Realty Stocks Surge After FDI Relaxation

Shares of the realty and construction companies surged today, following the relaxation of foreign direct investment (FDI) rules. The realty sub-index on the BSE jumped 2% in early trade, outperforming the broader sensex that traded flat.

As per the new rules, clearance from the Foreign Investment Promotion Board (FIPB) will no longer be required, making it easier for foreign companies to invest in the country. The ‘minimum built area’ for projects in which foreign investment is allowed has also been reduced to 20,000 square metres from the existing 50,000.

The government has also reduced the minimum capital investment by foreign companies to $5 million from $10 million.

The Centre intends to attract investments in the construction sector to fulfil Prime Minister Narendra Modi's promise to create 100 ‘smart cities’ by 2020.

The new rules will promote development of smaller projects, especially in urban areas where the availability of land is limited, said Akash Gupt, executive director at PricewaterhouseCoopers.
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