Modi effect will fuel FDI rush into real estate, feel stakeholders

narendra_modiExpectations of the real estate sector from the newly-formed Narendra Modi-led NDA Government runs high on the hope that with him at the helm of affairs, the sector will see much greater flow of Foreign Direct Investment (FDI) in the coming days.

However, a majority of stakeholders in the sector believe the real impact of a Modi-led government would be visible only after six-12 months, and that what is being seen now is much of euphoria than anything else.

Talking to ICE Connect, Ravindar Jha of Aditya Builders and Developers said, “We have great expectations from the Modi Government. In fact we are confident that the NDA Government would be able to bring more FDI in the real estate.”

With an apparently stable government at the Centre, experts in the domain are of the view that a revival and an increased inflow of FDI is around the corner.

According to the Department of Industrial Policy and Promotion (DIPP) statistics, FDI into the construction sector – townships, housing, built-up infrastructure – declined to about $1 billion in April 2013-Feb 2014 from $3.1 billion in April 2011-March 2012.

Between April 2000 and Feb 2014, a cumulative FDI of $23.1 billion has come to the realty sector, which is 11 percent of the total investment into the sector, the statistics suggest.

Interestingly the DIPP had in the recent past moved a Cabinet note, seeking relaxation of riders on FDI in the sector, but no decision was taken on it by the then UPA Government.

Echoing Jha’s views, Jitendar Bawa of Bawa Properties expressed hope that the new government will take some positive steps to increase the FDI investment in the real estate.

“With the increase of FDI investment in realty, there will also be an increase in the job opportunities which will improve country’s economic condition,” Bawa said.

Currently, 100 percent FDI is permitted through the automatic route in the sector, which covers townships, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional-level built-up infrastructure.

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