The much talked-about foreign direct investment (FDI)
in the Indian real estate segment has failed to take off
due to the unrealistic policy norms formulated by the
after two years of passing the FDI in real estate, just
one project has been cleared so far a joint venture
between Feedback Ventures and OCL India in collaboration
with Kontur Bintang Sdn Bhd, incorporated in Malaysia,
and Tan Sir G Gangalingam, a Malaysian citizen.
an estimated cost of Rs 748 crore, this project will develop
a residential township in Gurgaon near Delhi. According
to a senior market analyst with Knight Frank, property
consultants, the government has formulated totally unrealistic
norms for FDI in real estate.
such as minimum 100 acres of development area, mandatory
completion of 50 per cent work in five years and a three-year
lock-in period for foreign equity have forced the multinational
developers to stay away from the Indian real estate segment,"
major reason that is putting foreign players off is the
condition on the minimum area to be developed. For a foreign
player, finding 100 acres of land around Indian cities
will be a Herculean task as most land may have already
been cornered by local developers.
the government is not yet clear on the provisions for
providing basic infrastructure like roads and electricity
to the developer. Industry observers say the decision
to allow 100-per cent FDI in real estate had addressed
one of the fundamental reasons that kept the Indian realty
bogged down all these years and the paucity of fund flow
into the sector. But this is not really happening.
initial euphoria wore off, so did the interest of potential
investors. Hundred per cent FDI for developing an integrated
township was announced in 2001 and revised guidelines
were issued in January 2002. But the environment is still
not conducive for foreign players. The level of professionalism
is still not very high in the industry. The developers
still have to face all the bureaucratic hassles,"
says Saurabh Agarwal of RNA Builders.
government norms such as free handing over of government
lands such as police stations and rations shops, prior-operation
of schools and hospitals before selling the plots to the
housing sector were not attractive to multinational corporations,
says an official with Cushman and Wakefield.