The government has announced key policies for real estate in the Union Budget for 2017-18. Within real estate, affordable housing now gets an infrastructure status. There is also relaxation on area measurement and a higher allocation of funds to the National Housing Bank. These announcements are a definitive positive sign for the sector where easier access to credit has been an obstacle for some time, the report said.
“Further, policy announcements like Real Estate Regulation Act made in 2016 coupled with deadline imposed on state governments to implement the same can go long way in easing consumer concerns around project delivery and curbing of malpractices in the sector. All of this is expected to lead to a significant cleanup in the sector, making it attractive for institutional players,” KPMG said.
In 2016, a total of $1.8 billion was raised by real estate-focused private equity funds in 2016.
The government’s focus on bringing in good regulation into the real estate sector is expected to be positive for attracting real estate private equity. The general India growth story coupled with the focus adopted by banks to crack down on non-performing assets is helping create investment opportunities for the real estate investors across the capital structure, right from equity to mezzanine debt, structured debt, special situations, lease rental discounting and plain vanilla secured debt.
While clarity is expected to emerge on the tax norms around real estate investment trusts soon, it is widely expected that 2017 and 2018 will see a listing of Indian REITs backed by portfolios of commercial real estate assets, the report added.