FM an­nounces two ma­jor fac­tors for Realty In­vest­ment

Accommodation Times - - Current Affairs -

Union bud­get in­cluded some very pos­i­tive and ef­fec­tive an­nounce­ments in real es­tate in­vest­ment sec­tor. The pro­posed For­eign Di­rect In­vest­ment in real es­tate projects will in­crease funds avail­abil­ity, es­pe­cially for the af­ford­able hous­ing seg­ment. FDI is be­ing re­duced from 50,000 square me­tres to 20,000 square me­tres and from USD 10 mil­lion to USD 5 mil­lion re­spec­tively with a three year post com­ple­tion lock in. These min­i­mum thresh­old lim­its how­ever will not be ap­pli­ca­ble for those projects which com­mit at least 30% of the project cost for af­ford­able hous­ing. Govern­ment has also pro­posed in­cen­tives for Real Es­tate In­vest­ment Trusts (REITs) which will have pass through for the pur­pose of tax­a­tion. An­nounc­ing this dur­ing his maiden Bud­get Speech in the Lok Sabha on 10th July, the Fi­nance Min­is­ter Shri Arun Jait­ley said that REITs have been suc­cess­fully used as in­stru­ments for pool­ing of in­vest­ments in sev­eral coun­tries.

As an in­no­va­tion, a mod­i­fied REITs type struc­ture for in­fra­struc­ture projects is also be­ing an­nounced as In­fra­struc­ture In­vest­ment Trusts ( In­vITs) which would have a sim­i­lar tax ef­fi­cient pass through sta­tus, for PPP and other in­fra­struc­ture projects. These struc­tures would re­duce the pres­sure on the bank­ing sys­tem while also mak­ing avail­able fresh eq­uity. Shri Jait­ley ex­uded con­fi­dence that these two in­stru­ments would at­tract long term fi­nance from for­eign and do­mes­tic sources in­clud­ing the NRIs.

The in­tro­duc­tion of REITs will bring funds from re­tail in­vestors to the real es­tate sec­tor and would also pro­vide di­ver­si­fi­ca­tion ben­e­fit to real es­tate in­vestors. REITs will be proved to be an ef­fec­tive and vi­tal source of funds for the sec­tor.

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.