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Indian Real Estate Has Got The Foreign Investment Back

Rajbir Achoriwala

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Indian Real Estate Has Got The Foreign Investment Back

The Real estate industry which creates the largest number of jobs in the economy has got the foreign investment back after a lull of two years, thus indicating the revival in the sector.

According to data from the Department of Industrial Policy and Promotion, FDI in construction development stood at Rs 2,453 crore ($385 million) in April-December 2017—up 250 percent from Rs 703 crore ($105 million) in the year ago-period. This figures included townships, housing, and built-up infrastructure.

Measures like RERA, GST, demonetization, and crackdown on benami property (or property held via proxy) are some of the measures that are behind the revival. There may have been short-term negative effects however they have motivated the inflow of foreign funding.

A report by real estate services firm Cushman and Wakefield suggested the whole sector got investments worth Rs 30,000 crore, including from domestic and overseas investors, through the year to March.

The fresh investment has gone into the commercial real estate and infrastructure. Highlighting a rise in private equity inflows into the property market, the Cushman and Wakefield report said India’s buoyant office sector continues to attract heightened interest from foreign investors who are building a portfolio of rent-yielding assets. Thus, changing the ownership pattern of office stock in major cities.

The report said private equity investments in the sector for the quarter ended March was Rs 8,500 crore ($1.3 billion). Anshul Jain, country head and managing director, Cushman and Wakefield India said that investors from China, Japan and US have joined with domestic developers to enter the Indian realty market. This includes investors like Blackstone, GIC, Brookfield Asset Management and the Canadian Pension Plan Investment Board.

Affordable Housing

Anuj Puri, chairman of Anarock Property Consultants said residential sector too has attracted overseas investors. Prime Minister’s efforts to root out black money has given them confidence.

After the sudden demonetization, the demand has started picking up only now. Affordable housing is the new opportunity where the government allows subsidy on home loan interest for buyers with the income of up to Rs 18 lakh.

Puri added citing the example of the CPPIB and Singapore’s GIC, “They are more active in the affordable segment. That’s where the demand is.”

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