Mumbai: Real estate stocks surged as much as 11 percent after Finance Minister Arun Jaitley on Thursday announced plans to provide incentives for establishment of real estate investment trusts.
Reacting positively to this, shares of DLF zoomed 10.66 percent, while HDIL jumped 10.49, Prestige Estates Projects (10.23 percent) and Indiabulls Real Estate (9.12 percent) on the BSE.
Oberoi Realty climbed 7.22 percent, Unitech advanced by 5.48 percent and Sobha Developers was up 4.47 percent.
Following the sharp uptick in these stocks, the BSE realty index was trading 7.98 percent higher at 2,067.57 and was the biggest gainer among the 12 sectoral indices.
The government has proposed incentives for Real Estate Investment Trusts(REITs) which will have pass through for the purpose of taxation.
Announcing this during his maiden Budget Speech in the Lok Sabha today, Finance Minister Arun Jaitley said
that REITs have been successfully used as instruments for pooling of investments in several countries.
As an innovation, a modified REITs type structure for infrastructure projects is also being announced as
Infrastructure Investment Trusts(InvITs) which would have a similar tax efficient pass through status, for PPP and other infrastructure projects.
These structures would reduce pressure on the banking system while also making available fresh equity.
The FM exuded confidence that these two instruments would attract long term finance from foreign and domestic sources including the NRIs.
