Realty stocks surge as much as 11% post Budget

Real estate stocks surged as much as 11 per cent after Finance Minister Arun Jaitley today announced plans to provide incentives for establishment of real estate investment trusts.
Reacting positively to this, shares of DLF zoomed 10.66 per cent, while HDIL jumped 10.49, Prestige Estates Projects (10.23 per cent) and Indiabulls Real Estate (9.12 per cent) on the BSE.
Oberoi Realty climbed 7.22 per cent, Unitech advanced by 5.48 per cent and Sobha Developers was up 4.47 per cent.
Following the sharp uptick in these stocks, the BSE realty index was trading 7.98 per cent 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.