Real Estate in India

The Indian real estate sector is being recognised as an infrastructure service, helping in the economic growth of the country, according to industry experts.

As per a report released by the McKinsey Global Institute (MGI)–India's urban awakening: Building inclusive cities, sustaining economic growth–on April 2010, the country's urban population will soar to 590 million by 2030, from 340 million in 2008. India's cities could generate 70 percent of the net new jobs created by 2030, produce more than 70 percent of the country's gross domestic product (GDP), and stimulate a near four-fold increase in per capita income. It also says that India needs to invest US$ 1.2 trillion over next 20 years to modernise urban infrastructure and keep pace with the growing urbanisation.

Further, growth prospects and price stability of smaller cities are attracting large real-estate developers in such cities in the recent past, according to a report titled 'Real(i)ty Next: Beyond the Top 10 Cities of India', released by Crisil Research. The report estimates that the sale of new residential apartments in 10 such smaller cities at around US$ 4 billion in 2012.

The Government of India’s recent decision to allow 51 per cent FDI in multi-brand retail is also expected to benefit the real estate business in the country, in terms of boosting development of new shopping malls. In fact, India is named among top 20 destinations in the world with the strongest retail real estate momentum, according to international property consultant Jones Lang LaSalle.

SECTOR FACTS

• FDI flows into construction development (including townships, housing, built-up infrastructure) in April-June 2012-13 stood at US$ 348 million, according to the Department of Industrial Policy and Promotion (DIPP)
• Construction development sector attracted a cumulative FDI worth US$ 21.1 billion from April 2000 to June 2012

Investment Opportunities

Non-resident Indians (NRIs) and foreign citizens who are Persons of Indian Origin (PIO) are allowed to purchase immoveable property in India. Residential property prices have stabilised now and are deemed attractive for the NRI home buyer. Industry experts feel that with attractive pricing and innovation in construction technology and variety of designs, NRIs are taking a fresh look at India as a unique market in which they can invest.

NRIs are looking forward to investing in real estate in India with the dollar appreciating in value compared to the rupee in the recent times. "Generally, NRIs are looking at this period as an extremely advantageous one for realty investments. The Government has been making proactive policy changes clearly aimed at routing more NRI investments into India," says Om Ahuja, CEO - Residential Services, Jones Lang LaSalle India.

Meanwhile, Indian realtors participated in an India Property show in Singapore. The show was organised to attract Indian diaspora living in Singapore to invest into India’s booming real estate market. “The appreciation of the Singapore dollar, the Comprehensive Economic Cooperation Agreement and the RBI’s liberalised policies are all progressive steps for expats, NRIs and Singaporeans to invest in India’s booming real estate market. The reputation of the realtors and the variety of properties available make it a reliable and convenient investment opportunity for the Indian expats and Singaporeans alike,” said Mr R. Dhinakaran, nominated Member of Parliament and vice-president, Institute of Certified Public Accountants of Singapore.

Investment Policy Updates

The Government has proposed one per cent TDS (tax deduction at source) on transfer of immovable property if the sale value exceeds Rs 50 lakh in urban centres and Rs 20 lakh in other areas in the Union Budget 2012-13.

The Reserve Bank of India (RBI) has granted permission to foreign citizens of Indian origin to purchase property in India for residential or commercial purposes. The purchase consideration should be met either out of inward remittances in foreign exchange through normal banking channels or out of funds from NRE/FCNR accounts maintained with a bank in India.

According to the latest reforms,

• FDI up to 100 per cent under the automatic route in townships, housing, built-up infrastructure and construction-development projects (which would include, but not be restricted to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure) is allowed subject to the following guidelines (also for investment by NRIs)
• The project shall conform to the norms and standards, including land use requirements and provision of community amenities and common facilities, as laid down in the applicable building control regulations, bye-laws, rules, and other regulations of the State Government/ Municipal/ Local Body concerned
• The investor/ investee company shall be responsible for obtaining all necessary approvals, including those of the building/layout plans, developing internal and peripheral areas and other infrastructure facilities, payment of development, external development and other charges and complying with all other requirements as prescribed under applicable rules/ bye-laws/ regulations of the State Government/ Municipal/ Local Body concerned
• The State Government/ Municipal/ Local Body concerned, which approves the building/ development plans, would monitor compliance of the above conditions by the developer

Courtesy : oifc.in