By: Lalit Kumar Jain, CMD, KUL & CREDAI Chairman
Track2Realty Exclusive: Developers have also been trying to get the government to introduce the concept of single window clearance. It is common knowledge that time taken to grant approvals directly affects property prices. It has been found that delays in approval processes alone increase sale value of houses by 40%.
In the current scenario, a developer is required to obtain as many as 40 to 50 clearances from various departments of the civic body. These are also known as Intimation of Disapproval (IOD) conditions, implying that the building plan will be approved, subject to all these conditions being fulfilled.
On an average, it takes around two years to obtain these clearances. A developer is required to visit at least 15 offices in order to get these 40–50 clearances. This takes a lot of time. Labour charges, charges towards electricity, water, etc. have to be borne by the developer during this time period.
There is a shortage of 31 million houses in India; of this, 26 million are in the economically weak and low income group category and this gap is widening. So, it is time to introduce reforms that will help satisfy the needs of these sections.
These reforms include administrative reforms relating to faster approvals, land reforms to protect green land and making urban infrastructure viable through higher density and removal of FSI norms as has happened in Andhra Pradesh. There is also a need for fiscal reforms relating to tax, banking and procedural issues.
According to a McKinsey report, with the population crossing 1.2 billion in 2011, the total shortage of dwelling units in urban areas will be 38 million units by 2030 in comparison to 24.71 million in 2007.
The economy will have to build between 700 million and 900 million square meters of residential and commercial space a year in order to meet urban demand. This translates into adding two Mumbai size cities or one Shanghai, each year. It is also anticipated that India will add another 215 million people to its cities by 2025.
Demand for housing in India will never be poor due to factors such as ever-increasing population, increase in disposable incomes of the younger generation of people, etc.
There may be times when there will be a lull in demand for real estate; however, demand is bound to pick up after such short bursts of sluggishness. So, although the real estate sector in India is going through a lean period at the moment, happier times for both developers and home buyers alike are not far away.
