Given India’s core strengths – a wide spectrum of talent, robust domestic demand and favourable government policy initiatives – the country is leveraging democracy and decisiveness to position itself as a preferred destination on strategic as well as private equity investors’ radar. The government has supported an increase in trade opportunities, better global integration, and an increase in investor competitiveness by providing access to a market that offers scale.
The government introduced major FDI policy reforms impacting several sectors, such as defence, construction development, pensions, broadcasting, pharmaceutical and civil aviation. Additionally, they have eased FDI norms by allowing 100% FDI (foreign enterprises) in several sectors, namely automobile, food processing and construction, through the automatic route, a streamlined process. All these reforms and initiatives together with the easing of FDI norms and the introduction of Real Estate Investment Trusts (REITs) have accelerated the pace of investments in the sector.
However, there is also a need to allow 100% FDI in completed real estate projects. Currently, around Rs 2 lakh crore of investments are stuck in unsold inventory, the money released can be directed into the construction of affordable and low-cost housing projects.
While investment over the coming year may be muted due to pandemic inspired slower decision-making by investors, we expect the segment to grow over the next two-three years as existing participants expand their portfolio and new players enter the market. Positive measures such as infusing liquidity for housing finance companies, relaxation of ECB norms, Alternative Investment Fund (AIF) approval, etc. are expected to bring confidence in the sector.
FICCI and Colliers report on ‘Future India: Captivating Strategic and Private Equity Investments’ (http://ficci.in/publication.asp?spid=23332) portrays the investment scenario in the real estate industry.
The findings of the Report would be most useful not only for realtors, but also for consumers, Government, research & academic institutes, and the industry. The ideas and deliberations arising out of this Report would go a long way in addressing the regulatory challenges and reflecting on the way forward.
For the detailed report, please click: http://ficci.in/publication.asp?spid=23332
The author is Joint Chairman, FICCI Real Estate Committee and Corporate Chairman, RMZ Group