Mumbai: Realty companies have gained between 1% to 3% on BSE boosted by government's decision to lower built-up area and minimum capital requirements which need to be met by construction companies before accepting any foreign investments.
The government has eased foreign direct investment rules for the construction sector to attract more money into the country to build new hotels, housing and townships.
Godrej Properties has taken the lead with a gain of more than 3.5% followed by Prestige Estate Projects, up 1.5%, HDIL, up 1.4% and Oberoi Realty, up 1%.
Under the new rules, foreign investment is now allowed in projects with a minimum built area of 20,000 square metres, down from a previous 50,000 threshold. The minimum capital investment by foreign companies has also been halved to $5 million, the government said in a statement.
Government has already allowed 100% foreign direct investments (FDI) in the realty sector with certain conditions like the lock-in period of three years during which the investments cannot be repatriated.
The realty sector received around $ 1.2 billion in the form of FDI in the last financial year which ended on 31st March, 2014. In the preceding financial year the figure was $1.3 billion.
This decision by government will help early realization of PM Modi's ambitious plan to build 100 'smart cities' by 2020.
BSE Realty index is up 0.3% at 10:19 hrs.