Budget 2020: Commercial realty gets some attention this time


While in the previous many budgets, the commercial realty sector had witnessed a muted response, this time, they seem to be lucky as the FM has addressed some of their demands

Post budget, while everybody’s entire focus is on the impact on the residential realty market, we explored the effect on another segment i.e., the commercial realty market. While in the previous many budgets, the commercial realty sector had witnessed a muted response, this time, they seem to be lucky as the FM has addressed some of their demands.

NAREDCO Vice Chairman Mr. Parveen Jain, says “The demand in the Real estate sector is expected to increase with the announcement of providing more hospitals, educational institutions, and manufacturing facilities and 100 more airports by 2024. This shall be a big boost for the construction and Real estate sector and all stakeholders and shall generate employment to a great extent at all levels, and the demand for housing, commercial, office spaces are expected to increase”.

Boost to startup will support the growth of commercial realty

“Budget’s boost to startups, in terms of deferring employee taxation by five years, is a welcome move. Also, a startup with a turnover of up to INR25 crores (USD3.5 million) can avail a deduction of 100% of its profit tax for three out of seven years. The budget has now increased the turnover limit to INR100 crores (USD14 million) and extended the period of eligibility to claim a deduction from seven to ten years. We expect that cities like NCR and Bengaluru, with a considerable number of startups, should experience enhanced activity and we also see this as an opportunity for developers and investors in these cities as this change encourages new ventures and entrepreneurship”, opines Sankey Prasad, Managing Director and Chairman at Colliers International India.

 

Enhanced focus on logistics and warehousing

According to JLL, India, the National Logistics Policy and viability gap fund for the development of Warehouses envisages:

  • To provide the impetus for increasing warehousing supply
  • Supply expected to rise from 211 mn sq ft in 2019 to 379 mn sq ft in 2023
  • Net absorption of 36 mn sq ft in 2019 to get a further boost
  • Single window clearance to expedite supply as approval time expected to reduce by 6 months

 

Policy to build data center park

“The announcement on the digital revolution will play a big role in delivering services to the people in India that aims to achieve seamless delivery of services through digital governance. The Government will soon roll out the policy to enable the private sector to build data center parks throughout the country that will boost the commercial space”, says Mr. Anuj KhetanDirector, Vijay Khetan Group

 

Emphasis on infrastructure to boost the commercial realty sector

Mr. Rahul Grover-CEO, SECCPL, points out, “This year, the budget has revealed the Government’s intentions towards bettering infrastructure. The National Infrastructure Pipeline includes 6,500 projects across the country and Finance Minister Sitharaman has also announced the allocation of INR 27,300 crore for industry and commerce in FY21. The scope of commercial projects will show an incline, as can be seen from the Government’s plans of developing a 9,000-km economic corridor. Along with this, plans for developing strategic national highways have also been announced, which can help bring about developmental changes in the real estate sector as well”.

The FM has announced Rs 1.7 Lakh Crore to transport infrastructure. It includes railways. The Delhi to Mumbai express is targeted to be completed by the year 2023. Bengaluru airport is targeted to be completed by 2023 as well. According to experts, some big steps announced by the Government include 20% equity for the Bengaluru Suburban Transportation Project, 100 more airports by 2024, and the announcement of 5 new smart cities.

Jaideep, Ghosh, Partner, Travel, Hospitality, and Leisure, KPMG in India, explains, “Transport infrastructure is the backbone of our economy. Mega investments of US$25billion allocated to transport infrastructure covering roads, railways, aviation, inland waterways, and maritime as a part of National Infrastructure Pipeline projects, if implemented on a timely basis, could be a game-changer. National Logistics policy expected soon will be a critical catalyst for growth.”

The commercial realty sector has already done well in the last few years despite signs on slow- down in the residential realty sector; the budget support is expected to further boost the growth in the commercial realty sector in the near future.

 

Budget 2020 announcement that will boost commercial realty growth

  • Announcement of a new education policy proposed
  • Permission to ECB and FDI in the education sector
  • Proposal to develop 5 new smart cities in collaboration with States in PPP mode
  • Proposal for National logistic policy
  • Railway network to key tourist centres
  • Allowing private sector participation in creation of data centre parks

 

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