Budget reaction: Real Estate

1 Feb 2022 , 03:58 PM

“The Union Budget 2022-23 is forward-looking and focuses on a long-term plan for the country with digitization, urban development, and sustainability at its core. For the real estate sector, the budget placed an outlay of INR48,000 crores under the Pradhan Mantri Awas Yojana, and the construction of 80 lakh homes will facilitate affordable housing. This, yet again, showcases the government’s commitment on building affordable housing stock. However, we would have liked if there was more push on the demand side, such as the extension and expansion of the credit-linked subsidy scheme.

The Budget made several announcements to spur the growth of the logistics sector in the country. The government repealed about 1,490 union laws in recent years, paving the way for improving ease of doing business. The government also plans to launch ‘Ease of Doing Business 2.0.’ This should include more dynamic aspects and make India a more investment-friendly destination.

The budget announced a few laudable incentives for startups. The time extension provided to claim tax benefits will provide a breather for start-ups and encourage more start-ups in India. We look forward to the announcement on the replacement of the Special Economic Zone Act with new legislation. This has the potential to make export-led parks attractive for investments. The new benefits will also trickle down to technology companies who export services and have a positive bearing on commercial office real estate”.

Shyam Arumugam, Managing Director, Industrial and Logistics Services, Colliers India

“The budget speech places thrust on clean technology in public transport, with plans to develop special mobility zones for electric vehicles and the introduction of a new battery swapping policy. This is a welcome move to facilitate further growth of EVs, as India moves towards its sustainability goals. The EV space in India is likely to see investments of INR94,000 crore (USD12.6 billion) across the automotive value chain, over the next five years. A Much needed investment of additional allocation of Rs 19,500 crore for PLI for manufacturing of high-efficiency modules with priority to fully integrate manufacturing units to solar PV modules will be made to boost the domestic manufacturing of 280 gigawatts of installed solar capacity by 2030. A battery swapping policy would address the key concern for the charging infra. The policy aims to address the constraints of space in urban areas for setting up charging stations. Also since battery contributes to approx. 40% of EV input cost the same would enable faster EV adoption. This is a “game-changer” for EV adoption.

The Budget made several announcements to spur growth of the logistics sector in the country. The Budget announced that about 25,000 km of new highways will be built this year. Moreover, Gati Shakti Masterplan for expressways,100 new cargo terminals for multi-nodal logistics, and development of urban metro systems will give a big boost to new warehousing and logistics facilities across the country. The government also extended the ECLGS up to March 2023. This will go a long way in supporting the MSME sector and revive industrial activity. This has immense scope to drive demand for warehousing and logistic sectors. The government repealed about 1,490 union laws, paving the way to enhance ease of doing business. The government also plans to launch ‘Ease of Doing Business 2.0.’ This should include more dynamic aspects and make India a more investment friendly destination”.

Vimal Nadar, Head of Research, Colliers India

“The budget announced a few laudable incentives for startups. The period of incorporation has been extended by a year to March 2023 to avail of tax benefits. For corporates, extension granted for new companies to set up manufacturing facilities to 2024 from earlier 2023. These will provide a breather for start-ups and encourage more start-ups in India. India is becoming the hub for entrepreneurship, with India’s start-up story growing from strength to strength. Around 14,000 start-ups were recognized during the financial year 2022, with about 555 districts in India had at least one new startup. We are already seeing ample evidence of the start-up activity in the commercial office space. During 2021, in the top three cities of Delhi-NCR, Mumbai and Bengaluru, start-ups leased about 2.2 million sq feet of space during 2021, a 56% rise from 2020”.

Piyush Gupta, Managing Director, Capital Markets and Investment Services, Colliers India

Government is further strengthening public Investment Vehicles such as NIIF and SIDBI reflecting a proactive role in financing in strategic sectors. This is also reflected in providing emphasis on special status to investment in Digital Infrastructure. The concept of India @ 100 introduced in the Budget has set the foundation stone for India’s growth story over long term. The Gati Shakti national master plan spruced by seven engines of Infrastructure shall go long way in developing multi-modal network to create world class infrastructure with full support on planning, financing, innovation and technology. The Government spending and Private Investment shall create jobs at one end and also provide opportunities to Investors. This will provide sunrise opportunities relating to energy transition, climate action, financing of Investments.

Bhupindra Singh, Managing Director, Regional Tenant Representation & Office Services (North India), Colliers

“As an impact of the announcement from the FM today in the annual budget, Real Estate Developers must apply for additional FSI under the Transit-oriented Development (TOD) corridors. Clear title properties with good construction will have the option to create more floors in exiting assets. Re-development projects in densely populated locations with proper connectivity will have the option to increase footprint by going higher, however, keeping the structural feasibility will be the underlying criteria. The next 25 years are going to be focused on Infrastructure, make in India, start up’s, EV and Real Estate”.

Ajay Sharma, Managing Director, Valuation Services, Colliers India

Given the push the budget has provided for digitalisation of various arms of fiscal management, investment and process implementation, digital infrastructure has become important. This in turn pushes the need for data centre and data charging systems that will push the sector demand across  India.

Subhankar Mitra, Managing Director, Advisory Services, Colliers India

“The total effective Capex spend by the government is about 10.7 lakh crore. There is an emphasis on PM Gati Shakti’s mission which is targeted towards improving connectivity and logistics infrastructures of the country. On the Reform side most significant shift is towards City Planning. The budget emphasizes on modernization of Building Bylaws, Digitization of land records and also enabling registration of properties of any location. The budget casts its attention towards training and development of urban planning practice byways of setting up six centre of excellence with budgetary support. Since land is mostly state subject, hence a special interest-free loan for 50 years is offered to the state government who would participate in the reform process announced by the central government. It is expected to incentivise the state governments to collaborate with the centre to fast-track the reforms.

Budget is also focused on encouraging digital drive and fintech. The issuance of digital currency by the RBI and by bringing Data centre into the infrastructure category is expected to boost the fintech and digital drive of the nation. Setting up of International tribunal in GIFT city will help the corporate sector to address any disputes in cost effective manner, it will also help in promoting India as an attractive investment destination.

The Budget is focused on the futuristic technological shifts, it also attempted to ease of doing business, encouraging private sector investments and job creation. However, there is not much of focus on the consumption side. Nothing significant in the proposal to boost discretionary spend at the household level, which could boost sectors like retail, hospitality, F&B, leisure and entertainment”.

The views and opinions expressed are not of IIFL Capital Services, indiainfoline.com