Real Estate

Budget 2021: Debt financing in real estate to be game changer

Anil Urs Bengaluru | Updated on February 01, 2021

Debt financing of real estate investment trusts (REITs) and infrastructure investment trusts (InVITs) announced in the Union Budget is expected to be a gamechanger for the fundraising requirements in the real estate sector.

Ashoo Gupta, Partner, Shardul Amarchand Mangaldas & Co said: “Debt financing of real estate investment trusts (REITs) and infrastructure investment trusts (InVITs) will be enabled by making a suitable amendment this can be a gamechanger for the fundraising requirements of these entities and thereby enable greater transaction in completed brownfield projects.”

Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers International India said: “Providing flexibility to REITs and Invits to raise more debt capital would provide additional funds to acquire assets and this could lead to faster closure of transactions with lower cost.”

Marketability

Shishir Baijal, Chairman and Managing Director, Knight Frank India said: “In context to the real estate sector, budget announcements relating to monetisation of infrastructure and real estate assets will help increase private sector participation and also assist the government in enhancing fund flow for development of critical infrastructure assets.”

“The government has also continued its focus on the affordable housing segment by extension of the tax benefit by one year. Amid the prolonged pandemic scenario, this extension was needed to support the latent housing demand in the country. Further, the relaxation on tax compliance for REIT investors will improve the marketability of such products considering we are likely to witness new REITs this year,” he added

“The proposed easing of restrictions on leverage by InvITs/REITs will attract more REITs listings and thus higher investments into real estate. The announced monetisation of surplus land of government and government bodies is a welcome move; however, the implementation will need to be monitored,” said Dr Samantak Das, Chief Economist and Head of Research, JLL India.

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Published on February 01, 2021
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