Projected Growth and FDI in Indian Real Estate
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) projects substantial growth in the Indian real estate market over the next ten years. The industry body estimates that the market will reach a total value of $102 billion, with foreign direct investment (FDI) contributing approximately $30 billion. This represents an anticipated growth of over 30% for the sector.
Current Market and FDI
Currently, ASSOCHAM estimates the domestic real estate market to be valued at $15 billion, with FDI contributing around $6 billion. Bank credit to the sector in 2006-07 was estimated at around ₹3 lakh crore, and this figure is predicted to multiply significantly in the coming years, mirroring the sector's continuing growth trajectory.
Impact of Policy Changes
ASSOCham President Mr. S. Jindal highlighted the current regulation that permits foreign developers to undertake construction on a minimum area of 50,000 square feet. This policy has been instrumental in attracting approximately $6 billion in FDI to the Indian real estate sector.
Mr. Jindal further stated, "The upper limit of fifty thousand square feet would be lifted by the government as it is under continuous pressure for increased FDI’s which as per ASSOCHAM estimate will increase to two lakh square feet in subsequent decade in a gradual manner and result for much higher foreign capital absorptions".
This suggests that under consistent pressure to increase FDI, the government is considering raising the minimum construction area threshold. ASSOCham anticipates this limit to be gradually increased to 200,000 square feet over the next decade. The organization believes this policy shift will result in a substantial rise in foreign capital absorption within the burgeoning Indian real estate landscape.