Speaking to FE international property adviser Debenham Tie Leung managing director Ankur Srivastava said, The biggest problems in the real estate sector are the lack of clarity of titles or transparent ownership records and the high stamp duties that are prevalent across India, varying between 8% and 13% in different states.
Foreign investors have already been active in the country for some time. Some foreign developers such as Keppel Land, Singapores Lee Kim Tah, Dubais Emaar group and Ascentas are already present in commercial developments across India.
Said Venkataramanan Associates managing director V Narasimhan, If the land title reforms are activated, we will see a lot more of western real estate companies forming joint ventures in India. The onus is on the government.
Mr Srivastava added, The world is ready to come to India and the timing for the ruling is ideal. The challenge is to make ancillary services favourable.
Global real estate consulting firm Equis Corporation vice president for Asia Pacific operations Shrinivas Rao said that the impact of FDI approval for real estate may not be immediately felt in real estate sector. The reason for impact not being immediate is the fact that these foreign firms will not be allowed to own the land and will still have to depend on Indian developers or partners for the land. Also traditionally Indian developers are used to selling the asset as against the international developers strategy of leasing the assets to tenants or users.
Mr Rao added, For success in the long term, there would need to be transparency in the existing laws of the municipal authorities across India for issuing of licences for these developments.
More FDI into the markets could bring the booming real estate prices in Indias top destinations such as Bangalore, Mumbai, Delhi, Pune, Chennai and Hyderabad, to realistic levels.
While land prices may shoot up due to increased demand, the end user will get better products for competitive prices.