Huge NRI Investment in real estate sector in India

The Indian real estate sector has been seeing huge investment from non resident Indians (NRIs) and Overseas Citizens of India (OCIs) who have now started applying online and checking out top ranking brokers to buy homes and properties across India. Real estate organizers are building properties comparable to the rest of the world to cater to the growing demand from overseas Indians. Most of these are premium properties with amenities not seen anywhere else.

Many real estate companies in India are multinationals, and, therefore, are capable of producing replicas of integrated properties found in countries such as the US and UK. Their target clientele are the NRIs and everything is created with their requirement in mind.

Participation of foreign banks
NRI investment in real estate has become more lucrative with major foreign banks in India and financial institutions funding real estate in India. Rise in demand for quality properties for housing and the upswing in the hospitality and hotel industry in India have brought a number of such institutions in direct competition to invest in the real estate sector. There is also a boom in the stock prices of real estate companies.

The Indian Government has relaxed many rules and regulations regarding NRI investment in real estate to attract more investment from this sector. It is also pumping in more money in the real estate sector in India. The government has also updated the property tax act, the rent control system and the land ceiling regulations and made them more investor friendly for NRIs wanting to invest in real estate. There is further liberalization of foreign exchange regulations to get more NRIs into real estate buying, selling and investing.

Government measures
Among the many progressive measures taken by the government to promote demand and investment in the real estate sector are allowing 100% FDI in townships, housing, built-up infrastructure and construction development projects through the automatic route, subject to guidelines as prescribed by DIPP.

It has also allowed 100 per cent FDI under the automatic route in development of Special Economic Zones (SEZ), subject to the provisions of Special Economic Zones Act 2005 and the SEZ Policy of the Department of Commerce.

Returns have also skyrocketed for private equity players who have found an excellent business opportunity in real estate over the last few years. For NRIs it is profitable to invest in real estate and see property prices appreciating over the next two or three years.

According to the data released by the Department of Industrial Policy and Promotion (DIPP), housing and The real estate sector attracted a cumulative foreign direct investment (FDI) worth US$ 9,405 million from April 2000 to January 2011 Compared to US$ 1,048 million during April-January 2010-11. This includes construction of cineplex, multiplex, integrated townships and commercial complexes etc.