FDI in India's Real Estate Is Increasing, Shows Economic Survey 2018
The mood at home may not be upbeat so far, but, the charm of India's real estate has only doubled among outsiders. According to the Economic Survey 2017-18 that was tabled in Parliament on January 29 by Finance Minister Arun Jaitley, the sector attracted foreign direct investment (FDI) worth $257 million in the second half of 2017. While noting that the foreign investment made in the second half of 2017 is double the FDI real estate attracted in the entire 2016, the Survey noted that the sector has started showing signs of improvement.
What could have led to the growing popularity of India's real estate as a lucrative option for foreign investors? The Survey, which narrates the achievements of the government in the past year and acts as a prelude to the Union Budget 2018-19 that would be presented by Jaitley on February 1, answers that question, too.
The outlook of foreign investors towards the sector must have got more positive after the arrival of the Real Estate (Regulation & Development) Act, 2016. The law would, the Survey expects, work its magic domestically, too, as things progress.
“With the enactment of Real Estate (Regulation & Development) Act, 2016, it is anticipated that accountability would lead to higher growth across the real estate value chain, while compulsory disclosures and registrations would ensure transparency,” says the Survey.
Revealing data for the government's Housing-for-All-by-2022 mission, the Survey notes that the government has sanctioned over 3.1 million houses in urban India under its Pradhan Mantri Awas Yojana (PMAY). Of these, about 0.4 million houses have been built while about 1.6 million houses are at various stages of construction. The Survey, however, points out that aggressively building is not the answer – the rentals and the vacancy rates must be taken into account while doing so. There is also a need to pay more attention to contract enforcement, property rights and spatial distribution of housing supply versus demand, the Survey says.
Narrating other achievements of the government, the Survey says since the launch of the Swachh Bharat Mission (Rural) in October 2014, the sanitation coverage in rural India has increased to 76 per cent in January 2018 from 39 per cent in that year. Eight states (Arunachal Pradesh, Chhattisgarh, Gujarat, Haryana, Himachal Pradesh, Kerala, Sikkim and Uttarakhand) and two union territories (Daman & Diu and Chandigarh) have been declared as open-defecation free, points out the Survey.
Here are some other noteworthy points with regard to India's estate:
Urban expansion: By 2031, India will have an urban population of about 600 million. To deal with that increase, the urban-local bodies must look at generating resources through financial instruments such as municipal bonds, public-private partnerships and credit-risk guarantees, the Survey says.
The green light: The share of renewables in India's electricity consumption has trebled in the past 10 years. The share of renewable energy sources was 18 per cent of the total installed capacity of electricity in India as on November 2017.
She change: With men moving to urban areas, women have emerged as the force in India's agriculture area. Keeping that in account, 30 per cent of the total Budget allocation could be used for their benefit.