Foreign investors likely to invest only in metros
Industry experts believe that the global investors may initially focus at major metros than investing in high-risk Tier 2 and 3 cities. It is expected that the government’s move to reduce capitalisation limit to $5 million is likely to attract FDI in the real estate sector.
The international players are reluctant to enter the markets, which are of high risk, especially where infrastructure has yet not been developed. They feel that there will be very few takers for the commercial space in Tier 2 and Tier 3 cities as infrastructure and manpower problems exist. Also they are worried about the residential sector as there might not be enough returns on investments in smaller cities. However the developers’ community is upbeat about foreign investments in smaller cities and are hoping large investments to come through in small towns.
The new government in its budget has announced reduction in built-up area threshold from 50,000 square metres to 20,000 square metre and drop the minimum foreign direct investment limit to $5 million from $10 million. This is expected to attract more foreign investors.
The Managing Director of Tata Housing Brotin Banerjee stated that many private equity investors have ventured into Indian realty since the sector was opened to FDI in 2005. He also mentioned that given the current scenario, the opportunity presented by tier 2 and 3 cities are ripe, waiting to be tapped by developers backed by foreign investors.
Source- Financial Chronicle
Embassy Property Developments, FDI in real estate, Foreign Direct Investment (FDI)., Foreign investment, foreign investments in smaller cities, Foreign investor, Foreign investors, Foreign real estate players, global investors, Michael Holland, Realty News
