Re­cent real es­tate issues in­volv­ing the Okhla Bird Sanc­tu­ary, Campa Cola So­ci­ety and Su­pertech Emer­ald Court are likely to make for­eign in­vestors wary of ex­plor­ing the In­dian mar­ket

HT Estates - - FRONT PAGE - Jee­van Prakash Sharma

There are things that make In­dia a very dif­fi­cult place to in­vest i n and do t hings.” This was the re­sponse from Amer­i­can real es­tate ty­coon Don­ald Trump to this cor­re­spon­dent who, at a re­cent event in Dubai, en­quired about his in­vest­ment pref­er­ences.

What made Trump re­act this way? Is this how In­dia is per­ceived by for­eign in­vestors? Be­fore seek­ing an­swers to th­ese ques­tions, it’s quite im­por­tant to take a look at some of the re­cent cases that can make for­eign in­vestors and even In­di­ans think twice about in­vest­ing in the mar­ket.

Such cases high­light the in­abil­ity of de­vel­op­ment au­thor­i­ties in In­dia to act in the in­ter­ests of the com­mon man. This is par­tic­u­larly true of au­thor­i­ties in Delhi NCR, such as Noida, Greater Noida, the Ghazi­abad De­vel­op­ment Author­ity, and the Depart­ment of Town and Coun­try Plan­ning of Haryana etc.

Green rules ig­nored

Take the case of Okhla Bird Sanc­tu­ary i n Noida. The Supreme Court’s 2006 or­der to ear­mark a buf­fer zone of all na­tional parks and bird sanc­tu­ar­ies was largely ig­nored by the Ut­tar Pradesh gov­ern­ment and its nodal agen­cies as they per­mit­ted dozens of de­vel­op­ers to set up projects close to the sanc­tu­ary. The de­vel­op­ers as well as thou­sands of home­buy­ers who have in­vested their life’s sav­ings in the projects face an un­cer­tain fu­ture as the Na­tional Green Tri­bunal (NGT) has im­posed a ban on all con­struc­tion ac­tiv­i­ties within a 10km ra­dius of the sanc­tu­ary.

The Noida Ex­ten­sion land ac­qui­si­tion case, too, high­lights Noida Author­ity’s lack of con­cern for buy­ers and other stake­hold­ers. The Author­ity ac­quired land for pub­lic pur­pose but al­lot­ted it to de­vel­op­ers to con­struct flats. The en­su­ing lit­i­ga­tion de­layed hun­dreds of projects and im­pacted thou­sands of home­buy­ers. In the re­cent Su­pertech twin tow­ers lit­i­ga­tion, the Al­la­habad High Court had pointed to a nexus be­tween de­vel­op­ers and the de­vel­op­ment author­ity in the mat­ter, which is still under lit­i­ga­tion in the Supreme Court.

In the Campa Cola So­ci­ety case in Mum­bai, the com­pe­tent author­ity turned a blind eye to bla­tant build­ing rule vi­o­la­tions be­cause of which res­i­dents lost their homes. The Com­mon­wealth Games Vil­lage in New Delhi, de­spite the regu- la­tory su­per­vi­sion of the Delhi De­vel­op­ment Author­ity, saw vi­o­la­tion of FAR (floor area ra­tion) norms and build­ing of il­le­gal tow­ers. Be­sides, sev­eral mat­ters in­volv­ing land-ti­tle fraud in var­i­ous parts of the coun­try, open vi­o­la­tions of lay­out plans and il­le­gal con­struc­tions etc, paint a very dis­mal pic­ture of the realty business in In­dia.

Am­bi­gu­ity, de­lay in pol­icy de­ci­sions

Am­bigu­ous poli­cies on for­eign in­vest­ment, too, can dam­age In­dia’s rep­u­ta­tion. Last year, the En­force­ment Direc­torate is­sued no­tices to for­eign in­vest­ment com­pa­nies al­leg­ing vi­o­la­tion of for­eign ex­change rules through use of for­eign funds to buy farm­land in In­dia. One such com­pany, Emaar, de­fended its po­si­tion say­ing that its 2010 draft IPO prospec­tus - filed with the Se­cu­ri­ties and Ex­change Board of In­dia - stated that the com­pany had re­ceived the nec­es­sary clar­i­fica­tions from the Min­istry of Com­merce and In­dus­try re­gard­ing the ac­qui­si­tion of agri­cul­tural land.

“This lat­est de­vel­op­ment in In­dia is a reminder of the risks and un­cer­tain­ties of in­vest­ing in emerg­ing mar­kets, even those with pos­i­tive fun­da­men­tals, at­trac­tive growth prospects and a ris­ing mid­dle class. In­dia’s al­le­ga­tion against Emaar is also the lat­est ac­tion in a string of in­vestorun­friendly moves there that have neg­a­tively af­fected for­eign com­pa­nies,” says Moody’s Credit Out­look re­port of 2013.

The World Bank’s ‘Ease Of Do­ing Business In­dex’ of 2014 does not help. In­dia is ranked 134 ( down three ranks from 2013), much below many of its Asian coun­ter­parts such as Malaysia, Japan, Nepal, China, Pak­istan, In­done­sia and Bangladesh. A high rank on the ease of do­ing business in­dex means the reg­u­la­tory en­vi­ron­ment is more con­ducive to the start­ing and op­er­a­tion of a lo­cal firm.

So com­ing back to Trump’s ob­ser­va­tions, it seems that it’s not only the global re­ces­sion which is re­spon­si­ble for con­stant de­cline in for­eign in­vest­ment from US$2.94 bil­lion in 2009-2010 to US$ 0.13bil­lion in 2012-2013, but there are an ar­ray of reg­u­la­tory in­con­sis­ten­cies, land ac­qui­si­tion issues and real es­tate lit­i­ga­tions which have cre­ated neg­a­tive sen­ti­ments against In­dia in the for­eign mar­kets. Sin­ga­pore United States Malaysia United King­dom Aus­tralia Taiwan, China Thai­land Canada Ger­many United Arab Emi­rates Saudi Ara­bia Japan



South Africa Poland Bahrain



Spain Hun­gary


Sri Lanka



Nepal Pak­istan

Brazil In­done­sia Bangladesh 1 4 6 10 11 16 18 19 21 23 26 27 35 38 41 45 46 47 48 52 54 65 85 96 104 105 110 116 120 130

(Top and below) Projects in Delhi NCR and Mum­bai that are in the news for vi­o­la­tion of build­ing norms

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.