As India looks ahead to Budget 2026, the residential real estate market is entering a phase shaped less by cyclical sentiment and more by sustained public investment in infrastructure. Rather than short-term price movements, long-term capital expenditure on transport, logistics and urban connectivity is redefining where people choose to live and how housing demand is distributed across cities.
While estimates suggest central capital spending in Budget 2026 could cross Rs 12 lakh crore, the broader policy direction is already clear. Government capital expenditure has steadily increased, rising from Rs 11.11 lakh crore in FY25 to Rs 11.21 lakh crore in FY26, reinforcing infrastructure as the backbone of economic growth. Leading economists from institutions such as Bank of Baroda and ICRA project that FY27 allocations could range between Rs 12 lakh crore and Rs 12.5 lakh crore, growing annually at 7%–10%.
This sustained investment is doing more than improving urban efficiency. Better connectivity is compressing travel time, unlocking land at city edges and reshaping buyer preferences. Homebuyers are increasingly prioritising proximity to transit corridors, employment hubs and social infrastructure over traditional central locations. As commute time becomes a measurable cost, areas once considered peripheral are now viable residential choices.
The Mumbai Metropolitan Region offers a clear example of this shift. Large-scale projects such as the Mumbai Trans Harbour Link, Coastal Road, Goregaon–Mulund Link Road and the Panvel–Karjat suburban rail corridor are effectively shrinking distances. Data from ANAROCK Research and Magicbricks shows that property prices in micro-markets along these corridors rose by 15%–30% between 2022 and 2025. Faster access from South Mumbai to Navi Mumbai has redirected demand towards Panvel, Ulwe and Kharghar, while upcoming east–west connectivity is boosting sales velocity in Mulund and Goregaon.
Crucially, this demand is increasingly driven by end-users rather than speculative investors. Families are trading centrality for connectivity, supported by functional infrastructure that is already operational or nearing completion. Similar patterns are visible beyond Mumbai.
In the National Capital Region, the upcoming Noida International Airport at Jewar and the expansion of the Yamuna Expressway are transforming the region’s buyer profile. Land prices have surged sharply, but the focus has shifted from land banking to employment-led growth, with logistics, IT parks and hospitality zones under development. Mid-income housing demand in the Rs 50 lakh–Rs 90 lakh range is rising, anchored in job creation.
Elsewhere, projects such as the Ganga Expressway and the Delhi–Ghaziabad–Meerut RRTS are improving affordability and access, allowing young professionals to consider locations previously constrained by commute times. In Bengaluru, metro expansions are pushing growth outward, with homes near upcoming stations commanding notable premiums and stronger rental yields. Buyers here, too, are predominantly end-users seeking predictable travel and larger homes.
Hyderabad’s Regional Ring Road is opening new growth corridors, supported by planned industrial and logistics hubs. While land prices have already moved, the larger impact is expected as job creation follows infrastructure. Policy timing has also played a role, with changes in stamp duty valuation norms driving a surge in registrations during 2025.
Institutional capital is reinforcing this structural shift. Private equity investment in Indian real estate touched USD 6.7 billion in 2025, with residential emerging as a growing focus after offices. Investors are backing projects with visible infrastructure linkages, favouring disciplined supply and lower systemic risk.
Despite strong momentum in premium and mid-range segments, affordability remains a concern. Rising land and construction costs have squeezed sub-Rs 50 lakh housing, pushing middle-income households to city fringes and increasing dependence on mass transit.
Over the next five years, three forces are expected to dominate housing demand: infrastructure-led decentralisation, deeper institutional participation and buyer decisions driven by end-use rather than speculation. The takeaway for homebuyers is simple: connectivity now matters more than pin codes. For developers and policymakers, Budget 2026 presents an opportunity to address structural bottlenecks and align housing supply with the infrastructure-led reality of India’s urban future.
Source: The Hindu
