Indian real estate sector draws handsome foreign investments

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Foreign investments have revived in the Indian real estate sector after a slight slump over the last 2-3 years. This clearly points at a revival in the beleaguered sector which is one of the major drivers and employment creators for the Indian economy. As per reports, the foreign direct investment or FDI for construction development inclusive of housing projects, townships and built-up infrastructure touched a whopping Rs. 2, 453 crore or roughly $385 million in the period between April and December 2017. This indicates an increase of almost 250% as compared to the same period a year earlier when FDI reached Rs. 703 crore or roughly $105 million.

There are several key policy reforms that are now bringing investors back to the Indian real estate market. The last 1 ½ years have witnessed the impact of new measures such as demonetization followed by RERA and then GST. These measures have cleaned up the sector and made it more accountable and transparent. Buyer and investor confidence have gone up by leaps and bounds and this is steadily leading to a major revival for the sector. Foreign investors in real estate are now reacting more positively to the higher accountability, financial discipline and transparency in the Indian real estate market as per experts. The real estate sector garnered Rs. 30, 000 crore in investments as per reports for the last financial year from both global and domestic investors.

Most investors chose infrastructure and commercial real estate segments but the residential segment is slowly recovering as well. The office sector has been drawing considerable investments from global investors who are looking to create highly attractive and rent yielding assets in the country. Private equity investments were approximately Rs. 8, 500 crore or roughly $1.3 billion for the sector for the last quarter and a chunk of this was deployed by global private equity firms. Several United States, Japanese and Chinese investors have entered into tie-ups with real estate developers in the country for foraying into the Indian real estate market.

These include leading players like the Canadian Pension Plan Investment Board, Brookfield Asset Management, Blackstone and GIC. Global investors have also forayed into the Indian residential real estate market. Demand is increasing for affordable housing projects in the country and also for mid-range projects. Several global investors are now targeting the affordable housing category which is witnessing the maximum growth. 100% FDI has also been allowed in case of construction development which covers housing and townships alike.

Resident Editor