Real estate developers and investors feel government’s move to open up foreign direct investment (FDI) in real estate is set to boost NRI led investment and facilitate easy exits, according to a survey by property consultancy Colliers International India.
About 93% of the respondents believe the only demand side boost to treat investment by companies, trusts and partnerships owned by NRIs, as domestic investments will lead to more sale of properties/investment into development projects to/by NRI ‘fronted’ organizations.
Another move to consider each phase of construction and development projects as a separate project, 98% of the respondents feel will allow faster repatriation for foreign funds (especially in larger projects), as they will be allowed to exit with the completion of each phase of the project.
Joe Verghese, Managing Director of Colliers India said, “These are not game changers, but amendments are in the right direction and will send the signal that the government is serious about building an investor-friendly environment.”
About 48% of the respondents believe that the permission of 100% FDI under automatic route in completed real estate projects for operation and management will help transform Indian real estate to a world class level.
Industry participants demanded that much more reforms are needed, with respect to clarity over the entry and exit norms and processes, a more efficient approval process and a better corporate governance.
“The game changer would be amendments that would eliminate the current ambiguity and time required for approvals. That is currently the heaviest shackle holding back the real estate industry,” said Verghese.