By: Ravi Sinha
Track2Realty Exclusive: The Indian real estate today stands at a crossroad where it seems the government is confused, the developer is confused, the financer is confused and the buyer is confused. They all seem to be in a wait and watch mode but not sure as to waiting for what. While the government is sitting over two crucial bills that has far reaching implications on the future of Indian real estate, reforms and regulation means different things to different stake holders. With a tectonic shift expected this year, all the stake holders are evaluating their own cost-benefit.
Prima facie what seems to be a year of fair play for the buyers may not be music to the ears of the developers, though for buyers also this transparency seems to be coming with a price tag and definitely not on the expected lines of price crash. Investors and fund managers are already clueless where to go as the lock-in period of their investment comes to an end with many developers not in a position to repay.
Overall, there is a serious cause of concern, since India has acute shortage of homes and the absence of level playing field for all the stake holders may lead to less new launches and even lesser fresh supply. The government seems to be debating the regulator bill and land acquisition bill with the right intentions, many feel problem lies in their understanding the business of real estate in a holistic manner.
However, Sachin Sandhir, Managing Director-South Asia of Royal Institution of Chartered Surveyors (RICS) strongly advocates for a regulator in the year ahead.
“The question is no longer on whether we need a regulator, but on the fact that in what shape and form should regulation be imposed and who should fall within its purview. Real estate markets in countries like South Africa, US and UK can serve as role models where the sector and practitioners are regulated through legislation, voluntary schemes and self regulation across all key activities,” says Sandhir.
Maintaining that funding is an issue, Anshuman Magazine, CMD of CBRE South Asia says revival is a strong statement in today’s market. He believes the pending bills are not going to make any major difference as far as revival of the market is concerned.
“How these new laws are framed is also very critical since if you talk about the land acquisition bill, which in its present form is going to make the acquisition more difficult. And that is not good for the industry and overall infrastructure. With regard to the regulator, I would say it is good in the long term only if it balanced and aimed at regulating all the stake holders, including the buyers,” says Magazine.
Harmit Chawla, Managing Director of HCorp Realty agrees that the biggest drawbacks in the sector is to not being sure what precisely is needed from the government, nor is there any clarity as to how those demands will help the sector; whether demands are feasible from ethical, financial or legislative point of view.
When someone says Indian real estate lacks global standards, it is like stating the obvious. Dr Anil Sharma, CMD of Amrapali Group, on the contrary, questions why only the sector should be transparent when the entire eco system surrounding 50 odd clearances are way too challenging for the developers. He, however, maintains funding is not a problem when there is a demand in the market.
The question is from where do we head in the year 2013? Unfortunately, there is no clear answer to it in a market where regulation and reforms are at loggerheads. It is a strange paradox of economics that an asset class is increasingly appreciating its value even in the wake of substantial drop in demand.
Sunil Dahiya, Sr Vice President of industry body NAREDCO regrets the commercial essence of the business has been taken out. The consumer is waiting for something, and he is waiting in eternity for something better to come. He asserts what the consumer is waiting for, we also don’t know. So, the consumer has been loaded with confusion, and we are loaded with a product which is dead.
Suggesting anomaly with the proposed regulator, PK Tripathi, President of Unitech says the central government has to realise that there are certain action points that are with the states and the states are not going to leave it. Having realised that, the role of the central government in any regulatory bill should be restricted to the laying down the policies for environmental clearance or approvals from central government authorities like airport authorities. All these things through technology can be made automatic.
Beyond the debate over the future of the sector vis-à-vis emerging regulatory realities, an average home aspirant stands clueless whether his dream of a house is going to be cheaper in the year ahead. More importantly, is there any redressal or recourse in the wake of being at the receiving end of misconduct and malpractice at the hands of both developers and brokers. Only viable option for such harassed home aspirants is to look for ready-to-move houses. However, such inventory is hardly available within the reach of most of the house seekers.
