By: Sachin Sandhir, MD, RICS South Asia
Track2Realty Exclusive: The Indian real estate sector, often perceived as a sector with problems, is currently witnessing some sort of transformation. While the sector is now witnessing policy reforms, though at a slow pace, it is also witnessing increased professionalism in the way businesses are done in the country.
A number of firms are now looking to change the sector’s image by adapting to good business practices. The gradual shift of the market towards professionalism aims to provide a positive image to the sector. However, there is a long journey before we can claim that the market has fully transformed and provides a credible environment.
Traditionally, the sector has been dominated by several challenges. While families have been running large real estate businesses in the country, very few of them have been able to bring in professionalism within the processes. Challenges such as lack of regulation in procurement, project approvals and usage of a high amount of unaccounted money during property transactions in the resale market make the sector an unreliable one for doing business.
Irregularities such as the involvement of a number of unorganized brokerage firms and non-licenced property agents and cases of frauds committed by fly-by-night-operators make the scenario even worse in some parts of the country. Moreover, very few states have regulation that makes it mandatory for practicing real estate agents, consultants and brokers to get a licence before operating in the market.
Thus lack of professional standards and the ease of doing businesses make it a less transparent market in comparison to other developing countries. The findings from international consultants, Jones Lang LaSalle also corroborate the trend.
The Global Transparency Index from the consultant firm that monitors over 90 markets in the world and helps real estate firms to understand the important differences when transacting, owning and operating in foreign markets, says that India ranks low on the index as government agencies and market regulators have made relatively few inroads on the regulatory and legal front. The perception among foreign investors is somewhat similar to the sentiments echoed in the report by Jones Lang LaSalle.
Thus, while investors are keen to reap benefits from the growth potential of the Indian real estate sector, they are wary of putting much in to the Indian market due to the lack of regulation and trust. In addition to this, shortage of qualified core professionals also adds to the overall image of the sector. As per RICS’ findings, India needs around 4-5 million qualified core professionals every year till the next 5-6 years to meet the target.
…to be continued
