Venue—India Habitat Centre
Moderator—Ravi Sinha, CEO & Managing Editor, Track2Realty
Panelists—Sachin Sandhir, MD, South Asia, RICS
Achal Agarwal, ED, Investments, Fire Capital
Sunil Dahiya, MD, Vigneshwara Developers
J C Khera, GM, Finance, Supertech
Ravi Sinha: I welcome all the panelists in this roundtable discussion. We are organizing the brain storming session for our inaugural yearly Handbook Focus 2012. This is the second of the series after the 1st discussion in Mumbai on “Funding Gap in Real Estate.”
Today we have in this panel representative from across the realty segment with Sachin Sandhir, Managing Director, South Asia of RICS that works in global standards and qualifications. We have Achal Agarwal, Executive Director, Investments of Fire Capital, the private equity fund. Sunil Dahiya, Managing Director of Vigneshawara Developers is one of the most vocal spokesperson of the realty sector and then we have JC Khera, GM, Finance of Supertech.
I would like to start with Sachin. How far do you agree with oft-repeated stand of realty sector that policy ambiguity comes in the way of smooth functioning?
Sachin Sandhir: My perspective is going to be slightly different because I represent a professional body for qualification and standards which basically works in public interest. So our priority area in terms of emphasis is a little different. But I guess prima facie we are well positioned within the context right now. I think the land acquisition policy and the resettlement draft bill is the first thing that comes to mind where we can see the land acquisition policy throwing up a lot of ambiguity in the valuations itself.
When you have crated an arbitrary basis of using a thumb rule and saying four times the circle rate or whatever is the value in the market, it is not really an ideal way of recommendation for something that is more demand-supply driven. So the first area I see having a huge impact is effectively a higher cost of acquisitions and that cost is going to get passed on to the consumer. And the uncertainty that has been created is certainly not good for the industry.
The other thing is the issue of real estate regulation bill that has been talked about for a long time. Personally, I am not an advocate of regulation as much as I am an advocate of consumer redressal mechanism for ensuring that consumer complaints are dealt with.
Ravi Sinha: We will come back to the issue of consumer redressal and activism. Of course, on its flip side you will find instances like CCI verdict. Achal what is your take on this?
Achal Agarwal: Government has been doing quite a few things and many of the policies are in the right direction the way we look at it. At times we perceive that with some of these policies the intent is correct but implementation and the review process needs to be more business like. Someone needs to take quicker decisions. For example, we represent FDI in real estate where policies seem to have been framed more with macro vision in mind. There is no categorization in terms of investments. In Delhi and Mumbai it can work, but if we go to tier II or tier III cities, many a times that sort of an equity requirement would simply not be feasible to make returns on the project. So, I think sometimes you face a challenge in the overall framework.
Ravi Sinha: Sunil your views on this?
Sunil Dahiya: I have a view that policy has been designed keeping consumers in mind rather than keeping the developers in mind because developers are going to be the executioners of the policy. With the regulation bill for real estate, I think we are reinventing the wheel with that. If we go to telecom, power or banking, all these sectors have been able to provide better services to the consumers only after being deregulated. We are going the other way around.
If you see the new land policy, I would like to differ with Sachin on this because at one point of time I had the same impression that the land policy is an appeasement policy for a certain section of the society like the farmers. But during one of the interactions with the Planning Commission on land policy, I tried to understand the Government’s side also. Earlier the Supreme Court, in the ’60s and ’70s, threw out every petition filed in objection of land acquisition. This essentially meant all land acquired by Government is essential and for public use. Now after 2010-11, we are seeing a complete turnaround in the Supreme Court and it is even canceling out recent land acquisitions.
Now to check the Supreme Court getting into judicial activism process the Government came with a knee jerk reaction of introducing a new policy. As developers, we don’t want litigation in land. We don’t want a project to suffer because the land acquisition was wrong in some way or the other.
Ravi Sinha: I think let’s have the views of Supertech as they have only recently seen the wrong side of land acquisition policy.
JC Khera: Basically, if we discuss the land policy, we have to go behind the intent of the policy. The intent of the policy is not to give benefit to the farmers or to regulate the land acquisition. There was a tussle between UP land acquisition and political leaders in Delhi. So the industry as a whole was not taken into consideration. This policy which the Central Government has brought out now, basically we all know it is a state subject or on the concurrent list. Central Government did not bring out any policy in the past, and suddenly they woke up after this tussle between Central and State Government leadership came into the spotlight.
The judicial activism which Mr Dahiya has referred to is definitely one of the major points which brought the Central Government into the picture. But there were other steps that could have been taken and if a central policy was necessary, then it should have been done in consultation with the real concerned parties. The developers including Supertech were never taken into consultation.
….to be continued
