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Affordable housing, logistics to get a boost from SWFs
Real Estate

Affordable housing, logistics to get a boost from SWFs

The measures announced recently in the Union Budget granting 100 per cent tax exemption on interest, dividend and capital gains income to Sovereign Wealth Funds (SWFs) investing in infrastructure, will further help boost investments in affordable housing and logistics, says JLL Research. India seems to have gained a major impetus following some positive policy backing and the ecosystem in general thus helping boost the image of the country as a favorite with SWFs.

Sovereign Wealth Funds are state-owned investment funds commonly established with revenues generated from trade surpluses, central bank reserves, currency operations, privatisations and transfer payments. Between 2008-2018, global Assets Under Management (AUM) of SWFs grew at a CAGR of 10 per cent with Asia, garnering the highest share (42 per cent). 

“Sovereign wealth funds have been playing a pivotal role in investments globally with estimated AUM of 8.1 trillion as of 2019. Investments by SWFs in India improved sharply as a result of various policy measures introduced to attract foreign investments. The Union Budget for 2020 has further incentivised SWFs to invest in infrastructure including affordable housing and warehousing by providing tax exemptions. The rise in potential returns is expected to drive more SWF investments in India. SWFs would be more inclined to use the direct investment route as compared to investment platforms,” said Ramesh Nair, CEO and Country Head, JLL India.

India emerging as the favourite destination for SWFs 

Investments by SWFs improved sharply as various policy measures were introduced to attract foreign investments. In India, SWFs hold US$ 29 billion of Assets Under Custody (AUC) as of December 2019. Of these, real estate and warehousing account for 22 per cent of the AUC, amounting to US$ 6.6 billion. 

“SWF Investments quadrupled to US$ 5.3 billion during 2014-19 from US$ 1.3 billion recorded between 2005 and 2013, due to various reforms introduced in the real estate sector. Going forward, we expect more traction from this type of patient capital,’ said Dr Samantak Das, Chief Economist and Executive Director, JLL India.



The Union Budget for 2020 further incentivises SWFs to invest in infrastructure by providing them a 100 per cent tax exemption on interest, dividend and capital gains income in respect of investment made in infrastructure and other notified sectors before March 31, 2024, with a minimum lock-in period of three years. 

The resultant increase in potential returns is expected to boost investments by SWFs in affordable housing and logistics and warehousing which have been accorded infrastructure status. 

The measures announced recently in the Union Budget granting 100 per cent tax exemption on interest, dividend and capital gains income to Sovereign Wealth Funds (SWFs) investing in infrastructure, will further help boost investments in affordable housing and logistics, says JLL Research. India seems to have gained a major impetus following some positive policy backing and the ecosystem in general thus helping boost the image of the country as a favorite with SWFs.Sovereign Wealth Funds are state-owned investment funds commonly established with revenues generated from trade surpluses, central bank reserves, currency operations, privatisations and transfer payments. Between 2008-2018, global Assets Under Management (AUM) of SWFs grew at a CAGR of 10 per cent with Asia, garnering the highest share (42 per cent). “Sovereign wealth funds have been playing a pivotal role in investments globally with estimated AUM of 8.1 trillion as of 2019. Investments by SWFs in India improved sharply as a result of various policy measures introduced to attract foreign investments. The Union Budget for 2020 has further incentivised SWFs to invest in infrastructure including affordable housing and warehousing by providing tax exemptions. The rise in potential returns is expected to drive more SWF investments in India. SWFs would be more inclined to use the direct investment route as compared to investment platforms,” said Ramesh Nair, CEO and Country Head, JLL India.India emerging as the favourite destination for SWFs Investments by SWFs improved sharply as various policy measures were introduced to attract foreign investments. In India, SWFs hold US$ 29 billion of Assets Under Custody (AUC) as of December 2019. Of these, real estate and warehousing account for 22 per cent of the AUC, amounting to US$ 6.6 billion. “SWF Investments quadrupled to US$ 5.3 billion during 2014-19 from US$ 1.3 billion recorded between 2005 and 2013, due to various reforms introduced in the real estate sector. Going forward, we expect more traction from this type of patient capital,’ said Dr Samantak Das, Chief Economist and Executive Director, JLL India.The Union Budget for 2020 further incentivises SWFs to invest in infrastructure by providing them a 100 per cent tax exemption on interest, dividend and capital gains income in respect of investment made in infrastructure and other notified sectors before March 31, 2024, with a minimum lock-in period of three years. The resultant increase in potential returns is expected to boost investments by SWFs in affordable housing and logistics and warehousing which have been accorded infrastructure status. 

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