Real estate industry hails government move to ease FDI rules

Written by PTI | New Delhi | Updated: Oct 30 2014, 15:08pm hrs
Real estate industry today hailed the government's decision to relax FDI rules in construction sector, saying the move would help cash-starved developers raise significant amount of foreign funds and also complete the stuck projects.

"Praise to the Finance Minister for being so prompt in meeting the requirements of this industry in his budget announcement, then approval for Real Estate Investment Trusts (REITs) and now relaxation in FDI norm. There will be huge amount of FDI inflow in this sector after this easing of norms," realty major DLF's Executive Director Rajeev Talwar said.

Welcoming the decision, realtors' apex body CREDAI President C Shekar Reddy said it would help developers get an extra route of funding their projects.

"Developers continue to reel under high levels of debt, even as the channels of funding have shrunk. The easier FDI rules will help faster completion of projects delayed by a squeeze on funds due to elevated debt levels," JLL India Chairman and Country head Anuj Puri said.

"The announcement literally comes in the nick of time for Indian real estate. The sector's share in the total FDI has slipped from 5 per cent in the previous year to under 3 per cent as of the current fiscal until August. In fact, its share has been consistently falling over the last six years since 2009-10, when it stood at over 20 per cent," Puri said.

PWC India Executive Director - Regulatory Services Akash Gupt said this would result in increase M&A/ PE investment in this space on account of lower risk/ better returns on smaller projects.

This would also result in better developments in urban centres where space has always been a constraint and it was difficult to develop a 50,000 sq mtr project, he added.

Commenting on the move, Delhi-based developer RG group MD Rajesh Goyal said in a statement that the decision would provide a tremendous relief to the sector and expected the construction of projects to be smooth with fresh FDI inflow.

"The new conditions shall pave the way for the availability of funds to carry-on the projects in time," ACE group CMD Ajay Kumar said in a statement.