The funds-starved real estate sector is enthused with the government’s announcement last week regarding the easing of foreign direct investment (FDI) norms in the construction sector. A 100 per cent FDI will now be permitted under the automatic route and this gives them the liberty to invest in all real estate classes.
From the perspective of the overseas investors, the removal of the lock-in period of three years, which was a major deterrant, is expected to significantly kindle their interest. So investors can exit on completion of the project, or after completion of support infrastructure in the project like water supply, street lights, internal roads etc. are completed.
The minimum built-up area requirement has been reduced to 20,000 square meters from the earlier 50,000 square meters, increasing the scope for smaller projects in crowded metros.
To boost affordable housing, developers will be exempt from restrictions in area and minimum capitalization if they commit 30 per cent of the project cost to affordable housing.
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