FDI in Real Estate-What Does It Mean for The Common Man?

Budget 2014 might not have ushered in the instantaneous "Acche Din" expected by many, but there is no denying the fact that it certainly is a very positive and thoughtful budget that is the first step in coming closer to the much coveted dream of better days.

FDI (Foreign Direct Investment) in real estate is certainly one of the most talked about budget announcements this year and rightly so, as it is going to make things easier for the middle class in the real estate arena. In very simple terms, FDI in real estate implies that the dream of living in one's own house is not very distant for the middle and lower-middle class of the society.

Let us get an insight into how this move of Modi government of bringing FDI in real estate is beneficial for the common man:

1) The government has announced the minimum built-up area requirement to be relaxed from 50,000 square meter to 20,000 square meter to allow FDI. This simply implies that the foreign funds would flow more easily, which in turn would facilitate quality and timely completion of projects.

2) The government has also raised the bar on upper limit on FDI to $10 million from $5million, which again translates to cheaper, easier and faster funds for the sector. These benefits, sooner or later, will surely be passed on to the consumers.

3) Amplification of fund flows through the relaxing FDI norms will also help strengthen the battered rupee and will also help check inflation.

4) Very importantly, FDI in real estate will improve investor sentiment in the market, which will boost sales.

5) FDI in real estate would recuperate the investment climate and will also usher in transparency in the market.

It must be noted that FDI in the real sector hit rock bottom recently as it declined to less than $1.3 billion in the period April 2013 to February 2014. It was $3.1 billion between April 2012 and March 2013. The decline in FDI in the mentioned period is hugely attributed to the unveiling of a number of scams in the UPA regime as well as to the political uncertainty in the pre-election period.

The above mentioned steps are certainly a welcome-sign; here’s hoping that FDI in real estate would work wonders for construction industry and will also help the industry bounce back in the near future.