FDI in Real Estate

FDI in Real Estate of Dholera

Extensive Foreign Direct Investment in Indian Real Estate Market is an essential component to make the government’s vision of ‘100 Smart Cities’, ‘Delhi Mumbai Industrial Corridor’ and ‘Housing for all by 2022’ a living reality.

The recent relaxation is FDI norms in the sector announced by the Department of Industrial Policy and Promotion (DIPP), the nodal agency for all FDI policy, in December 2014, has changed the outlook of FDI investments in India, making it much easier, lucrative and convenient for foreign investors. In a cash starved industry with expensive financing routes, this announcement comes as a wave of relief for both builders and investors.

With the amendment in FDI norms, 100% FDI under the automatic route is now permissible in real estate sector including projects such as townships, malls and shopping complexes, and business centres that were earlier disallowed to be completely funded by FDI’s.

SmartHomes possesses deep insight in the area of real estate markets and through a team experience exceeding 200 man years, it effectively understands customer requirements and design homes in accordance to it at reasonable prices leading to optimization of the Customer Satisfaction Index. In India, SmartHomes has successfully delivered over 80 million square feet housing projects through an award winning team of engineers and architects.

The following key amendments were made in the FDI policy to give a boost to the industry and attract foreign investments by leaps and bounds:-

  • Minimum floor area is reduced from erstwhile 50,000 square meters to 20,000 square meters. This means that FDI’s can now also participate in small- midsized projects which is in sync with the government’s vision for creating affordable housing.
  • Minimum Capital requirement has been brought down to USD 5 million from USD 10 million. This shall help foreign investors with relatively lower financing capabilities to also participate in Indian real estate sector creating houses in Tier 2 & Tier 3 cities where pricing is currently lucrative and more affordable.
  • Removal of the mandate of having a minimum land of 10 hectares for development of serviced plots.
  • Exit route for FDI has also been eased out and they can now exit a project after development of trunk infrastructure or transfer their stake to another non-resident company before completion of the project .

While the Financial Years 2007-08, 2008-09 and 2009-10 attracted FDIs to the tune of 8.9%, 10.3% and 11% respectively in the housing and real estate sector, the flexible norms are expected to take growth to another level in the upcoming years. FDI in India has seen exponential growth from the period 2005-2010 and accelerated from a mere 171 crores to 13,586 crores in a five year term. This is expected to rise exponentially here on due to revamped policies which are likely to act as a catalyst for the growing demand in the Indian real estate.

Real Estate sector development in India is linked to the development and employment creation of 250 ancillary industries, thus boosting the economic activities and surging the economy on a whole. FDI proves to be an alternative route for funding the real estate projects in India at a relatively cheaper cost making it vital for the sector.

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