The government’s move on Wednesday to allow 100% foreign direct investment (FDI) in real estate broking and consulting firms was widely hailed by industry players. The amendments differentiate real estate broking services and ease norms for direct investment in them. While the market size and the scale of the brokerage business in India is huge, it is also extremely disorganised and fragmented. Mrinal Kumar, partner, Shardul Amarchand Mangaldas & Co, pointed out that while the credibility of the broker is also always in question, the commission earned by brokers are, nonetheless, in thousands of crores. He said, “This move by the government to clarify that real estate brokerage services is not ‘real estate business’ and allow 100% FDI will give them a boost.
It will enable international broking companies to invest in Indian companies offering real estate broking services and also set up their own subsidiaries here. Not only is this a move towards further liberalising the economy, but it will push the growth of the real estate sector and provide better and standardised services.” Ramesh Nair, CEO and country head, JLL India, believes the move will institutionalise real estate services. He argued, “Establishing and growing large real estate services firm will become more feasible, making it easier to raise capital for such services.
The decision adds significance to real estate broking and consultancy business and prophesies the government’s determination to advance the same into an exceedingly organised, structured and transparent market.”