Affordable housing, logistics to get a boost from Sovereign Wealth Funds
SWFs hold USD 29 billion of Assets Under Custody (AUC) as of December 2019
Mumbai, February 19, 2020 – The measures announced recently in the Union Budget granting 100% tax
exemption on interest, dividend and capital gains income to Sovereign
Wealth Funds (SWFs) investing in infrastructure, will further help
boost investments in affordable housing and logistics, says JLL Research. India
seems to have gained a major impetus following some positive policy
backing and the ecosystem in general thus helping boost the image of the
country as a favorite with SWFs.
Sovereign
Wealth Funds are state-owned investment funds commonly established with
revenues generated from trade surpluses, central bank reserves,
currency operations, privatisations and transfer payments. Between 2008
-18, global Assets Under Management (AUM) of SWFs grew at a CAGR of 10%
with Asia garnering the highest share (42%).
“Sovereign
wealth funds have been playing a pivotal role in investments globally
with estimated AUM of 8.1 trillion as of 2019. Investments by SWFs in
India improved sharply as a result of various policy measures introduced
to attract foreign investments. The Union Budget for 2020 has further
incentivized SWFs to invest in infrastructure including affordable
housing and warehousing by providing tax exemptions. The rise in
potential returns is expected to drive more SWF investments in India.
SWFs would be more inclined to use the direct investment route as
compared to investment platforms,” said Ramesh Nair, CEO and Country Head, JLL India.
India emerging as the favourite destination for SWFs
Investments
by SWFs improved sharply as various policy measures were introduced to
attract foreign investments. In India, SWFs hold USD 29 billion of
Assets Under Custody (AUC) as of December 2019. Of these, real estate
and warehousing account for 22% of the AUC, amounting to USD 6.6
billion.
“SWF
Investments quadrupled to USD 5.3 billion during 2014-19 from USD 1.3
billion recorded between 2005 and 2013, due to various reforms
introduced in the Real estate sector. Going forward we expect more
traction from this type of patient capital,’ said Dr Samantak Das, Chief
Economist and ED, JLL India.
Strong interest of SWFs in India
Source : National Securities Depository Limited, Securities and Exchange Board of India and JLL Research
The
Union Budget for 2020 further incentivizes SWFs to invest in
infrastructure by providing them a 100% tax exemption on interest,
dividend and capital gains income in respect of investment made in
infrastructure and other notified sectors before 31st March, 2024 with a minimum lock-in period of 3 years.
The
resultant increase in potential returns is expected to boost
investments by SWFs in affordable housing and logistics &
warehousing which have been accorded infrastructure status.
About JLL
JLL
(NYSE: JLL) is a leading professional services firm that specializes in
real estate and investment management, headquartered out of Chicago. A
Fortune 500 company with annual revenue of $16.3 billion, JLL operates
in over 80 countries and a global workforce of more than 93,000 as of
September 30, 2019. JLL is the brand name, and a registered trademark,
of Jones Lang LaSalle Incorporated. For further information, please
visit jll.com.
In
India, JLL has an extensive presence across 10 major cities (Mumbai,
Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad,
Kochi and Coimbatore) and over 130 tier II & III markets with a
cumulative strength of close to 12,000 professionals. Headquartered out
of Mumbai, we are India’s premier and largest professional services firm
specializing in real estate. Our services cover various asset classes
such as commercial, residential, industrial, retail, warehouse and
logistics, hospitality, healthcare, senior living, data centre and
education. For further information, please visit jll.co.in
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