Track2Realty: Maharashtra Government will soon come out with cluster development policy. This was announced on Friday, June 27, by Sachin Ahir, Minister of State for Housing, Slum Improvement, Housing Repairs and Reconstruction, Urban Land Ceiling, Industries, Mines, Transport, Environment and Parliamentary Affairs. He was speaking at the real estate conclave organised by Confederation of Indian Industry (CII) in Mumbai.
The conclave was themed as ‘Voice of Change 2014-Building Growth Consensus for Real Estate in India’. Sachin Ahir urged the real estate industry to ensure that their supply matches demand. Addressing the conclave he said that time was right for the real estate industry to voice their opinions to facilitate the development of the industry.
Talking about the difficulties arising out of the recently introduced Land Acquisition, Rehabilitation and Resettlement Bill (LARR) 2013, Ahir said that the State Government has taken up the same with the Central Government. He added that both private and public sector organisations have been equally affected by the LARR. He also disclosed that the state government of Maharashtra will soon announce the Cluster Development Policy pertaining to the redevelopment of old buildings and complexes in Mumbai.
According to the Minister, the Real Estate Investment Trust (REIT), which is expected to be introduced shortly in India will prove to be very beneficial to developers in terms of raising funds at reasonable costs and will aid the growth of the industry.
Addressing the issue of water scarcity faced by Mumbai, the Minister said that the policy in the state regarding green building proposal will help solve the problem and that it is encouraging to see that many new townships have adopted the same. He added that extra FSI would be made available to developers going green. Talking about the grave parking problems faced by the city, he said that enforcement by law and awareness are essential to solve this issue.
Sachin Ahir released the CII-JLL report ‘Rowing The New Wave: Game-Changing Rules For Indian Real Estate’ at the session.
Anuj Puri, Chairman & Country Head, Jones Lang LaSalle said that change is good only if it is steered well in the right direction. He said that the industry has seen huge turbulence since the global financial crisis of 2009. He said that in the last 6 years there were three takeaways for the industry, the first one being shorter real estate cycles of 2-3 years in the domestic market compared to 5-6 years internationally, second, over dependence on international economies and third, oversupply situation created by short success stories in various micro-markets and various sectors created, especially commercial spaces. He expressed optimism that the strong government at the Centre will help bolster the industry’s confidence.
Speaking on the current situation of the various segments of the real estate industry, Puri said that the office sector in India was spread over 35 crore square feet across 5 metros. Of this, 5 crore square feet is vacant especially in the suburban and peripheral cities. This has resulted in a dichotomy, wherein on one hand, the rentals in central business districts are rising sharply, while those in suburban and peripheral cities are not.
Puri added that rentals have not yet touched the peak levels witnessed in 2008. He said that in the residential space, affordable housing is doing well, however, high-ticket housing projects are witnessing unsold inventories especially in cities like Mumbai and NCR. Speaking about the retail space, he said that the good malls were doing well, however, the bad malls are going empty and run the risk of not getting leased at all because they have been custom built and can’t be used for any other purpose.
Puri pointed out that delay in government approvals with respect to project launches, over-pricing, and difficulties in financing were the key issues plaguing the industry. He drew attention to the fact that currently developers are shelling out interest to the tune of 19-24 %, which is spelling difficulties them and also the end customers. He concluded by saying that ensuring governance and transparency, developing infrastructure and hinterlands and focusing on customer will go a long way in ensuring a healthy growth and development of the real estate industry in the coming years.
R Mukundan, Immediate Past Chairman, CII Western Region and Managing Director, Tata Chemicals said that the role of government is paramount to the success of the real estate industry. He said that the new government’s agenda to provide a home to every family by 2020 is a good opportunity for the industry and stressed upon the need for buyer friendly policies to boost the fortunes of the industry. He said that low-cost housing has the key to solving the problem of access to water and sanitation and hence is the solution to sickness and health problems.
Mukundan said that the private sector real estate projects for both residential and commercial spaces have seen a huge growth on the back of rising population and growing economy. He also spoke of the huge interest evinced by foreign investors in domestic real estate market. The FDI in Indian real estate accounts for 11% of the country’s total FDI inflows.
