REIT is an at­trac­tive prod­uct for mod­er­ate in­vestors

In­di­vid­ual in­vestors can in­clude real es­tate in­vest­ment trusts in their in­vest­ment port­fo­lios be­cause of the mod­er­ate risks in­volved com­pared to other as­sets

HT Estates - - HTESTATES - Neeraj Bansal

The Union Bud­get 2016-17 was a mixed bag for the real es­tate sec­tor. The re­forms an­nounced i n t he bud­get were largely di­rected to sup­port the sup­ply side of the real es­tate sec­tor, while the de­mand side was of­fered lim­ited in­cen­tives. Over­all, var­i­ous re­forms such as re­moval of Div­i­dend Dis­tri­bu­tion Tax ( DDT) on Real Es­tate In­vest­ment Trusts ( REITs) Spe­cial Pur­pose Ve­hi­cle (SPV), direct and in­di­rect tax ben­e­fits to af­ford­able hous­ing, tax in­cen­tives to first time home bor­row­ers etc are ex­pected to sup­port the sec­tor growth.

In our view, the most prom­i­nent an­nounce­ment was the re­moval of DDT, which was ear­lier ap­pli­ca­ble on pay­ment of div­i­dends by a REIT SPV.

The DDT is­sue was the only ma­jor road­block in suc­cess­ful take-off of REITs in In­dia and with its re­moval, we may wit­ness list­ing the first REITs later in the year or early next year. It is es­ti­mated that in In­dia has po­ten­tial for list­ing of about about 200- 250 mil­lion sq ft of REITable as­sets worth US$3540 bil­lion and close to half of

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