Rera Rat­ing com­ing up in six months, con­firms UP Rera

HT Estates - - FRONT PAGE - Nam­rata Kohli [email protected]­dus­tan­

So far, Rera’s role was that of a reg­u­la­tor of In­dia’s real es­tate in­dus­try. What was in­tro­duced on May 1, 2017 as the Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Act, 2016 (RERA), is adding more func­tions un­der its am­bit, with the lat­est be­ing grad­ing of de­vel­op­ers and even putting clear­ances un­der the scan­ner. All this with­aview­to­pro­tect­thein­ter­est of con­sumers.

Ac­cord­ing to Ra­jive Ku­mar, Chair­man UP Rera, “Like Crisil comes up with rat­ing of bonds, rat­ing of com­pa­nies; we at Rera UP will look at var­i­ous things. A fair share of grad­ing the real es­tate de­vel­op­ers and their projects will go into how well de­vel­op­ers are po­si­tioned vis-a-vis Rer­a­com­pli­ance­sandwewil­l­fac­tor in cus­tomer feedback. We haves­tarted this trend an­dother states will fol­low suit.”

While firm­ing up the method­ol­ogy, UPReraisal­ready­con­sult­ing all stake­hold­ers in­clud­ing Credai, Naredco, As­so­ci­a­tion of buy­ers, home­buyer groups etc. SaysKu­mar,“TheTOR(termsof ref­er­ence) will have in­puts from every­one. How­ever, once the method­ol­o­gy­is­frozen, then­there is no in­flu­ence.” When asked about­time­line, he­as­sureswithin six months, and­bythenex­tan­niver­sary­ofRera, this will comeup.

Haryana Rera is equally keen to rateth­ede­vel­operand­pro­jects. Con­firm­sSamirKu­mar, Director RERAHaryana,“Wewil­l­be­grad­ing the real es­tate de­vel­op­ers by as­sign­ing them a Star rat­ing, from 1 to 5 based on their track record. It will act like whatanISI / ISO is for prod­uct and ser­vices. We will in­volve the con­sumers and the RWAs (res­i­dent wel­fare as­so­ci­a­tions).”

Naredco feels this step is in align­ment to other rat­ing cer­ti­fi­ca­tion that al­ready ex­ists in the sec­tor an­dis be­ing uti­lized bythe in­dus­try stake­hold­ers.

Butto get aRer­aen­dorse­drat­ing­forade­vel­oper­or­pro­jectswill def­i­nitely en­hancethe­con­sumer con­fi­dence in­dex. Ac­cord­ing to Dr Ni­ran­jan Hi­ranan­dani, Na­tional Pres­i­dent Naredco, “Thi­sis part of the new­paradigm where Rera com­pli­ance de­fines real es­tate, andwe­donot­seeitas rein­vent­ing the wheel. How­ever, it should­no­tad­dto­thetimetaken and/ or project cost in a ma­jor way.” Headdsthat­so­farRer­a­has played a vi­tal role to en­hance trans­parency, set­ting up a com­pli­ance mech­a­nis­man­d­bring­ing in the much-re­quired ac­count­abil­ity of the de­vel­oper fra­ter­nity. Those­realestate de­vel­op­ers who play by the ‘rule book’ will not haveanyprob­lem­swith­onemore rat­ing process,” says Hi­ranan­dani.

Will the au­thor­i­ties come un­der the purview? Says Ra­jive Ku­mar, UP Rera chief, “The pre­sen­tAct­pri­mar­i­ly­has­buy­ers and­pro­mot­ers. How­ever, thereis a sub­stan­tial com­po­nent which re­lates to sev­eral clear­ances. As of now, the de­vel­op­ment au­thor­ity is not un­der purview un­less they are pro­mot­ers them­selves. So there is noth­ing in the Act di­rectly that binds them into time-bound de­liv­ery. We are work­ing on a sys­tem which will en­sure that in the first stage, the clear­ance­spro­cess­be­come­s­e­lec­tronic. If de­vel­oper ap­plies on 30th Nov 2018, then it’s on record elec­tron­i­cally that hehas­ap­plied on that date. In the sec­ond stage, th­ey­ca­nen­surethatany­thing­not meet­ing the time­lines is held to task.”

The Rera rat­ing process is set to em­pow­erthe­buy­ers, the­banks and builders.

