JLL rates Budget 3/10 for the real estate sector
Real Estate

JLL rates Budget 3/10 for the real estate sector

The Union Budget announcement continues to focus on affordable housing and infrastructure, more specifically, urban infrastructure and logistics.  However, we do not see significant impact on the realty sector, says Ramesh Nair, CEO & Country Head, JLL India, as he shares his Budget Outlook for 2020.

Keeping in mind the limited fiscal room available to the Government, the focus of the Budget is to increase liquidity and enhance consumer demand through extension of benefits and simplification of personal income tax.

Emphasis on ‘Study in India’
•    Will provide a significant boost to student housing, which is set on a higher growth trajectory.

Private sector policy on data centre parks across the country
•    JLL estimates US$ 4 billion investment opportunity for data centres
•    Industry capacity to grow from 350 MW in 2019 to 781 MW in 2024
•    Industry revenue to triple in the next five years to US$ 3.2 billion in FY2024

National Logistics Policy and viability gap fund for development of Warehouses
•    To provide impetus for increasing warehousing supply
•    Supply expected to rise from 211 mn sq ft in 2019 to 379 mn sq ft in 2023
•    Net absorption of 36 mn sq ft in 2019 to get further boost
•    Single window clearance to expedite supply as approval time expected to reduce by 6 months

NBFC eligibility for SARFAESI Act reduced from Rs 5 billion to Rs 1 billion Assets Under Management
•    To empower more NBFCs to recover funds in stalled real estate projects
•    Provide opportunity for funds to invest in stressed assets

Enhanced focus on infrastructure - Rs 1.7 trillion allocated to transport infrastructure including railways
•    Delhi-Mumbai expressway to be completed by 2023
•    Bengaluru-Chennai expressway to be completed by 2023.
•    Government to provide 20% equity for Bengaluru Suburban Transportation Project
•    100 more airports to be developed by 2024
•    5 new smart cities proposed

Continued focus on affordable housing
•    Extension of benefit u/s 80EEA to avail additional Rs 150,000 interest deduction on home loans for first time home buyers
•    This benefit (currently available for home loans sanctioned between April 1, 2019 and March 31, 2020), has been extended until 31st March 2021. This will continue the benefits the first time home buyers.
•    Considering that a majority of home buyers fall in the lower and mid-income segments, this tax benefit will boost demand substantially.
•    Will significantly benefit first time home buyers who will enjoy the benefits of interest subvention under the CLSS scheme and the extended tax benefits.

Time extension to claim 100 per cent tax deduction on profits from affordable housing projects until March 2021 u/s 80IBA
•    This extension in the dateline will ensure continued interest of developers for the construction of affordable housing projects and help achieve the “Housing for All” objective of the government

Abolition of Dividend Distribution Tax and 100 per cent tax exemption for Sovereign Wealth Funds infrastructure investments with minimum lock-in of three years
•    Investments in logistics and warehousing to get boost
•    Investments in affordable housing projects to get more fillip

The Union Budget announcement continues to focus on affordable housing and infrastructure, more specifically, urban infrastructure and logistics.  However, we do not see significant impact on the realty sector, says Ramesh Nair, CEO & Country Head, JLL India, as he shares his Budget Outlook for 2020.Keeping in mind the limited fiscal room available to the Government, the focus of the Budget is to increase liquidity and enhance consumer demand through extension of benefits and simplification of personal income tax.Emphasis on ‘Study in India’•    Will provide a significant boost to student housing, which is set on a higher growth trajectory. Private sector policy on data centre parks across the country•    JLL estimates US$ 4 billion investment opportunity for data centres•    Industry capacity to grow from 350 MW in 2019 to 781 MW in 2024•    Industry revenue to triple in the next five years to US$ 3.2 billion in FY2024National Logistics Policy and viability gap fund for development of Warehouses•    To provide impetus for increasing warehousing supply•    Supply expected to rise from 211 mn sq ft in 2019 to 379 mn sq ft in 2023•    Net absorption of 36 mn sq ft in 2019 to get further boost•    Single window clearance to expedite supply as approval time expected to reduce by 6 monthsNBFC eligibility for SARFAESI Act reduced from Rs 5 billion to Rs 1 billion Assets Under Management•    To empower more NBFCs to recover funds in stalled real estate projects•    Provide opportunity for funds to invest in stressed assetsEnhanced focus on infrastructure - Rs 1.7 trillion allocated to transport infrastructure including railways•    Delhi-Mumbai expressway to be completed by 2023•    Bengaluru-Chennai expressway to be completed by 2023. •    Government to provide 20% equity for Bengaluru Suburban Transportation Project•    100 more airports to be developed by 2024•    5 new smart cities proposedContinued focus on affordable housing •    Extension of benefit u/s 80EEA to avail additional Rs 150,000 interest deduction on home loans for first time home buyers•    This benefit (currently available for home loans sanctioned between April 1, 2019 and March 31, 2020), has been extended until 31st March 2021. This will continue the benefits the first time home buyers. •    Considering that a majority of home buyers fall in the lower and mid-income segments, this tax benefit will boost demand substantially. •    Will significantly benefit first time home buyers who will enjoy the benefits of interest subvention under the CLSS scheme and the extended tax benefits.Time extension to claim 100 per cent tax deduction on profits from affordable housing projects until March 2021 u/s 80IBA•    This extension in the dateline will ensure continued interest of developers for the construction of affordable housing projects and help achieve the “Housing for All” objective of the governmentAbolition of Dividend Distribution Tax and 100 per cent tax exemption for Sovereign Wealth Funds infrastructure investments with minimum lock-in of three years•    Investments in logistics and warehousing to get boost •    Investments in affordable housing projects to get more fillip

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