Realty sector loses Rs 64.8 Bn in market value
ECONOMY & POLICY

Realty sector loses Rs 64.8 Bn in market value

Listed companies in the real estate sector experienced a loss of Rs 64.8 billion in market value by Friday, following Finance Minister Nirmala Sitharaman's announcement in her Union Budget speech on Tuesday regarding the removal of indexation benefits on property sales. Although stock market data indicated that some of these losses were recovered on Friday, the sector still ended the week with a net loss compared to the day before the Budget presentation. The total market valuation of real estate sector companies stood at Rs 6.98 trillion as of Friday.

Analysts have suggested that the removal of indexation benefits might negatively affect investor sentiment, especially in high-end segments where annual returns range from 10% to 11%. According to an analysis by rating firm IndRa, properties with expected returns below this range could lead to higher capital gains tax outflows, which may result in decreased investments in this segment. The firm indicated that reduced investor demand could pose challenges for developers in raising prices in the near term, as investors might be cautious about significant tax liabilities.

The impact of the indexation benefit removal and the reduction in long-term capital gains tax is expected to be minimal for end-users who sell their current homes and reinvest in new ones, but it will affect investors selling investment properties and seeking to reinvest in other asset classes. Prashant Thakur, Regional Director & Head of Research at Anarock Group, suggested that the removal of benefits might reduce speculative demand and increase supply, potentially leading to price corrections. This could result in a notable price decline in the short term as sellers compete for fewer buyers. However, Thakur anticipated that the market would stabilize over time, with prices reflecting genuine end-user demand rather than speculative investments, and developers might shift focus from luxury to affordable and mid-segment housing.

CLSA indicated that the new tax regime could have a negative impact on investors with holding periods of less than five years, especially where property price appreciation is moderate (below 10% per annum).

Listed companies in the real estate sector experienced a loss of Rs 64.8 billion in market value by Friday, following Finance Minister Nirmala Sitharaman's announcement in her Union Budget speech on Tuesday regarding the removal of indexation benefits on property sales. Although stock market data indicated that some of these losses were recovered on Friday, the sector still ended the week with a net loss compared to the day before the Budget presentation. The total market valuation of real estate sector companies stood at Rs 6.98 trillion as of Friday. Analysts have suggested that the removal of indexation benefits might negatively affect investor sentiment, especially in high-end segments where annual returns range from 10% to 11%. According to an analysis by rating firm IndRa, properties with expected returns below this range could lead to higher capital gains tax outflows, which may result in decreased investments in this segment. The firm indicated that reduced investor demand could pose challenges for developers in raising prices in the near term, as investors might be cautious about significant tax liabilities. The impact of the indexation benefit removal and the reduction in long-term capital gains tax is expected to be minimal for end-users who sell their current homes and reinvest in new ones, but it will affect investors selling investment properties and seeking to reinvest in other asset classes. Prashant Thakur, Regional Director & Head of Research at Anarock Group, suggested that the removal of benefits might reduce speculative demand and increase supply, potentially leading to price corrections. This could result in a notable price decline in the short term as sellers compete for fewer buyers. However, Thakur anticipated that the market would stabilize over time, with prices reflecting genuine end-user demand rather than speculative investments, and developers might shift focus from luxury to affordable and mid-segment housing. CLSA indicated that the new tax regime could have a negative impact on investors with holding periods of less than five years, especially where property price appreciation is moderate (below 10% per annum).

Next Story
Products

TOTO India Launches Premium G & L Showers with Sleek Faucet Range

TOTO India has launched its G Shower and L Shower series, alongside an expanded range of GT, LH, and Pull-Out lavatory faucets. The collection blends advanced technology, refined aesthetics, and everyday comfort, staying true to TOTO’s philosophy of creating spaces that are both beautiful and functional. The G Shower series delivers the 3Rs of showering: Relaxing, Refreshing, and Revitalizing. Features include the Calming Shawl spray mode, Warm Spa technology, and multiple overhead and hand-shower options across eight finishes. The L Shower complements this with easy-to-use controls sui..

Next Story
Infrastructure Energy

Hero Future Energies Secures Funding for 120 MW Hybrid Project

Hero Future Energies (HFE), through its SPV Clean Renewable Energy Hybrid Three, has secured Rs 19.08 billion in funding from the State Bank of India (lead) and Canara Bank. The funds will be used to develop and construct HFE’s 120 MW renewable energy hybrid project at Kurnool, Andhra Pradesh. The project, contracted with SJVN, integrates wind, solar, and storage technologies to deliver reliable peak power. With a 21-year repayment period, the funding ensures timely execution and the commencement of commercial operations. The financial closure demonstrates continued lender confidence in..

Next Story
Infrastructure Energy

IOC GPS Renewables Raises Rs 8.36 billion Debt for Compressed Biogas Plants

IOC GPS Renewables Private Limited (IGRPL), a joint venture between IndianOil Corporation  and GPS Renewables, has raised Rs 8.36 billion (approx. US$ 95 million) in debt financing from Indian Bank to execute nine Compressed Biogas (CBG) projects across India.   The funding is the largest single-bank debt raise in the CBG sector and the first fully non-recourse financing in India for these projects. The plants—four in Haryana, three in Uttar Pradesh, one each in Chhattisgarh and Andhra Pradesh—will each produce 15 tonnes of CBG per day using paddy straw as feedstock. All nin..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?