The Indian real estate market is ready for take off. The hibernation period is definitely over, with FDI (Foreign Direct Investments) in real estate estimated to reach $16 billion by 2012 from $600 million in 2006. Beginning with company listing, mutual fund investing in the real estate, India is racing with 9% annual growth of an $800 billion economy towards the rank of the third largest economy by 2050. The real estate boom, availability of cheaper housing loans and a booming economy are fueling the flow of FDI towards Indian real estate. FDI is being encouraged with a regulatory framework, simpler tax norms, public and private participation, managerial skill and technical expertise. Comparing the earlier norms to the present, one can note the major changes introduced. Changes made: -
100% FDI in real estate is permitted.
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Investment by only NRI (non-resident Indians) and POI (persons of Indian origin) in housing and real estate criteria has been abolished.
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Regulations allowing only integrated township through wholly owned subsidiary or through a joint venture company with an Indian partner have been abolished.
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Requirement of a registered Indian company with minimum capitalization of $10 million for a wholly owned subsidiary and $5 million for joint ventures with Indian partners has been introduced.
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There’s a lock-in period of 3 years from date of capitalization for repatriation of the investment.
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Minimum area for development has been brought down from a hundred acres to twenty-five acres.
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50% development is to be completed within five years of land possession.
Within 6 months of the SEZ Act 150 special economic zones approval gives rise to the possibility of attracting further $20 billion in total FDI. However, the changing norms are still in their infancy, with developers not enjoying complete freedom, requirement of reservation for economically weaker section, restrictions for use of various areas and areas to be handed over free for use, high level of corruption, red tape and bureaucracy. The 10th plan estimates a shortage of 22.4 million housing units in 2007, with requirement of housing touching 90 million in another fifteen years. Sixty million square meters of office space would be required in the next 5 years due to the advancing sectors of services and Information Technology. Cheaper foreign funds, advanced technology, better infrastructure and efficient project implementation are paving the path to greater heights in Indian real estate. Has this impacted you as an NRI or PIO? Does investing in the Indian real estate seem more attractive and easier now? Share your views with us!
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