GST, REITs made real estate sector secure option for investors; realty market veteran explains how
Financial Express , May 15, 2019
The introduction of Real Estate Investment Trusts (REITs), Goods and Services Tax (GST), Real Estate Regulatory Authority (RERA) among others have brought in significant changes in the real estate sector, making it a secure option for investors, said a realty market veteran. These economic reforms have led to growth and development within the infrastructural, residential and commercial areas, Sanjay Dutt, Chairman, FICCI Real Estate Committee, also said in a blog post. The foreign investors have now become better familiar with the country’s regulatory and taxation aspects as increased accountability and transparency have entered the sector, he noted. The high-end properties, once dealt in by ultra rich, are now accessible for investment to retail investors as well through REITs. Any investor with investment less than Rs 2 lakh is considered as a retail investor in the capital markets. REITs earn income through rent from their holdings which is passed on to the investors. The capital appreciation in the underlying assets also provides benefits to the investors.
Over the last couple of years, the sluggishness in real estate sector has deepened amid liquidity crisis at NBFCs which has hurt builders. However, the real estate sector veteran is hopeful of the improvement in sales going ahead. The demand for residential and commercial properties is also on the rise after the introduction of GST, the Managing Director and Chief Executive Officer, Tata Realty & Infrastructure Ltd, said, adding indirect taxation framework has helped to streamline the realty sector in India. Furthermore, the benefits arising out of improved taxation structure has helped the sector to revive, Sanjay Dutt said.
Meanwhile, the sales in the residential segment is expected to improve in the next six months, said a Knight Frank report released on Monday. The rationalisation of GST for under-construction and affordable housing properties and various measures from the Reserve Bank of India (RBI) have helped the sentiment to improve in the sector, the report said citing various stakeholders of the sector. The right steps by the Modi government and the RBI may result in the translation of the policy interventions into new launched and sales in the coming months, said the report titled ‘Knight Frank’s Q1 2019 Sentiment Index Survey.’