New FDI norms to boost affordable housing segment

New Delhi: Real estate industry today hailed the government’s decision to relax FDI norms for construction sector saying the move would boost foreign investment into the housing sector, particularly affordable segment.[caption id=“attachment_2354698” align=“alignleft” width=“380”]  Boost for real estate sector. AFP[/caption] The government today relaxed foreign direct investment (FDI) norms in construction sector by removing two major conditions related to minimum built up area as well as capital requirement. This means that any project regardless of size which is under construction can have access to FDI. It also eased the rules for foreign investors to exit and repatriate their investments. “This is a very good decision. We expect that a lot of money will flow into the construction sector which will boost the overall economy and provide jobs,” realtors’ apex body CREDAI Getamber Anand told PTI. When contacted, DLF CEO Rajeev Talwar said that this will be a “game changer” for the real estate sector and improve liquidity of developers. “This is a very good package of economic reform which will give huge boost to growth and employment,” he said. Property consultant JLL India Chairman and Country Head Anuj Puri said: “The government has really liberalised the FDI rules for construction sector. This will bring a lot more excitement and interest from foreign equity players to invest into real estate for development of residential and commercial buildings.” The removal of restriction on minimum development area will not only boost affordable housing but inner-city development, he added. CREDAI’s President sought more clarity on the requirement of completion of trunk infrastructure for foreign investors to exit from their investments. He demanded that exit should be allowed for phase-wise development of trunk infrastructure. With this latest easement, Puri said the FDI can now be brought into the construction sector in any amount and for any size of project. “This will have a huge positive impact on the housing sector as a whole, but much more so on the affordable housing segment, which was so far not a beneficiary of FDI in any significant manner,” he added. “The significant reforms announced today can be said to be the biggest relaxation to the FDI policy for the real estate sector since the opening up of this sector for FDI in 2005. The policy changes, especially the clarification on leasing/renting of completed assets not constituting real estate activity is going to be a game changer and will fuel the growing appetite in the Indian and international investment community for investments in completed commercial buildings,” said Kalpesh Maroo, Partner, BMR & Associates LLP. PTI