Boost for housing sector; REITs likely to kick off

Bringing the much-needed cheer to the real estate sector, Finance Minister Arun Jaitley announced a slew of measures for the housing sector which are expected to lift the buyers' sentiment.

In order to realise the Centre’s flagship mission ‘housing for all by 2022’, Jaitley has announced a 100 per cent deduction for profits to an undertaking from a housing project for flats up to 30 sq m in four metro cities and 60 sq m in other cities, approved during June 2016 to March 2019, and is completed within three years of approval.

“Minimum Alternate Tax will, however, apply to these undertakings,” he added.

This would increase the focus of affordable housing developers on the largely-ignored segment, said

Sanjay Dutt, Managing Director, India, Cushman & Wakefield , said, adding that, “The caveat of housing space limits should have been equitable, and the three-year window for project completion could have been for a longer duration as approvals and construction typically take a long time.”

For the ‘first-home buyers’, the Budget proposed deduction for additional interest of ₹50,000 per annum for loans up to ₹35 lakh sanctioned during the next financial year, provided the value of the house does not exceed ₹50 lakh. This is expected to encourage low-end buyers to invest in property.

“In effect, it will reduce the cost of loan which will boost the demand for housing in the budget to mid segment,” Shishir Baijal, Chairman & Managing Director, Knight Frank India, said.

However, developers were looking forward to credit break and single-window clearance for projects, which the government has failed to announce, said, Anubhav Jain, Director, Silverglades.

Real estate investment trusts

Clearing the main hurdle for listing of Real Estate Investment Trusts in India, Jaitley announced that any distribution made out of income of special purpose vehicle to the REITs and INVITs having specified shareholding will not be subjected to Dividend Distribution Tax.

Anuj Puri, Chairman & Country Head, JLL India , said, “We expect a few listings to happen in the current year itself, either by financial institutions or developers. Currently, around 229 million sq ft of office space can be seen as REIT-compliant. If we assume that even 50 per cent of these get listed, we are looking at a total REITs listing worth $18.5 billion.”

The Budget also extended excise duty exemption, currently available to ‘Concrete Mix’ manufactured at site for use in construction work at such site to ‘Ready Mix Concrete’. This is expected to lower the cost of housing construction.