Real Estate and FDI

Since the present government decided to allow FDI in real estate in 2005 it has been in a bubble. Only Non resident Indians and Persons of Indian Origin could invest in real estate before the introduction of the FDI in the real estate sector. But now with this new policy, foreign investors can now invest in the development of townships, infrastructure construction development projects, housing, commercial premises, hotels, resorts, hospitals, educational institutions and recreational facilities.

India received a total of US $2.70 billion in 2003-2004 of which only 4.5% was used in the real estate sector; in 2004-2005 this was 10.6% of US $3.75 billion FDI, and 16% of US $5.46 billion in 2005-2006. The change in the government policy on FDI has had an impact on the growth in demand of residential, commercial and retail sectors of the real estate and attracted three times more foreign investment. This has shown a direct impact on the quality and the pace of the construction activities in the country today. Thus we find that this sector is more organized and professional using advanced technology for a more competitive and healthy environment both for the domestic and foreign investors.