Real Estate

REIT on track for listings worth $18.5-b

Anil Urs Bengaluru | Updated on January 20, 2018 Published on March 01, 2016

Proposal to exempt dividend distribution tax on SPVs is a huge boost

The Budget proposal to exempt special purpose vehicles (SPVs) on Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts from dividend distribution tax (DDT) will pave the way for their listings in future.

Till now, DDT was applicable on SPVs, which was a huge hindrance to the introduction of real estate investments, making them less attractive.

“REITs could become a reality soon and we expect a few listings to happen in the current year, either by financial institutions or developers,” Anuj Puri, Chairman & Country Head, JLL India, told BusinessLine.

“Currently, around 229 million sq ft of office space can be seen as REIT-compliant. If we assume that even 50 per cent of these get listed, we are looking at total REIT listings worth $18.5 billion,” he added.

Boost for realty

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said: “REIT has finally got its due. Abolition of the tax was holding back asset owners. Overall, the Union Budget augurs well for the real estate sector, having addressed affordable housing, REITs and infrastructure”.

“Exemption of REITs from tax will help the industry create newer avenues to raise capital and capitalise on income-yielding assets. Investors in India will now have a new attractive asset class to build long-term wealth with regular income,” said Om Ahuja, CEO, Residential, Brigade Enterprises.

Sanjay Dutt, Managing Director, India, Cushman and Wakefield, said even though the Union Budget does not address the issues of stamp duty and capital gains, the exemption of DDT for SPVs is a real boost for the real estate sector.

More measures needed

“With DDT exemption, REITs will give developers and investors in India a huge opportunity, given the potential in the real estate market. However, abolition of DDT alone may not be enough for companies to launch REITs in the coming months,” he added.

Jason Kothari, CEO, Housing.com, said: “Considering the liquidity issues and the subdued demand in the real estate sector over the last couple of years, we hoped for much r more from the Budget this year. We do welcome the government’s acknowledgement of the role start-ups play in job creation and the tax holiday for the first three years after a company is started.”

Published on March 01, 2016
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