beyond metros. Faster execution enabled by upgraded construction equipment will further strengthen buyer confidence. With capital expenditure raised to Rs. 12.2 lakh crore, infrastructure-led urbanisation will gather momentum.”
Conclusion
Overall, policy continuity and sustained capital expenditure under Union Budget 2026 are not only supporting the real estate sector but actively reshaping India’s urbanisation trajectory. By expanding the country’s city network and strengthening infrastructure-backed growth corridors, the Budget lays the groundwork for balanced, long-term urban development across metros, Tier-2 and Tier-3 cities.
