Union Budget 2024: REITs to become more appealing to investors as holding period for long-term capital gains reduced
liquidity as the budget proposed to reduce the holding period for long-term capital assets from 36 months to 12.
This policy change makes REITs more attractive to investors by offering quicker access to favourable tax treatment on capital gains. The reduced holding period lowers entry and exit barriers, making investments in REITs more appealing and dynamic.
“Reducing the long-term capital gains holding period from 36 to 12 months puts us at par with listed equity shares, further popularising the REIT asset class in India. Over the past five years, REITs have transformed the Indian real estate landscape, attracting around 230,000 investors. The four listed REITs today have over Rs 1.4 lakh crore in assets under management and have distributed over Rs 17,000 crore,” said Aravind Maiya, CEO of Embassy REIT.
The resultant increase in liquidity is expected to stimulate greater interest from companies in adopting REITs as part of their investment strategies. Additionally, the REIT market is likely to expand as more investors, attracted by the shorter holding period and improved liquidity, join the sector.
Experts say companies will find REITs a more viable option for raising capital, given the enhanced ability to recycle assets and reinvest proceeds efficiently. This broader participation can lead to more diversified and robust investment portfolios, ultimately driving commercial real estate market growth.
“This move enhances liquidity, boosts transaction volume, and increases investments, making REITs a more
