J.K.Patil and associates

It is understood that more than 35 foreign funds having already put their foot into the real estate sector of India, and many more global realtors, finding out the possibility of investment opportunity to invest in India. Foreign investors, it is leart,that Indian property market will enable the sector to increase its share in total FDI inflow into the country by at least 10 per cent in 2006-07.

But resently two major obstacles are noticed which will cut down the investment in India by foreign investors. One is the the increse in the rate of interest on housing loan. Due to sudden boom in the real etate sector during last few years, we have seen many new palyers divesirfied into this field to take advantage of growing demand. The Income tax policy for exemtion in the payment of tax has added many more players in the field.As a result, due to mass production , the sky-high prices and growing interest rates, the maket is seen collapsing suddenly leaving lots of finished product unsold.

Another important factor is increasing value of the Indian rupee against US dollars .With the rupee growing stronger day by day, non-resident Indians may think twice before buying the properties in the country, since they have to pay more. It is learnt that the share of NRIs, particularly in commercial sector may reduce to a greater extend. The trend in investment is normally in unfinished property, which will affect more putting burden of investment to the developers. The property market has already noticed a 7-8 percent drop in the sales and will continue till the currency stabilises again

PATIL J.K.
J.K.Patil and Assocoates,Pune/Mumbai