‘FDI in Real Estate in India’ by Mr Parth Mehta, Managing Director, Paradigm Realty.

Mr. Parth Mehta has eight years of rich Real-Estate background post his MBA degree in

Finance. An Alumnus of SPJAIN Centre of Management, Mr Mehta has diverse experience

starting from being an analyst at Citibank post his graduation in BMS from NM college to

acting as Business Development Manager at Wadhwa Group of companies, a reckoned name

in Mumbai Real Estate fraternity followed by being entrusted as CEO & Director of Parinee

Realty another Mumbai based Real Estate Developer.

As the CEO at Parinee Realty, his core responsibility was to undertake STRATEGIC TIE-

UPS and ACQUISITIONS. Mr.Mehta was overseeing the holistic growth of the company and

was an incharge of divisions including Finance, HR, Business-Development, Sales

&Marketing, Approvals & Liasoning.

Mr Mehta, is a seasoned real-estate entrepreneur with SRA as his forte since he has acquired,

articulated & implemented SRA Projects to the tune of 3 million sq.ft for Parinee Realty. He

believes in par excellence which is his driving force and success of projects is by-product of

diligence & embedded company’s ethos.

Currently as a stakeholder at Parinee Realty, he is overseeing couple of large sized SRA

projects located at prime locations like Worli, Borivali, Kandivali. Inherent passion &

acumen of a deal-maker induced him to start a venture i.e. PARADIGM REALTY which

exudes commitment, integrity, par excellence & creativity.

Real estate sector is the second largest employment generator in India. The size of the real

estate industry in India is US$12 billion approximately. The growth rate of the industry is

30% and there is a colossal positivity in the Indian real estate sector.

Major contributors of the sector growth in chronology are 1) the residential and official

usage, 2) Infrastructure 3) shopping malls, 4) hotels ,education & hospitals etc. The real

estate sector is witnessing a new phase of growth: be it in the commercial or the residential

segments. The Government has taken many steps to create an environment of growth for the

sector.

Most significant economic policy decision taken by the Government of India: 100% FDI in

Townships, housing, built-up infrastructure and construction-development projects. Major

corporations are taking initiative and are wooing international players soliciting investments

for major projects.

CURRENT SCENARIO

The Indian real estate market is ready for take-off. The hibernation period is definitely over,

with FDI (Foreign Direct Investments) in real estate estimated to reach $16 billion by 2015

from $600 million in 2006.

The FDI scenario in India is currently witnessing a gradual shift with liberalized reforms over

the last few years and an attractive investment climate making a positive impact on the

inflow. With a steady increase in volume of FDI, India has attracted more than 90 countries

till 2010 leaving US behind in the list of top investment destinations in the world.

MAJOR DEVELOPMENTS

The Department of Industrial Policy and Promotion, has permitted FDI up to100% under

automatic route in townships, housing, built-up infrastructure and construction development

projects -housing, commercial premises, hotels, resorts, hospitals, educational institutions,

recreational facilities, city and regional level infrastructure facilities, such as roads and

bridges, transit systems etc.

The FDI policy seems to take a mid-path approach by doing away with some of the restrictive

conditions of the past even while imposing overarching conditions preventing speculative

trading. The project shall confirm to the norms and standards, including land use

requirements and provision of community amenities and common facilities as laid down in

the applicable building control regulations, by-laws, rules and other regulations of the State

Government / Municipal / Local Body concerned. The investor shall be responsible for

obtaining all necessary approvals, including those of the building /layout plans, developing

internal and peripheral areas and other infrastructure facilities, payment of development,

external development and other charges and complying with all other requirements, as

prescribed under applicable rules/bye-laws/regulations of the State Government / Municipal

Body / Local Body concerned.

IMPACT OF FDI IN REAL ESTATE

The FDI-funded Indian real estate will have the sufficiency of capital flow that will help

realty players complete projects on time and increase buyer’s sentiments across the

country.Indian realty sectors will be more organized and technically advanced to facilitate

construction business. FDI in Indian real estate shall make the industry compettive interms of

new mass layout launches as well as it shall increase the competition between foreign

investors scouting for sweet deals.

With real estate foreign investment in India, construction of FDI-funded housing projects will

surface. This is so, because investment flow from foreign investors will potentially solve fund

related issues that real estate faces and it will increase development of projects punctuated by

timely and quality deliverance.

To say the least, the move is considered excellent, as some projects like townships involve

time-taking development. With real estate foreign investment India in place, these projects

will not face funds related issues and therefore they will be completed on time to the joy of

buyers and builders both.

Besides, the relaxed norms will help government materialize development of its ambitious

100 Smart Cities and it will facilitate faster development of various realty projects across the

country. These projects will be able at affordable cost as a result. Apparently, the move will

encourage Indian realty to complete projects on time as adequate financial assistance from

cross-border investment will end funds crunch issues that hamper on-time completion of real

estate development and subsequent depletion in the buyer’s sentiments.

THE WAY FORWARD

The 10th plan estimated a shortage of 22.4 million housing units in 2007, with requirement of

housing touching 90million in another fifteen years. Sixty million square meters of office

space would be required in the next 5years due to the advancing sectors of services and

Information Technology.

India’s Foreign Direct Investment (FDI) policy has been gradually liberalised to make the

market more investor friendly. The results have been encouraging. These days, the country is

consistently ranked among the top three global investment destinations by all international

bodies, including the World Bank, according to a United Nations (UN) report. For Indian

economy which has tremendous potential, FDI has had a positive impact. FDI inflow

supplements domestic capital, as well as technology and skills of existing companies. It also

helps to establish new companies. All of these contribute to economic growth of the Indian

Economy.