Real estate is one of the few sectors to win big benefits in an otherwise frugal budget. There are many key proposals that will open up funding for developers, boost buyer sentiment and allow foreign investments to flow in. Access to funds has been a key bottleneck; developers have been burdened with huge debt and high interest rate, as property sales have slowed down. Two key proposals in the budget should bring relief on this front. First, introducing Real Estate Investment Trusts (REITs) should help the sector attract new funding. Tax structure was a major hurdle in REIT structures and the proposal to allow pass-through status to REITs is a positive. REITs will increase liquidity as developers and private equity funds can exit their commercial investments by selling their holdings to these funds. Developers such as DLF, Prestige Estates, Godrej Properties and Phoneix Mills with a large commercial property portfolio will benefit from this proposal. Liberalisation of FDI norms for smart cities should bring in more funds. The lower threshold limit, along with favourable terms for low-cost housing will aid township developments. Mahindra Lifespace will be a main beneficiary.

The main proposal that will boost buyer enthusiasm is the increase in interest deduction limit . Home loan rates have been hovering high and the increased deduction should lower borrowing costs for buyers. Renewal in demand will be positive for developers such as Puravankara and Ashiana Housing who develop mid-income housing. Besides these proposals, plans to offer incentives to low-cost housing development should attract more developers to expand in this segment. National Building Construction Company, a public sector developer, should benefit from this.

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