What Indian Real Estate may expect

The last 12 to 24 months have been a mixed bag for the Indian real estate sector as a whole. While there has been an upsurge in activities in asset classes such as commercial, warehousing and retail, the residential market has largely seen a flat trend with a few bumps coming from the affordable housing space. 

Startups are lining up in the real estate sector with co-living business models and we also had our maiden REIT listing.  

There are some key industry demands that we hope will be addressed in Budget 2019:

1. The re-introduction of the SEZ tax holiday for developers and the extension of tax holiday for units. 
2. Distressed projects – A one-time incentive to developers taking over existing projects which are under financial / operational distress. 
3. Affordable housing – An extension of the tax holiday. 
4. Credit for GST incurred on construction cost for Built to Lease assets.  
5. The introduction of tax incentives for co-living ventures.
6. A roadmap to developing the rental housing segment under partnership with the Government. 
7. Exemption from paying Dividend Distribution tax in case of a Holding Company structure under REITs.

Additionally, some of the key challenges that the sector will face are:

1. The impact of GST on (i) construction costs, especially for Built to Lease assets where subsequent credit is not available; (ii) Premium charges and (iii) Land related arrangements between developers and landowners.
2. Residential projects stuck mid-way due to financial stress, with home buyers having limited options to resort to.  
3. Affordability of homes in urban areas after considering the additional transaction costs.
4. Lack of long-term cheap finance for large projects.