Budget 2026: Real estate shares fall up to 10% due to budget failure; REITs rise to 3%

Real estate stocks fell 10% intraday, continuing their lackluster pre-budget show, likely disappointed by the lack of any big-ticket announcement for the sector. The Nifty Realty index fell 4.6% with nine scrips in the 10-share index trading in the red after the Budget 2026 speech.The biggest intraday losers included Lodha Developers and Prestige Estates Projects, whose shares fell 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 limit for deduction of interest paid on home loans of ₹ 24(b) for own use, from the current Rs 2 lakh to Rs 3-5 lakh.While this remains a long-standing industry demand, brokerage Nuvama Institutional Equities sees it happening this time. It is believed to have a positive impact on the real estate sector by boosting demand in the affordable housing segment and the middle-income segment.

The other expectation was a redefinition of affordable housing.

Nuvama also expected the government to redefine ‘affordable’ in terms of price range or unit size to achieve a reduced VAT rate of 1% on the sale of properties under construction. “The change would boost housing demand,” the report said in a budget note.

Bhavya Bagrecha, fund manager at Bharat Bhoomi Fund, said the current limit for affordable housing is 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-metro cities. “It is virtually impossible to find a house within the Rs 45 lakh limit in major urban centers, making many buyers ineligible for affordable housing benefits such as lower GST rates,” she added. Another demand related to the extension of the time limit and the deduction amount of 80 EER. While Nuvama felt that the move, if implemented, could give a new impetus to the affordable housing segment.

Also read: Budget 2026: PFC and REC rise to 6% after FM Sitharaman announces restructuring

REITs rise to 3%

Brookfield India Real Estate Trust touched a day’s high of Rs 361.99 on the NSE and gained 2.6%, while Nexus Select Trust rose almost 3%. Shares of Embassy Office Parks REIT rose 1%, while Mindspace Business Parks REIT traded flat, although the bias was negative.

Finance Minister Nirmala Sitharaman today said the government will continue to focus on developing infrastructure in cities with a population of more than 5 million (Tier II and Tier III), which have emerged as growth hubs. She proposed to accelerate the recycling of significant real estate assets of CPSEs by setting up dedicated REITs.

“Over the past decade, our government has taken several initiatives for large-scale improvement of public infrastructure, including through new financing instruments such as Infrastructure Investment Trusts (InVITs) and Real Estate Investment Trusts (REITs) and institutions such as NIIF and NABFID,” Sitharaman said in her Budget speech.

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