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News & Views on Indian Real Estate

Monday, June 23, 2008

Need for relaxing FDI, PE norms for small city builders


With land and construction material prices skyrocketing, bank finance hard to come by and bookings slowing down affecting the cash flow, the real-estate industry in Coimbatore wants the Centre to tweak the FDI and foreign Private Equity (PE) investment norms in real estate in small cities so that these fund sources are able to extend them a lifeline. The industry also emphasizes the need for classifying the real-estate sector as an industry so that it becomes eligible for bank finance at reasonable interest rates. Due to the opening up of the real-estate sector in India to FDI and PE investments; the sector has witnessed huge funds flow. This has benefited mostly large builders based in metros and big cities and most of the real-estate developers in small cities such as Coimbatore have not been able to access funds from these sources because of the stringent norms. So there is a need for relaxing these norms as the size specified for FDI investment is very large for a city of the potential of Coimbatore. The Government should also accord industry status to the real-estate sector that would make bank funds available at reasonable rates.

Manish said...

This is good suggestion, this should be considered by the government.

vikas said...

I agree the funds are not adequate for running project. But foreign investment involves lots of thing which has to be considering before taking any decision.

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