Ac­cord­ing to Shub­ham Jain, Group Head & Vice Pres­i­dent, Cor­po­rateRat­ingsICRALimited, “The grad­ing/rat­ing of project and de­vel­op­ers is ben­e­fi­cial for all the stake­hold­ers. A sci­en­tific as­sess­ment process to have the de­vel­op­ers/projects mea­sured against the same yard stick can help the buy­ers in tak­ing an in­formed de­ci­sion while mak­ing the in­vest­ment­de­ci­sion. Asci­en­tif­i­cally graded project is more amenable to ac­cu­rate and re­li­able es­ti­ma­tionofthe­lend­in­grisks in­volved. The­p­ro­jec­town­er­scan usethe­grad­ing/rat­ing asatoolto con­vey their project de­vel­op­men­tandex­e­cu­tion­ca­pa­bil­ity. A higher grade typ­i­cally re­flects the abil­ity of the de­vel­oper to com­plete the project within the sched­uled time­lines and cost.”

Talk­ing specif­i­cally about Rer­arat­ing, ICRAspokesper­son says that a stan­dard­ized ap­proach to­wards bench­mark­ing of projects and de­vel­op­ers will be agoodthing for the in­dus­try.

It will im­prove trans­parency in the mar­ket and act as an en­abler for the stake­hold­ers to take in­formed de­ci­sions.

Typ­i­cally, while car­ry­ing out ther­at­ing/gradin­go­farealestate project and­de­vel­oper, rat­ing­con­sul­tant like ICRAassess­therisks un­der­t­wo­broad­cat­e­gories: busi­ness risk and fi­nan­cial risk.

Some of the in­dica­tive risk as­sess­ment cri­te­ria in­clude sec­tor spe­cific risks, mar­ket po­si­tion, project com­po­si­tion, project man­age­ment and qual­ity, le­gal com­pli­ance, past project track record, dis­pute and lit­i­ga­tion track record and cus­tomer feedback.

This­apart­fi­nan­cial risk de­ter­mi­nants in­clude prof­itabil­ity, lever­age, cash flows vs obli­ga­tions, fi­nan­cial flex­i­bil­ity, ac­count­ing qual­ity and con­tin­gent li­a­bil­ity.

While­assess­ingth­e­real es­tate project, they tend to eval­u­ate the lo­ca­tion, ap­pro­pri­ate­ness of ex­e­cut­ing agen­cies, level of con­trol and ad­her­ence to project sched­ule, price com­pet­i­tive­ness, reg­u­la­tory risks, con­trac­tu­alar­range­ment, cash flow vs obli­ga­tions, trans­fer of own­er­ship and penalty clauses amongst oth­ers. Be­sides project spe­cific risks, the track record of the de­vel­oper and its fi­nan­cial po­si­tion have an im­por­tant­bearingonthe­grad­ing of the project.

Is it eas­ierto rate apro­ject­than a de­vel­oper? Says Jain, “Rat­ing/ grad­ing ade­vel­oper woulden­tail aw­ider­cov­er­a­ge­ofthe­vari­ables/ de­ter­mi­nants as com­pared to a project and hence would be rel­a­tively com­plex ex­er­cise.”

De­vel­oper as­so­ci­a­tion Credai has also wel­comed this move of Rera rat­ing de­vel­op­ers and projects.

Ac­cord­ing to Jaxay Shah, Pres­i­dent, CREDAI Na­tional, “RERAhas­trans­formedthe­real es­tate sec­tor byen­hanc­ing­trans­parency and home­buy­ers’ faith in the in­dus­try. De­vel­oper rat­ings­byRERAisan­oth­er­wel­come step in strength­en­ing this trust gained by the de­vel­op­ers’ com­mu­nity. As with all reg­u­la­tions un­der the Act, it will be a smooth tran­si­tion for theeth­i­cal de­vel­op­ers an­danaspi­ra­tionforde­vel­op­ers col­lec­tively. Home­buy­ers stay at the heart of the ini­tia­tive and will be able to en­ter trans­ac­tions with a cer­tainty of fair out­comes.”

Banker­sand­fi­nanciers­feelit’s a step in the right di­rec­tion. Ac­cord­ing to Ra­jesh Sharma, Manag­ingDirec­tor, CapriGlobal Cap­i­tal Lim­ited, “RERAreg­is­tra­tion has­dis­ci­plined the un­or­ga­nized sec­tor in a big way. Ma­ha­rash­tra is the best ex­am­ple of its im­ple­men­ta­tion. And rat­ing based on RERA regis­tra­tion is a step in the right di­rec­tion. Len­der­sarenow­bet­teras­sured­ofthe com­ple­tion time lines of the project be­sides sales and col­lec­tion dis­ci­pline in projects.” Yes, the pres­sure is im­mense but to­day we have the means to match up to grow­ing ex­pec­ta­tions of every­one in the name of Proptech. By the use of tech­nol­ogy, we can drive op­er­a­tional ef­fi­ciency and en­hance work life ex­pe­ri­ence in these spaces, and can try to ful­fil the wish­list of both oc­cu­piers and own­ers. As In­dia’s first global cen­tre for prop­erty tech­nol­ogy (“PropTech”), the CoE is the fo­cal point for de­vel­op­ing so­lu­tions which ad­dresses our client’s need. Some ar­eas of in­ter­ven­tion in­clude prop­erty man­age­ment as onecan­im­prove­pro­cure­ment and user ex­pe­ri­ence through pre­dic­tive main­te­nance and ro­bot­ics.

