“Considering the real estate sector is the second-largest employer in the country and directly or indirectly, accounts for approx.10 percent of the GDP, it deserves serious attention in the upcoming budget. Within realty the commercial real-estate has been a watch-out sector for investors both overseas and back home owing to its strong fundamentals and resilience. The government should therefore consider measures to further encourage more NRI investments in the country. For instance considering a reduction in the income earned from long-term capital gains would be helpful.
Owing to fractional platforms, affordable commercial realty is now a reality in India and therefore for retail investors intending to invest in commercial assets, the government should consider a higher exemption limit. Alternatively since both the interest income as well as dividend earned by investors are taxable as per their slab rates, the government should consider a waiver of tax on dividend. These measures will help boost retail sale which in turn can offer a huge impetus to trade and economic activities. Considering personal loan is expensive, the government should also bring in a policy whereby retail investors can avail a loan seamlessly from banks at a reasonable interest rate for investment in commercial assets through fractional route.
Besides it is important to address investor sentiments while also addressing the challenges being faced by developers. For instance considering a stress fund can help generate cash flow for developers thereby helping build the supply side of the industry. Alternatively encouraging banks and NBFCs’ to lend to commercial real-estate projects or take over and restructure stalled projects will also go a long way in kick-starting the economy. Similarly properties that are not sold but developed for leasing, GST at 18 percent should be reconsidered as it is a huge liability for the developers as it pushes the cost of construction and poses further challenges in the wake of a liquidity crunch.
Additionally, the Government should also consider incentivising alternative asset classes such as warehousing, SEZs’, data canters and co-working spaces to build momentum on both the demand and supply side.”
