UNION BUDGET 2026 PUTS REITs AND InvITs AT THE HEART OF REALTY GROWTH

For years, Indian real estate has depended on a familiar trio: bank lending, private equity and developer equity. It worked, but it was uneven. Liquidity cycles dictated confidence. Funding gaps stalled projects. Transparency lagged behind global standards. Union Budget 2026–27 signals something more structural. Instead of simply funding infrastructure, the government is redesigning how infrastructure and real estate are financed. At the centre of this shift are Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). The message is subtle but clear: real estate is no longer just a development business. It is becoming a capital markets story. Unlocking Public Assets, Deepening Markets One of the most consequential proposals in the Budget is the monetisation of public sector real estate through dedicated REIT structures. Public sector enterprises hold significant commercial land and office assets, much of it underutilised. By transferring these into REITs, the government aims to unlock value without relinquishing operational control. Apurva Muthalia, Business Head – Real Estate at Equirus Family Office, describes the move as structurally positive. It allows PSUs to free up capital from their balance sheets while offering investors access to stable, income-generating assets leased to quasi-sovereign entities. For retail and institutional investors alike, that combination of yield and stability carries appeal.


Tanuj Shori, Founder and CEO of Square Yards, sees this as part of a broader capital market deepening strategy. The recycling of public assets, he says, reinforces REITs and InvITs as mainstream investment vehicles rather than niche instruments. Over time, more listings could emerge across offices, retail centres, logistics parks, data centres and infrastructure portfolios. In effect, government real estate moves from dormant balance sheet entries to tradable, income-producing assets.

A Shift From Cycles to Systems Navin Dhanuka, Director at ArisUnitern, believes Budget 2026 marks a shift away from short-term cyclical support toward building a durable growth backbone. The emphasis on infrastructure corridors, City Economic Regions and capital market reforms creates what he describes as a virtuous loop between jobs, housing and urban expansion. When infrastructure expands into Tier-2 and Tier-3 cities, demand for housing and commercial space follows. But financing that expansion sustainably requires deeper capital pools. Shrinivas Rao, CEO of Vestian, frames the Budget as part of a larger roadmap toward Viksit Bharat by 2047.

Enhanced connectivity, regional development and easier financing conditions for foreign investors strengthen the ecosystem in which real estate operates. Global corporate centres evaluating Tier-2 cities, he notes, could accelerate decentralised growth if capital remains accessible and predictable. The real story here is integration. Infrastructure spending feeds urban growth. Urban growth feeds rental demand. Rental demand feeds REIT cash flows. Capital markets recycle that value back into new projects.

Equity Participation and Market Liquidity
The Budget also introduces refinements that could influence capital f lows. Saurabh Bhagat, CFO at Colliers India, notes that while REITs and Alternative Investment Funds already enjoy tax efficiencies, proposals allowing portfolio investment by REITs into equity instruments may have a greater impact on equity markets than on the REIT structures themselves. In other words, the regulatory fine-tuning may not disrupt existing vehicles, but it strengthens their interaction with broader capital markets. Sudarshan Lodha, Co-founder and CEO of Strata, calls REITs a bridge between infrastructure assets and long-term investors. He points to measures such as the Infrastructure Risk Guarantee Fund and the push for corporate bond market making as steps toward enhancing liquidity and risk distribution. Together, these reforms deepen the investment ecosystem, making real estate f inancing less vulnerable to isolated funding shocks.

Expanding the Geographic Footprint
Monty Joshi, Co-founder of Sarvam Properties, sees the Budget as laying the groundwork for sustained urbanisation. Infrastructure and City Economic Regions are expanding housing demand beyond saturated metro cores into emerging Tier-2 and Tier-3 markets. Capital access through REITs and municipal bonds, he argues, reduces execution risks and costs for developers. As end-user demand becomes more geographically diverse, this creates a more stable cycle, less driven by speculation and more by occupancy. The deepening of capital markets does something else: it broadens participation. Retail investors, once largely excluded from prime commercial real estate, can now access stabilised assets through listed structures. That democratisation of access improves transparency and valuation discipline.

Budget 2026 places REITs and InvITs at the centre of India’s evolving real estate financing model. By unlocking public sector assets and strengthening capital markets, the government is encouraging a shift from traditional funding sources toward more transparent, investor-driven structures.