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The dust has settled on the Union Budget 2026, and the real estate market is buzzing with a strange combination of excitement and dread. On the one hand, the government has signaled a big, forward-thinking shift toward making India’s Tier 2 and Tier 3 cities into global growth centers. On the other hand, the dream of “Housing for All” appears to be facing a major policy roadblock.
For the Confederation of Real Estate Developers’ Associations of India (CREDAI), the message is mixed. While infrastructure investments are transformative, the lack of affordable housing incentives has left developers and middle-class purchasers feeling trapped.
Table of Contents
The Rise of the “Growth Centres”
A Massive Infrastructure Infusion
Budget 2026 allocates ₹12.2 lakh crore for infrastructure. This is more than just a number; it’s a plan for the “New India.” The Finance Minister’s focus has switched drastically toward cities with populations of more than 5 lakh, seeing them as emerging “growth centres” rather than “small towns.”
The Power of City Economic Regions (CERs)
One of the most talked-about highlights is the allocation of ₹5,000 crore per City Economic Region (CER). The budget seeks to build cohesive economic ecosystems by mapping these locations based on distinct growth drivers, such as Coimbatore’s textile centers or Varanasi’s spiritual tourism magnet. For real estate, this means increased connection and a natural increase in demand for both commercial and residential properties.
The Infrastructure Safety Net
De-risking the Developer
The government announced a ₹25,000 crore Infrastructure Risk Guarantee Fund, which drew interest from the industry. This fund is intended to provide credit guarantees to lenders throughout the high-risk construction phases of a project. By eliminating the “project financing bottleneck,” the government is encouraging private parties to invest more confidently in large-scale urban development.
High-Speed Connectivity
The unveiling of seven new high-speed intercity rail corridors, including those connecting Mumbai to Pune, Delhi to Varanasi, and Bengaluru to Chennai, is a game changer. These “growth connectors” will effectively shrink the distance between metros and satellite towns, making living in a Tier-2 city and working in a Tier-1 city a viable reality for thousands.
The Affordable Housing “Free Fall”
A Missed Opportunity for the Middle Class
Despite the infrastructure cheer, CREDAI has expressed “deep disappointment” in the affordable housing category. The sector has been requesting a modification to the 2017 price cap of ₹45 lakh for years. Urban developers are struggling to build a quality home under ₹45 lakh due to rising land prices and raw material expenses such as steel and cement.
The Shrinking Supply Warning
CREDAI National President Shekhar Patel gave a severe warning: without intervention, the ratio of affordable housing in new launches might fall from 18% to 12%. This is more than simply a statistic; it represents a potential disaster for the lower middle class. When supply runs out, rents rise, and informal housing (slums) expands.
Bridging the Policy Gap
Outdated Definitions
The industry remains puzzled as to why the definition of “affordable” hasn’t evolved. CREDAI contends that “affordable housing” should be viewed as economic infrastructure rather than a welfare program. To reflect the market reality of 2026, they propose lifting carpet area norms and abolishing the hard value cap.
The Rental Reality Check
While the budget prioritizes “buying” and “building,” the underdeveloped structured rental market remains a concern. CREDAI’s proposal for a National Rental Housing Mission, which would include tax breaks for tenants and developer incentives, was mostly ignored. As urbanization accelerates, the lack of a formal rental system could pose a significant challenge for the mobile workforce.
What Does This Mean for the Future
The 2026 Budget has virtually constructed the roads and bridges, but it has not yet unlocked the door to the house for everyone. The emphasis on Tier-2 cities will surely produce a “virtuous loop” of jobs and housing in peripheral areas, but the basic issue of affordability remains a pressing one. For the time being, the real estate sector is at a crossroads: excited by the infrastructure push, but frightened of a market that may soon become too expensive to support itself.
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