Friday, May 27, 2011

FDI in Indian Real Estate Sector

Seeing the multi-fold growth in India and a robust sustainable market economy, the Foreign Direct Investment (FDI) has started pouring huge funds in Indian real estate sector. As per latest data received FDI in Indian real estate sector has increased from USD 0.04 billion in 2005-2006 to USD 2.18 billion in 2007-2008. FDI has invested nearly USD 7.82 billion in Indian real estate sector during 2007-08.

Taking into account an average construction period of 3 years for real estate properties, this is a 8.1% of the market value of investment-grade residential properties under construction in India as of March 31, 2011.

The market price of investment-grade real estate properties in India soared from USD 69.4 billion in December 31, 2006 to USD 108.8 billion by March 31, 2011. This is 8.2% of total GDP for the year 2009. A lion’s share of this market valuation is cost of development and construction of these real estate properties. The combined cost of development and construction is valued to be USD 48.5 billion over a period of 2-3 years.

At present, the commercial valuation of commercial real estate properties inclusive of both retail and office spaces is USD 34.8 billion. Of late, the commercial places under construction contribute three fourth of the total estimated market value in the commercial sector.

From the above it is quite evident that Govt. of India is all set to pamper the FDI mood to invest more in Indian real estate sector. The FDI is also eager to see more investment friendly norms in Indian real estate sector after witnessing its robust economy and ever increasing purchasing power of the upcoming city dwellers.

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