FDI in Real Estate
Foreign Direct Investment (FDI) in Real Estate
Foreign Direct Investment (FDI) in the real estate sector involves foreign entities investing in the development and operation of real estate projects, like residential or commercial buildings, in a foreign country. It’s a key aspect of India’s real estate sector, with 100% FDI allowed under the automatic route for construction development projects, including townships, housing projects, and commercial real estate.
Key Aspects of FDI in Indian Real Estate:
100% FDI under automatic route:
FDI is permitted in construction development projects, including townships, housing, and commercial real estate, under the automatic route.
Minimum project requirements:
There are minimum area and capitalization norms for development projects, with the minimum area to be developed varying depending on the type of project.
Lock-in period:
Original investment cannot be repatriated before a period of three years from the completion of the minimum capitalization.
Broking services:
100% FDI under the automatic route is also permitted in real estate broking.
Restrictions:
FDI is not permitted in agricultural land, farmhouses, or trading in transferable development rights.
Benefits:
FDI can contribute to the development of specialized real estate segments, such as logistics parks for e-commerce, and can also lead to the development of affordable housing.
Regulations:
FDI in real estate is governed by the Foreign Exchange Management Act (FEMA) and the Consolidated FDI Policy of the Department of Promotion of Industry and Internal Trade (DPIIT).