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$30 Bn FDI money to flow into realty in 10 years
By siliconindia
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Tuesday, 17 June 2008, 17:31 IST
New Delhi: An Assocham study said that foreign Direct Investment (FDI) worth 30 billion dollars is expected to flow into the domestic real estate market in the next 10 years, thanks to a more than 30 percent growth in the sector.
The domestic real estate market is currently assessed at about 15 billion dollars, in which FDI contributes about six billion dollars. The bank credit to this sector in 2006-07 is estimated at about Rs three lakh crore, which will multiply substantially in the coming years in view of the growth that the sector has been registering, the study added.
"Currently, the foreign developers can undertake construction activities on a minimum space of 50,000 square feet, as a result of which Indian real estate sector could achieve FDI's component around six billion dollars," Assocham President Sajjan Jindal said.
The Chamber expects the government to lift the ceiling of 50,000 square feet. It estimates the figure to be increased to two lakh sq ft in next 10 years in a gradual manner and result for much higher foreign capital absorptions.
"The only problem the real estate sector currently confronts is that of approvals for setting up townships as involvement of Centre and a number of state agencies are there," Assocham said.
The study also suggests the FDI be routed through private equity instead of institutional mechanism.
"The real estate sector story in India would grow larger as the IT sector alone is expected to require about 200 million square feet space across the major and large townships," says the study.
It is also estimated that in India's residential sector, the housing shortage is around 20 million units of which nearly seven million units are estimated for urban India.
The increase in purchasing power and exposure to organized retail formats have also redefined the consumption patterns for dwelling units which has resulted in retail projects to mushroom in smaller towns and cities.