Realty sec­tor to gain from re­forms

Com­mer­cial, re­tail and res­i­den­tial realty seg­ments to ben­e­fit the most from re­cent FDI re­forms, says a sur­vey

HT Estates - - HTESTATES - HT Es­tates Cor­re­spon­dent

The com­mer­cial, re­tail and res­i­den­tial real es­tate seg­ments are likely to sig­nif­i­cantly gain from the for­eign direct in­vest­ment re­forms re­cently in­tro­duced by the depart­ment of in­dus­trial pol­icy and pro­mo­tion (DIPP), says a sur­vey con­ducted by FICCI ti­tled Im­pact of FDI Re­forms on In­dian Real Es­tate Sec­tor.

Com­mer­cial and re­tail sec­tors will re­ceive the max­i­mum for­eign cap­i­tal fol­lowed by the res­i­den­tial sec­tor, in­clud­ing af­ford­able hous­ing projects. Ho­tels will take the third sport while tourist re­sorts and old-age homes are ranked at num­ber 4, hos­pi­tals at num­ber 5 and spe­cial eco­nomic zones (SEZs) and ed­u­ca­tional in­sti­tu­tions at num­ber 6.

Ac­cord­ing to DIPP, In­dian real es­tate has at­tracted about $24.16 bil­lion FDI in con­struc­tion de­vel­op­ment sec­tor dur­ing April 2000 to Septem­ber 2015. How­ever, FDI in con­struc­tion de­vel­op­ment sec­tor has been de­clin­ing over the past few years due to reg­u­la­tory issues and slow­down in the realty sec­tor.

The FDI re­forms an­nounced by the DIPP for the con­struc­tion de­vel­op­ment sec­tor are ex­pected to pro­vide a new di­rec­tion to the for­eign in­vest­ment regime for

the realty sec­tor, help the real es­tate in­dus­try tide over the fi­nan­cial crunch and help the in­dus­try and the gov­ern­ment achieve the mis­sion of Hous­ing for All by 2022, the sur­vey says.

Ac­cord­ing to the FICCI Sur­vey, in­dus­try is happy and sat­is­fied with cur­rent FDI re­forms in con­struc­tion de­vel­op­ment sec­tor and has shown high level of con­fi­dence and op­ti­mism to­wards fu­ture flow of for­eign cap­i­tal into realty sec­tor. A ma­jor­ity of (about 78%) re­spon­dents are sat­is­fied with the changes made in FDI pol­icy while 22% re­spon­dents have given it a neu­tral rat­ing.

Re­spon­dents were op­ti­mistic and felt that FDI re­form mea­sures will cer­tainly in­crease flow of FDI into the realty sec­tor in the com­ing months.

About 55% felt that there will be more than 15% an­nual in­crease in FDI flow into the sec­tor, 23% felt the in­crease will be in the range of 10-15% and 22% felt that in­crease will be less than 10% an­nu­ally.

Al­most all (100%) re­spon­dents felt that gov­ern­ment’s de­ci­sion to al­low exit and repa­tri­ate for­eign in­vest­ments be­fore the com­ple­tion of projects under the au­to­matic route, but with a lock-in-pe­riod of three years for each tranche of in­vest­ment and trans­fer of stake from one non- res­i­dent to an­other non­res­i­dent, with­out repa­tri­a­tion of in­vest­ment and with­out any lock-in pe­riod or any gov­ern­ment ap­proval, is a path break­ing step. “It will cheer for­eign in­vestor com­mu­nity and will have a ma­jor im­pact on at­trac­tive­ness of In­dian real es­tate go­ing for­ward,” the sur­vey re­veals.

The REITs mar­ket will get a boost as gov­ern­ment has al­lowed 100% FDI under au­to­matic route in com­pleted projects for op­er­a­tion and man­age­ment of town­ships malls/shop­ping com­plexes and business cen­tres.



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