By: Sunil Mantri, CMD Mantri Realty & President, NAREDCO
Track2Realty Exclusive: The Government of India has been re-evaluating policy measures and modifying these or initiating fresh mandates in order to give a boost to the industry. Changes in policies pertaining to SEZs towards reducing area requirements, the easing of norms for external commercial borrowing (ECB) for development of affordable housing and the augmentation of limits for listed NCDs will go a long way in clearing bottlenecks faced by the sector.
Some policies, such as inviting FDI in multi brand retail, can have an indirect but beneficial impact on the sector. SEBI’s revised draft of Real Estate Investment Trusts (REITs) Regulations, 2013, which was made public for debate in October 2013, once implemented in their new and improved format will also have a positive impact on the real estate industry as it will enable further investment in the real estate sector. Amendments to the Companies Act 2013, with respect to depreciation, consolidated financial statements and provisions pertaining to dividends will also facilitate corporate in the real estate sector.
The Real Estate Regulation and Development Bill, which is still under debate, advocates the introduction of a Real Estate Authority for planned real estate development and aims to provide a platform for the sale of immovable property in an efficient manner. It envisages the promotion of transparency in real estate transactions and focuses on the timely delivery of projects to protect consumer interest.
Inclusion of housing in Governments’ manifestoes: According to a study by KPMG-NAREDCO study, ‘Bridging the Urban Housing Shortage in India-2012’, India’s urban population registered a decadal growth of 32 per cent rising from 285 million to 377 million between 2001 and 20113. It is opined that this trend is likely to persist on the back of robust economic development across the country. Given this scenario, it becomes critical to fill the existing gaps in the country’s strained urban infrastructure and in particular, housing. Primarily, it would be important to address the need in the EWS (Economically Weaker Sections) and LIG (lower Income Groups), which currently account for 95 per cent of urban housing shortage in the country.
Prospective governments should begin planning its approach to solving this problem right away and include its proposals in its manifesto. This will secure the confidence of the electorate.
Rental housing to be encouraged: While owning a home is a basic and valid dream, the prospect of renting houses should be encouraged with appropriate legislative facilitation. This will ensure a regular stream of investment into housing projects from investors who can expect returns in the form of rent and capital gains. Once the housing stock is adequately built up, it will automatically translate into a larger market for home owners too.
Ready-made tenement under the Public Private Partnership (PPP) format: The influx of people from rural and semi-urban areas to cities, coupled with the acute shortage of affordable housing, has resulted in the mushrooming of slums in these cities. The involvement of developers by providing them incentives for construction of tenements would help solve the problem without putting an excessive burden on the exchequer.
