Realty Stocks Surge Post FDI norms Relaxation
As the central union cabinet approved the relaxation of FDI norms in real estate and constructions, stocks of nearly all real estate companies surged amid the Bull Run in the stock markets. The new rules have reduced the minimum built up area requirement to 20,000 square meters from 50,000 square meters while the minimum capital requirement has been reduced from $10 million to $5 million respectively. With the relaxation of norms for FDI in the realty sector, the problem of cash crunch faced by even the big real estate developers would is likely to be resolved in the coming months.
The stocks of all major real estate companies witnessed the after effect of the relaxed FDI norms registering a green close at the end of the markets on Friday. DLF one of the biggest and well known real estate company, registered an increase of 4.74% while Sobha Developers registered a 4.34% increase. Stocks of Mahindra Lifespace Developers rose by 3.78% while Unitech and Housing Development & Infrastructure registered an increase of 3.93% and 2.8% respectively. Other companies to register a positive after effect of the FDI relaxation of norms in the real estate sector include D B Realty which rose 2.96%, Indiabulls Real Estate which rose by 2.79%, Phoenix Mills rising 1.58% and Omaxe registering a 0.89% increase.
While all foreign direct investments under the relaxed FDI norms would come with a lock in period of three years, any request for exit before the lock in period or date of completion of the project would be entertained by the foreign investment promotion board. Any real estate project that commits channelize a minimum of 30 per cent of the total cost for low cost affordable housing would be exempted from minimum built up area and capitalization requirements paving way for more emphasis on affordable housing.
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