REAL ESTATE SECTOR IN INDIA

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Contents 
          Growth in Real Estate Sector Why to Invest In Indian Real Estate Sector Opportunity of Investor in Indian Real Estate Sector Integrated Township Retail Sector and Real Estate Sector Latest trends of FDIs and Guidelines for FDIs Real Estate Mutual Funds Special Economic Zones (SEZs) Key trends in Real Estate boom Major players References Websites

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 Credit to the housing sector has continued to be strong and benefited from low interest rates and incentives. Investment of US$ 16 billion expected over the next five to six years in Real Estate.Growth in Real Estate  Investment of US$320 billion required in next five years in infrastructure.  Real Estate sector is registering an annual growth rate of 30%. 3 .

 Returns in India range between 12-15% compared to 3-4% in the advanced countries.  Merrill Lynch forecasts that the Indian real estate sector will grow from US$ 12 billion in 2005 to US$ 90 billion by 2015. 4 .1% of the GDP constitutes FDI in real estate sector.Growth in Real Estate (Contd.)  1.

Why Invest in Indian Real Estate Sector   The Economy is growing with GDP Rate 9.   5 .2% IT. chemicals. Presence of a large number of Fortune 500 and other reputed companies India is going to produce an estimated 2 million new graduates from various Indian universities during this year. ITES and Business Process Outsourcing (BPO) India has shown its expertise in sectors like auto-components. apparels. pharmaceuticals and jewellery where it can match the best in the world. creating demand for 100 million square feet of office and industrial space.

Opportunity in Indian Real Estate Sector Commercial Ventures Retail Outlets and Malls Sprawling Malls and Multiplexes Building of Apartments In Hotel Industry 6 .

Integrated Townships Central Government permitted setting up integrated townships at the following places:‡ Gurgaon (Haryana) ‡ Hyderabad (Andhra Pradesh) ‡ Mohali (Punjab) ‡ Jaipur (Rajasthan) ‡ Bangalore (Karnataka) ‡ Kolkata (West Bengal) 7 .

Unitech's Great India Place has a million square feet (sq ft) of retail space. at least 3 malls with similar dimensions are under development.Retail and Real Estate Sector ‡ Spurt in extremely large retail spaces. ‡ About 20 of these are now at various stages of construction across the country. ‡ In Bangalore. ‡ Shopping malls with over 1 million sq ft of space have become the order of the day.6-million sq ft mall by Today Homes. ‡ Ludhiana will soon have a 1. 8 . at least 8 malls with over 1 million sq ft. ‡ In Mumbai. ‡ In the National Capital Region (NCR). each.

hotels. recreational facilities and regional level infrastructure). resorts. hospitals. subject to certain conditions.  FDI up to 51% is allowed through FIPB route in single brand retail shops. educational institutions. commercial premises. housing. built-up infrastructure and construction-development project (including but not restricted to housing. 9 .Latest Trends Of FDIs  100% FDI is allowed under automatic route in townships.

a minimum land area of 10 hectares ‡ In case of construction-development projects.Guidelines for FDI in Real Estate Minimum area to be developed under each project would be as under: ‡ In case of development of serviced housing plots.000 sq. any one of the above two conditions would suffice 10 . a minimum built-up area of 50.mts ‡ In case of a combination project.

‡ Original investment cannot be repatriated before a period of three years from completion of minimum capitalization. the investor may be permitted to exit earlier with prior approval of the Government through the FIPB. However. 11 . The funds would have to be brought in within six months of commencement of business of the Company.Guidelines for FDI in Real Estate The investment would further be subject to the following conditions: ‡ Minimum capitalization of US$ 10 million for wholly owned subsidiaries and US$ 5 million for joint ventures with Indian partners.

12 . ‡ ³Undeveloped Plots´. water supply. here will mean where roads. as applicable under prescribed regulations. and other conveniences. street lighting.Guidelines for FDI in Real Estate ‡ At least 50% of the project must be developed within a period of 5 years from the date of obtaining all statutory clearances. have not been made available. drainage. The investor would not be permitted to sell undeveloped plots. sewerage. It will be necessary that the investor provides this infrastructure and obtains the completion certificate from the concerned local body/service agency before he would be allowed to dispose of serviced housing plots.

It announced that all REMFsplans will be close ended. 13 .  SEBIs has permitted to mutual funds companies to launch REMFs.Real Estate Mutual Funds (REMFs)  SEBI has recently approved the scheme of REMFs/  This scheme has an objective to invest directly or indirectly in real estate property.  The units of REMFs will be compulsorily listed in stock exchanges and Net Asset Value (NAV) of the scheme will be declared daily.

debentures of listed and unlisted companies. equity shares.REMFs (Contd. bonds. 14 .) REMFs can invest directly in real estate properties within India. which deal in properties and also undertake property development and in other securities. mortgage (housing lease) backed securities.

in 15 . SEZ Act 2005 has now come into effect. like many East-Asian economies. private.Special Economic Zones (SEZs) SEZ is a specifically delineated duty free enclave and is deemed to be foreign territory for the purposes of trade operations and duties/tariffs. To augment infrastructure facilities for export production it has been decided to permit the setting up of SEZs in the public. The above Act and Rules enable India to leverage SEZs. to push investments and growth to a higher level.nic.  Details at: www. joint sector or by the State Governments.sezindia. SEZ Rules 2006 were also issued in February.

237 SEZs have been approved. 16 .8 billion in the next five years.SEZs (Contd.) So far 63 SEZs are functional. Total investment in SEZs is expected to be over US $ 8.

Key trends in real estate boom Legislation Transaction Costs  Absence of REITs and REMFs Land Acquisition Lack of corporatization 17 .

ANSAL BUILDWELL Ltd REVFs/REMFs  Indian companies: IDFC. 18 . Dewan Housing Finance. etc. etc. HDFC.  Foreign companies: Blackstone. Savvils.Major Players Real Estate Developers  DLF Universal  OMAXE Ltd. Kotak Mahindra. Dawnay Day. Macquarie Bank.

19 .5 billion in Indian real estate in the next two years. plans to invest US$ 1.  Hilton Hotels Corporation (HHC) has announced a joint venture company with DLF Ltd to develop and own 75 hotels and serviced apartments over 7 years.Major Players  Citigroup is investing around $400 million of equity from a recently raised fund in India. the UK-based investment company.  Dawnay Day International.

indianrealestateforum.nic.org  www.assocham.com  www.sezindia.indianground.References Websites  www.com  www.in .

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