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| | The ..:INDIA BUSINESS CLUB:.. Network is not currently active and cannot accept new posts | | REAL ESTATE STORY PART 2 | Views: 782 | | May 27, 2006 7:43 am | | REAL ESTATE STORY PART 2 | # | 
sanjay jain | | The strong consumption demand coupled with the Governments thrust on infrastructure and the Indian story would result in the growing GDP in turn resulting in the growth of the top and bottom lines of many corporate. This in turn would be reflected in the surplus in the hands of people resulting in higher disposable income this would not only increase the life style but also would demand for better housing and resident. This could see increase urbanization and an upsurge in malls, shopping centers and big complexes.
With the EET due to be implemented in next budget a taxpayer may only be left with the option of buying residential property as there cannot be tax on withdrawal since the question of withdrawal doesn’t arise in investments in property.
The few steps taken by the Government to up the flow of capital in the reality sector are:
Repealing of the Urban Land Ceiling Act initiated.
Securities & Exchange Board of India (SEBI) has allowed Indian venture capital firms to invest in real estate
Liberalization of Foreign Direct Investment (FDI) norms
Traditionally, FDI allowed only in the hotels & tourism sector
100% Foreign Direct Investment (FDI) is allowed in the construction sector under Automatic route.
The policy of allowing 100% FDI in all sectors ~ far-reaching impact
Minimum area threshold for FDI in Integrated Townships reduced to 25 Acres from 100 Acres.
Foreign investors can now invest in commercial real estate development projects having a minimum built up area of 50,000 m2.
Minimum equity investment cap of $ 10 Million for 100% FDI projects and $ 5 Million in Joint Ventures.
Foreign Investors only barred from trading in undeveloped land.
100% FDI by NRIs/ PIOs / OCBs allowed in following activities:–
Real estate development (residential & commercial) including townships with support social and institutional infrastructure facilities–
City and regional level urban infrastructure facilities, including both roads & bridges –Investment in manufacturing of building materials
Investment in housing finance institutions
The policy would lead to more capital inflows to real estate
The estimated FDI inflow in real estate is expected to be approximately US $ 3.75 billion
Price Trends in Indian Real Housing sector expected to sustain strong growth in light of attractive interest rates and tax incentives
Commercial sector to grow in tandem with sectors like IT, ITES, Banking, Telecom, etc.
Increasing numbers of shopping malls
Lease v/s Buy gaining ground for commercial developments Heightened development in real estate in Tier II & III locations
New Residential Models-Townships
FDI would improve construction quality and improve efficiencies
Potential Entry of Real Estate Mutual funds and Real Estate Investment Trusts. Private Reply to sanjay jain | | |
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