Budget 2026: Realty stocks plunge up to 10% on Budget miss; REITs rally up to 3%

Synopsis

Realty stocks fell sharply after Budget 2026 disappointed the sector with no major incentives, dragging the Nifty Realty index lower. Developers saw heavy losses amid unmet housing expectations, while REITs outperformed, supported by the government’s continued focus on urban infrastructure development and asset monetisation through dedicated REIT structures.

Realty stocks plunged 10% intraday, continuing their pre-budget lackluster show, likely disappointed by the absence of any big-ticket announcement for the sector. The Nifty Realty index fell 4.6% with nine scrips in the 10-stock index trading in the red following the Budget 2026 speech.

Among the top intraday losers were Lodha Developers and Prestige Estates Projects, whose shares declined 10% and 8%, respectively. Others like Godrej Properties, DLF, Sobha, Oberoi Realty, The Phoenix Mills, Signatureglobal (India), and Brigade Enterprises also fell up to 7%.

One expectation from this year's budget was an increase in the cap on deduction towards interest paid on home loans u/s 24(b) for self-occupied property, from the current Rs 2 lakh to Rs 3-5 lakh.

While this remains a longstanding industry demand, brokerage Nuvama Institutional Equities sees that happening this time. It is believed to positively impact the real estate sector by boosting demand in the affordable and mid-income housing segment.

The other expectation concerned a redefinition of affordable housing.

Nuvama also expected the government to redefine 'affordable' in terms of price band or unit size to attract a reduced 1% GST rate on the sale of under-construction property. "The change would provide a stimulus to housing demand," it said in a budget note.

Bhavya Bagrecha, Fund Manager at Bharat Bhoomi Fund, said that the current cap on affordable housing is at Rs 45 lakh, which should be increased to Rs 75–85 lakh for metro cities like Mumbai and Delhi-NCR, and Rs 60–65 lakh for non-metros. "It is virtually impossible to find a home within the Rs 45 lakh limit in major urban centers, rendering many buyers ineligible for affordable housing benefits like lower GST rates," she added.

Another demand pertained to the extension of the time limit and the deduction amount u/s 80EEA. While Nuvama opined that the move could give a fresh impetus to the affordable housing segment if implemented.

Also Read: Budget 2026: PFC, REC rise up to 6% after FM Sitharaman announces restructuring

REITs rise up to 3%

Finance Minister Nirmala Sitharaman today said that the government will continue to focus on developing infrastructure in cities with over 5 lakh population (Tier II and Tier III), which have expanded to become growth centres. She proposed to accelerate the recycling of significant real estate assets of CPSEs through the setting up of dedicated REITs.

"During this past decade, our Government has undertaken several initiatives for large-scale enhancement of public infrastructure, including through new financing instruments such as Infrastructure Investment Trusts (InVITs) and Real Estate Investment Trusts (REITs) and institutions like NIIF and NABFID," Sitharaman said in her budget speech.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)

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