Budget 2019 – A bonanza for Indian commercial real estate sector
The intentions of Modi 2.0 government to bolster the real estate clearly reflects in the recent budget 2019. The budget is based on addressing the challenges faced in the economy of the country.
The government in its past 5 years tenure, turned the real estate upside-down. It came up with several reforming and renewing policies that actually changed the way real estate used to operate. The government introduced GST, RERA and REITS to reform the real estate industry. The opening up of the FDI and streamlining of the process brought the much-needed boom in the country’s real estate sector.
One sub-sector within the real estate sector which prospered the most with the above actions of the government is the commercial sector. The government has allowed investment in REITs from FPIs and NRIs for this sector.
The cleaning up of the banking system is a good aspect in the budget. The Finance Minister conveyed that HFCs will come under the RBI and NPAs have reduced. To revive NBFCs, the Finance Minister also proposed banks to buy high-rated pooled assets of financially sound NBFCs.
Under ‘Pradhan Mantri Gram Sadak Yojana’, the government announced that nearly 1,25,000 km of roads will be upgraded. With the improved connectivity, the demand for infrastructure will eventually increase, leading to the need of more commercial places.
Moreover, in the coming 5 years, the government will also invest Rs 100 lakh crore in infrastructure. The development in infrastructure inevitably leads to the formation of new micro-economic spheres which include offices, schools, hospitals, etc.
The development of commercial spaces in tier 2 and tier 3 cities is also inexorable because of the high-cost operating offices in major cities. The clear focus of the government to develop such cities will definitely increase the commercial spaces in tier 2 and tier 3 cities in the near future.