Easing of FDI norm in realty brokerage to boost investment

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New Delhi | Published: January 10, 2018 6:34:33 PM

The government's clarification that property brokerage services are not real estate business and hence eligible for 100 per cent FDI under the automatic route would provide clarity to global players for future JVs.

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The government’s clarification that property brokerage services are not real estate business and hence eligible for 100 per cent FDI under the automatic route would provide clarity to global players for future JVs and wholly-owned presence in India, according to experts. This will also help in making real estate market organised, they said. Commenting on the development, Abhishek Goenka, Leader -Direct Tax, PwC India, said the clarification was long overdue. “The industry was saddled with differing views and interpretations on this count, and this should now ease the pain for existing international players, as well as provide clarity for future JVs and wholly owned presence in India,” he added. Bhairav Dalal, Partner – Real Estate Tax, PwC India, said this is a welcome clarification especially given the number of start ups in this space offering innovative broking products. ANAROCK Property Consultants Chairman Anuj Puri said: “The 100 per cent FDI route had existed in previous years, allowing various multi-national property consultancies to enter India without local partners. Then, the route was closed down without notice or explanation.”

“As such, this is historically not a new provision, but the timing of its re-introduction is certainly right, with RERA (new realty law) now deployed and looking to have nation-wide coverage,” Puri added. However, he said the players who can benefit from opening up of FDI are naturally limited, considering that only between 10-20 per cent of property brokers and brokerages have registered themselves under RERA so far.

Puri said this is another clear sign that Indian real estate, which was notorious for shady dealings in previous years, is going from unorganised to organised at a fairly rapid pace. Ramesh Nair, CEO and Country Head JLL India, said the opening up of FDI for real estate brokers is a strong signal of institutionalisation of the services rendered towards real estate in India. “With this, establishing and growing large real estate services firm will become more feasible, making it easier to raise capital for such services,” he added.

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