FDI in Real Estate
FDI in Real Estate
The Department of Industrial Policy and Promotion (DIPP), via Press Note No. 2 (2005), has authorized up to 100 percent FDI under the automatic route in townships, housing, built-up infrastructure and construction development projects (which would include, but not be limited to, housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, city and regional level infrastructure facilities, such as roads and bridges, transit systems).
The minimum development area for each undertaking would be as follows:
- a) In the case of serviced housing tract development, a minimum land area of 10 hectares.
- b) In the case of construction development initiatives, a minimum of 50,000 square meters of built-up area.
- c) For a combination of the two preceding initiatives, any one of the preceding two conditions is sufficient.
The minimum capitalization requirement is US$ 10 million for a wholly-owned subsidiary and US$ 5 million for joint ventures with an Indian partner or partners. The funds would need to be raised within six months of the company’s commercial launch.
The initial investment cannot be repatriated until three years have passed since the conclusion of the minimum capitalization requirement. Nonetheless, the investor may be allowed to leave earlier with prior approval from the Foreign Investment Promotion Board (FIPB).
The development of at least fifty percent of the integrated project must be concluded within five years of receiving all statutory clearances. The investor would be prohibited from selling undeveloped parcels (underdeveloped connotes, where roads, water supply, street lighting, drainage, sewerage and other conveniences as applicable under prescribed regulations, have not been made available). Before the sale of serviced housing plots is permitted, the investor must provide the necessary infrastructure and acquire a certificate of completion from the relevant local body/service agency.
The project must comply with the applicable building control regulations, by-laws, rules, and other regulations of the State Government / Municipality / Local Body concerned, including land use requirements and provision of community amenities and common facilities.
The investor shall be responsible for obtaining all necessary approvals, including those of the building/layout plans, developing internal and peripheral areas and other infrastructure facilities, paying development, external development, and other charges, and complying with all other requirements, as prescribed by the applicable rules/by-laws/regulations of the State Government / Municipal Body / Local Body concerned.
The State Government / Municipality / Local Body approving the building / development plans will oversee the developer’s compliance with the aforementioned conditions.