real estate stocks: Real estate stocks rally up to 4% ahead of Budget. Here’re key expectationsFebruary 1, 2021
At 10.15 am, shares of Prestige Estates were ruling 4.19 per cent higher at Rs 278.20. Phoenix climbed 3.54 per cent to Rs 774.30. Oberoi Realty advanced 3.19 per cent to Rs 543.50. DLF rose 1.92 per cent to Rs 260.30. Sobha, Godrej Properties and Indiabulls Real Estate added up to 1 per cent.
The BSE Realty index rose 47.69 points or 1.97 per cent to 2,466.21 and was the top performing sectoral index on BSE, thanks to high expectations from the Budget.
In case of real estate, a Rs 2 lakh rebate is available on housing loan interest rates under section 24 of the IT Act. There are expectations that this rebate could be increased to at least Rs 5 lakhs. If that happens, real estate stocks such as DLF, Godrej Properties, Prestige Estates, Brigade Enterprise, Ashiana Housing would be in focus. It would also be positive for building material players such as Kajaria Ceramics, Century Plyboards, Astral Poly Technik and Supreme Industries.
Real estate sector is also seeking a GST waiver for a limited period. So far, the rate on under-construction properties is 5 per cent (minus the input tax credit benefit) for premium homes over Rs 45 lakh. The rate is 1 per cent for affordable homes (less than Rs 45 lakh).
The sector is also seeking a deduction under section 80C for principal repayment of housing loan is Rs 1.5 lakh and deduction is clubbed with other tax savings
“When it comes to investment in REITs which has become a favoured route to raise funds for developers with renting-bearing commercial properties. The investment of up to Rs 50,000 in REITs should be allowed as a deduction under Section 80C, also the holding period for REITs to qualify for long-term capital gain should be reduced from 36 months to 12 months, a step which will spur retail investment in value creating instrument like REITs,” said Krish Raveshia, CEO at Azlo Realty.
Edelweiss said that the government may look to support the bounce in the real estate sector by providing an extension to the PMAY-CLSS scheme which is expiring at end of March 2021, which would also be in-line with the government’s vision to provide Housing for All by 2022.