Relaxed foreign investment norms in real estate soon

It is no secret that the growth momentum of Indian real estate had slowed down in recent times. But it is no secret either that the realty arena is making a comeback at a fiery pace. The all important government authorities have got their act together and humungous growth is back on track.

investment-on-bigIn a move which is all set to trigger further growth in real estate the mighty union cabinet has excluded many longstanding provisions in the FEMA – Foreign Exchange Management Act on 7th of May. The move will lead to an increased investment in real estate. A few other positives have emerged as well in the past few days. The vibrant and well renowned rating agency, ICRA, has predicted that the demand for cement is all set to go up in the country. On the other hand, close to 22 realty developers have asked the government to completely cancel their proposed SEZs while 27 of them are seeking extension in the time required to finish their SEZs.

The Union Cabinet has strategically decided to abolish a few norms to relax the prevailing regulations as far as investment of foreign funds is concerned in REITs – Real Estate Investment Trusts. The previous norms had prevented inflow of the crucial foreign investments in real estate as investments in rent yielding or completed realty assets was absolutely prohibited. REITs usually tend to invest in office and retail commercial space but investment till now was possible only in under construction realty projects. Thus such a move will and is rightly expected to increase investments multifold.

India’s infrastructure, investment cycle and economy are all set to significantly improve as well. The production of cement has increased in the country already and the demand for it is expected to grow by a whopping 6 to 7% as well. Increased demand of cement is a direct indicator of improvement in the real estate space and the demand goes up only when the industry is witnessing a boom. Thus things are pointing in the right direction.

While, 27 real estate developers have asked for extension in the requisite timeline for them to successfully develop and handover their SEZs. Also 22 developers have asked to completely scrap their SEZs altogether. Just a few days back the government had to scrap many more SEZs. Thus in order to protect the development and growth of SEZs and real estate, the government is expected to relax norms for inducing investment and construction of SEZ.

These are just few of the instances where an immensely positive move and direction has been taken by the government to revive the realty space of India. So if you are an investor or an end user of real estate, then do not hesitate in jumping on the real estate bandwagon.

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