Industry divided over FDI impact

The central government’s decision to bring Foreign Direct Investment (FDI) in real estate has divided developers and real estate experts from the city over whether FDI inflow will actually increase or decrease prices in the market.

Experts feel that just capital inflow in the real estate sector is not enough, but that there also needs to be buyer-friendly steps like that of reducing the actual cost of the flats which can create bigger demand in the market.

Dharmesh Jain, president, Maharashtra Chamber of Housing Industry (MCHI) Mumbai, said, “This move will help achieve the ‘Housing For All by 2022’ aim of the government. It will definitely prove to be a boon for the lower strata of the society who are still aspiring to own homes.”

However, Sandeep Ahuja, chief executive officer, Richa Realtors, said, “With the vision of the government to push ‘Housing for all’, many believe FDI inflow is going to hike the property prices. As the investment made by the foreign players will come with the burden of high interest rates of 20–25 per cent, it would be too early to comment if inflow of FDI will solve the affordable housing problem in the country.”

Experts feel that the government should instead focus on bringing FDI in infrastructure projects around the country and not in real estate.

Ajay Chaturvedi, the CEO of Accomodation Times, a journal that covers the real estate sector, said, “What is the use of constructing ghost towns in when there is no connectivity FDI in real estate will definitely help the developers when it comes to capital holding power, but in no way will give boost to construct more affordable homes.”

Meanwhile, Sunil Mantri, president, National Real Estate Development Council, said FDI in real estate will have a positive impact the on the buyers.