’Regulations in India are simpler in than West Asia’
NEWDELHI: After RERA was implemented, Karnataka has the second most populated real estate regulator website, after Maharashtra. J.C. Sharma, vice-chairman and managing director, Sobha Developers Ltd, which is based in Bangalore but has a presence in various parts of India as well as West Asia, shares his views on the regulatory transformation and outlook for the real estate sector. Edited excerpts: lowest number of launches in 10-15 years. I doubt if any price appreciation happened, though interest rates were coming down. It was also the year when the industry recognized and realised for the first time that if it doesn’t prepare for the changed environment, it won’t have any role to play.
As far as demand and supply are concerned, there is pent up demand. Sales are down due to the regulatory changes, but supply is gradually reducing. Transactions are happing, though at a slow rate; new launches are almost nil. In the future, when supply dries up or reduces, and demand picks up, coupled with inflation, prices will also go up. RERA is much simpler in India than (the rules) in West Asia; for developers as well as home buyers. Here, developers have been given the right to withdraw 30% of the payment received from customers. There you are not allowed to withdraw any money, till you have all the money to build. The customer too can’t withdraw booking at will; otherwise, he will have to pay a hefty penalty for withdrawal.
So from both perspectives, Dubai real estate regulations are far more stringent than RERA. Developers are not even allowed to take money from the escrow account, even for the land. Though withdrawing for architectural fee and overheads is allowed, this is just 2-4%. According to me, this (RERA) is evolving. As the economy, and all the stakeholders—be it banks, government, developers, customers, vendors, or municipal authorities— evolve and start to understand that they have to improve, changes will keep happening. However, while we are responsible for completing projects, the occupancy certificates, no-objection certificates, environmental clearances... all these things are with a third-party. Even power, water and other utility connections, and certificates needed after completion are not under RERA purview. It is a valid demand to bring these also under RERA. sq. ft. built-up area.
Another project that has been recently approved by Bangalore Development Authority (BDA), has about 1.8 million sq. ft, consisting of about 1,800 units. In Bangalore, there are two processes: first you need to have approval from BDA and then from Bruhat Bengaluru Mahanagar Palika (BBMP). We are looking forward to getting approvals and will launch the project in the next fiscal. With the emphasis that the government is putting on affordable housing and the huge demand at the bottom of the pyramid, this segment is likely to emerge. I personally believe that the government has done much more than what we could have anticipated. For instance, it has tweaked the size of apartment to be considered under the affordable housing policy; it has given financial incentives; reduced the applicable GST; given income tax exemptions, and so on. Something can always be added, but we live in a free economy, and in a competitive environment, so we should not expect more.
But if I still have to address your question, I think it (real estate) is a state subject, and state governments must be more forthcoming in giving approvals, and giving occupancy certificates. Besides that, though the central government is incentivising, state governments should be more proactive in providing the required infrastructure, for affordable housing to develop. Take the example of Dwarka Expressway (Delhi NCR). Infrastructure development should have happened 10 years back; it is still not complete. In the master plan, agriculture land on the right side of the expressway was earmarked as developable land. Licences were given and huge investments were committed. Giving licences today and not providing infrastructure later should not happen.