Psabby Jv.docx

What structures do investors consider while investing in real estate in India?

There are also situations where a foreign company may want to exercise management control even though it is not investing in the JV company. Typically, if a foreign company is providing technology and other knowledgebased inputs, it may want to ensure that the JV company is managed as per its directions. In such cases the foreign company may retain an option to invest in the JV company at a future date. Such a structure may also be used by a foreign company to create a foothold for itself in a sector where Foreign Direct Investment (FDI) is not allowed.

India appears to have several confusing land and development laws Transfer of Property Act, which deals with both movable and immovable property, and the Indian Easements Act, both effective from 1882; the Registration Act, again which is old from 1908; the Slum Areas (Improvement and Clearance) Act which was passed in 1956, and the not so old Environment (Protection) Act 1986 and the Forest (Conservation) Act of 1980; and then the very recent Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act of 2013, and last year’s Real Estate (Regulation and Development) Act and the Benami Transactions (Prohibition) Amendment Act, which came into effect on 1st November 2016; and the Indian Stamp Act 1899

Can foreign entities acquire or transfer interest in immovable property in India? Also, how does the government regulate foreign investment in the real estate sector?

The Foreign Exchange Management Act, 1999 and the Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 govern the purchase/sale of immovable property in India by foreign entities. A foreign corporate which has a branch office in India is permitted to acquire immovable property in India so long as this is essential for carrying out its business in India Under the Consolidated Foreign Direct Investment Policy (FDI Policy), foreign investment in the real estate sector in India is permitted under the Automatic route under which no Reserve Bank of India (RBI) or government approval is required for the investment, subject to compliance with the prescribed parameters and the FDI Policy or the Government route which requires a prior permission of the RBI or the government for the investment.

What are some key features of REITS? REITs need to be set up as trusts and must be registered with SEBI. A REIT must have a trustee, sponsor(s) and a manager. The REIT Regulations specify that the trustee must be a SEBI registered debenture trustee and must not be an associate of the sponsor/manager. REITs are permitted to invest in commercial real estate assets, either directly or through special purpose vehicles and can raise capital through an initial public offering subject to the condition that the value of all commercial real estate assets owned by the REIT is not less than INR 5 billion.