Developers with sizeable SEZ portfolios such as DLF and Tata Realty are looking for more clarity since the vacancy rate in SEZs is higher than that in a typical office park.
“It’s actually a step in the right direction and we are waiting for clarity from the government and introduction in Parliament very quickly. It was supposed to come out in the last session of Parliament but for some reasons it did not. But we are hopeful that in the upcoming winter session it should get introduced,” said Rajaram Pai, chief business officer – Industrial, Mahindra Lifespace Developers. The government made the announcement in February during the budget session.
According to industry estimates, about 20,000 hectares of SEZ land and 100 million square feet of built-up area are currently vacant.
“The NCR (National Capital Region) market is witnessing the least amount of supply infusion (about 5.8 million sq ft) in 2022 compared to other tier-1 cities across the country. With the SEZ denotification process successfully going through, relevant supply to the extent of more than 3 million sq ft will be introduced in the NCR market and will be a big push for the occupiers, which will further keep rental growth under check,” said Shwetta Sawhney, a real estate expert.
According to an analysis by CBRE, the previous caveat of maintaining contiguous land area requirements has been dispensed with in the new bill.
“However, there still remains the challenge of an expensive and long denotification process extending over five to six months. Furthermore, denotification by the developer also involves returning all benefits availed by virtue of tax exemptions and subsidies for development of the asset to the government,” said CBRE.
