Infrastructure, commercial realty to benefit from budget
Budget 2016 makes a strong case for promoting start-ups in India with 100% tax rebate on profits announced for them for three yearsreal estate Updated: Mar 05, 2016 17:51 IST
Approximately 16-18 km of road construction per day has been achieved by the middle of the current financial year, and budget 2016 has adopted measures to significantly step up National Highway Authority of India’s capabilities in this regard. Roads infrastructure has great influence on real estate development, particularly with the new land it opens up for development through highways and feeder routes.
The budget has outlined revival plans for non-functional airports in partnership with state governments, with a vision to spend around Rs 100 to Rs 150 crore on each airport to make them functional again.This will give a boost to infrastructure in many Tier-II and Tier-III cities, and is without a doubt positive for their real estate markets. A select few projects that are commercially viable with good ridership could pick up pace in the near term.
Going by the budget announcements, Central PSUs are going to be encouraged to reduce their exposure to excess land holdings. While availability of land for development is definitely a constraint and the Land Acquisition Bill is increasingly difficult to implement, an alternative route is to make use of land holdings of central PSUs. We have seen this been done in the railways budget, as well.
As far as the retail sector is concerned, the revamp of the Model Shops & Establishment Act is a welcome move and could help the retail sector considerably. Unorganised retail could receive a fillip as smaller shops will now also be given the option of remaining open for all seven days of the week, like organised malls. While this will make the high street retail real estate proposition a bit more attractive, we will have to wait and see the implications from a labour market perspective.
The Budget made a strong case for promoting start-ups in India with 100% tax rebate on profits announced for them for three years. In the recent past, we have seen successful start-ups (particularly in the technology and eCommerce sectors) becoming big and occupying a commendable share in office space. As more start-ups get encouraged to commence operations, we expect developers to offer more small mixed-use properties or arrangements for sharing of office space to cater to this segment.
The author is chairman and country head, JLL India