With REITs pass-through the real estate players seem to have wasted no time in getting the ball rolling. Now, USD 10 billion is set to flow into India's real estate sector.
The real estate sector received a much needed shot in the arm when the finance minister allowed pass-through status to real estate investment trusts (REITs).
With this pass-through the real estate players seem to have wasted no time in getting the ball rolling. Now, USD 10 billion is set to flow into India's real estate sector and it is all because finance minister Arun Jaitley took the long-awaited step of allowing pass through status on taxation to REITs.
What this means is that the income generated would be taxed in the hands of the investor and the fund would not have to pay tax on the same. So, now the real estate participants are falling over each other to get in line.
Michael Holland, CEO, Embassy Office Parks said: "The embassy portfolio at the moment is about 16 million(mn) sq ft with developable potential of 23 mn sq ft and its know that our partner Blackstone is on an expansion mode and with that it could become 40 mn sq ft. In terms of valuation it would be about USD 2 billion. So sometime early 2015 looks like a reasonable timeframe to launch.
"We have currently 10 mn sqft of leased portfolio and we are looking at expanding it to 23 mn sq ft before we list. This will come mostly though acquisitions and partly what is developed under our brand," says Raj Menda MD, RMZ Corp.
So, the list is long and has some heavy hitters in the mix; from developers like DLF , K Raheja Corp, Prestige Estate , Panchshil Realty and Phoenix Mills to private equity players like Xander, Kotak Realty Fund, Red Fort Capital and Golden State Capital.
Also read: Realty: 6 issues that Jaitley left unanswered in Budget
Experts say the list of beneficiaries stands at over 18 and is growing by the hour. So the cash-strapped real estate sector may soon put the troubling times behind it.
Anuj Puri, Chairman & Country Head, JLL said: "We have about 345mn sq ft of completed office stock which is leased of which 100 million can be REITed straight away. The balance will take some time and this in itself will bring in about USD 10-12 billion of value. So in effect you can raise Rs 60000-72000 crore in the current market.
This amount could very well get a lot bigger, a lot faster. After all, with more clarity coming in on the dividend distribution tax and capital gains tax for REITs, experts say many more developers will join the bandwagon soon.
DLF stock price
On July 15, 2014, DLF closed at Rs 213.05, up Rs 5.40, or 2.60 percent. The 52-week high of the share was Rs 242.80 and the 52-week low was Rs 120.25.
The company's trailing 12-month (TTM) EPS was at Rs 2.96 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 71.98. The latest book value of the company is Rs 85.08 per share. At current value, the price-to-book value of the company is 2.50.
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