• MindCept

Government considers relaxation in FDI policy for real estate

According to market experts, this - to allow FDI for completed apartments with occupancy certificates - has been a long-standing demand.


The Ministry of Commerce and Industry is considering relaxation in the foreign direct investment (FDI) policy for the real estate sector, including 100 per cent FDI in completed RERA registered projects with over 100 apartments, sources said.





According to market experts, this - to allow FDI for completed apartments with occupancy certificates - has been a long-standing demand. The consideration by the government for further relaxation comes in the midst of the coronavirus crisis, lack of business and the resultant liquidity crisis. This will allow real estate players to monetise their completed projects so that focus could be diverted to complete pending housing projects that are struck largely due to shortage of funds.


Secretary, Department for Promotion of Industry and Internal Trade, Guruprasad Mohapatra, said that there are always some policy considerations going on regarding several sectors, but refused to comment on the proposed changes for real estate. Among other proposals, before the government is that 100 per cent FDI should also be permitted for completed warehouses, people in the know of developments said. Though FDI is permitted in warehouses, their are restrictions on bringing foreign money on running projects.


In fact, an overhaul of the FDI policy is on cards and the DPIIT is expected to come with various changes soon. While the government is looking to liberalise the FDI regime in reality estate sector further, it is still not included to open overseas investment in 'real estate business'. The restrictions on FDI in real estate entities is also expected to continue for some more time.


As per the Centre's Consolidated FDI Policy which came into effect in August 2017, 'real estate business' means dealing in land and immovable property with a view to earning profit there. Shobhit Agarwal, MD & CEO of Anarock Capital said: "In FDI, the main task has been to allow FDI in fully built-up OC (occupancy certificate) ready apartments so that developers can liquidate their holdings and put cash back into circulation. Pre-Covid-19, this proposal had found little traction with the government. Now, however, the government may revisit this proposal."


He noted that there is a lot of available inventory and demand may remain subdued because of the economic implications of the coronavirus pandemic and viewing this, the proposal can have tremendous advantages which will ripple across the economy.


Ankush Kaul, President, Sales & Marketing at Ambience Group, said amidst the overall slowdown due to the current lockdown, both commercial and logistics warehousing facilities need strong impetus.


"RERA approved projects will have a greater degree of pull among investors, making them profitable investment avenues. Warehousing is already the strong asset class across real estate, and has been doing well, even under the lockdown due to the demand for various goods and services. These, if implemented, will have a positive impact on the sector's growth, which is otherwise struggling to generate liquidity, he said.


Samir Jasuja, Founder & MD of PropEquity, however, was of the view that the approval for 100 per cent FDI in ready-to-move-in RERA registered projects would have a limited impact as the number of completed projects is very low in the country in comparison to the under-construction projects."It may have some impact on the ready-to-move-in luxury segment but that too is a very small market," Jasuja told IANS.


Source: https://realty.economictimes.indiatimes.com/news/industry/government-considers-relaxation-in-fdi-policy-for-real-estate/75707714

May 13, 2020

2 views
Mindcept-Logo.png

© MINDCEPT CONSULTING

  • Black LinkedIn Icon

DISCLAIMER: The information contained in this website is offered for illustration purposes only and is general information. We make no representations or warranties of any kind (express or implied) with respect to the information, products, services, statements, figures, calculations, plans, images, logos, related graphics and are purely indicative in nature only. Whilst all reasonable care has been taking in providing all information, however, We or / and our related companies or/ and our representatives, consultants or / and our agents accept no responsibility for its completeness, accuracy, reliability, suitability or availability of any information contained herein for any action taken in reliance thereon by any party. Any reliance on information as contained in this website does not constitute an offer, inducement, representation, warranty or contract and may be relied upon at one’s risk and consequences.