Sec­ond is real es­tate trans­ac­tions as in­creased au­to­ma­tion will help to achieve greater ef­fi­ciency in leas­ing and sales in­clud­ing use of blockchain tech­nolo­gies. Next is con­struc­tion man­age­ment to dis­rupt and im­prove the de­sign and con­struc­tion of the built en­vi­ron­ment to en­hance safety and pro­duc­tiv­ity out­comes dur­ing con­struc­tion. Fi­nally with data col­lec­tion, data science and anal- ysis, we can im­prove the de­ci­sion mak­ing­foroc­cu­piers, in­vestors and man­agers by ap­ply­ing ar­ti­fi­cial in­tel­li­gence and ma­chine learn­ing tech­niques.

What kind of data is vi­tal to the real es­tate and how does tech­nol­ogy help in us­ing this data?

To­day data is the most crit­i­cal thing. We­m­an­age4­bil­lion­sqft of space and peo­ple are liv­ing and work­ing in our prop­er­ties. We have all data on rents, buy­ing, sell­ing, rent, va­cancy and it’s all about analysing and mon­e­tiz­ing this data. One can safely as­sume that data is the new oil in 21st cen­tury. Tech­nol­ogy will help in analysing data col­lected from smart ap­pli­ca­tions. Vi­tal data re­lated to real es­tate in­cludes his­tory of the prop­erty, cur­rent val­u­a­tion, cus­tomer lo­ca­tion pref­er­ence, res­i­den­tial/com­mer­cial hous­ing trends, cost of own­er­ship, leas­ing de­tails among oth­ers. Data col­lec­tion and anal­y­sis will im­prove de­ci­sion mak­ing and help to achieve greater pro­duc­tiv­ity and ef­fi­ciency.

What is PropTech and what is it ex­pected to do?

I would say that what fin­tech has done to the bank­ing sec­tor, Proptech will do for the prop­erty sec­tor. Fin­tech refers to the use of tech­nol­ogy across all fi­nan­cial ser­vices and func­tions. For in­stance, the sim­ple task of re­plac­ing pa­per-based pro­cesses with soft­ware an­dap­pli­ca­tions is an ex­am­ple of fin­tech at work. Sim­i­larly, Proptech is pi­o­neer­ing new ways to in­te­grate tech­nol­ogy into main­stream of­fer­ings in real es­tate like AI (ar­ti­fi­cial in­tel­li­gence) for cus­tomer ser­vices, Vir­tual re­al­ity (VR) and Aug­mented re­al­ity (AR) for im­mer­sive de­sign pro­cesses and sim­i­lar oth­ers.

Where does In­dian real es­tate in­dus­try stand on the tech­nol­ogy curve as now?

TheIn­dian real es­tate in­dus­try is wit­ness­ing rapidly evolv­ing tech busi­ness mod­els - not just in terms of con­struc­tion, but even in terms of sim­pli­fy­ing the buy­ing process with real es­tate bro­kers and agents slowly adapt­ing to the newer tech­nolo­gies. The sec­tor is mov­ing to­wards uti­liz­ing an im­mer­sive mix of tech­nol­ogy such as ar­ti­fi­cial in­tel­li­gence, ma­chine learn­ing and An im­por­tant as­pect of proptech is a strong fo­cus on cy­ber se­cu­rity as the rise of the im­ple­men­ta­tion of smart-build­ing tech­nol­ogy and var­i­ous user apps can lead to in­creased hacks or unau­tho­rised ac­cess of build­ing. In real es­tate, the adop­tion of blockchain would re­write the in­dus­try in four ways: dis­in­ter­me­di­a­tion, fraud pre­ven­tion,

Money 2.0 (a novel cur­rency con­cept de­signed to em­power any­one – not only cen­tral banks – to is­sue money), and smart con­tracts. Ar­ti­fi­cial In­tel­li­gence has the po­ten­tial to trans­form the real es­tate in­dus­try in a num­ber of ways such as ma­chine learn­ing in search engines that could pre­cisely ad­dress a cus­tomer’s needs and adapt with their chang­ing pref­er­ences. Be­sides, VR / AR are ex­pected to change con­struc­tion and­de­sign process. 3D print­ing could trans­form the com­mer­cial real es­tate mar­ket con­sid­er­ably, es­pe­cially in the project de­vel­op­ment ver­ti­cal as it en­ables con­struc­tion ac­tiv­i­ties to be faster, of a higher qual­ity and at lower costs. Fi­nally BIoT, or Blockchain andtheIn­ter­net of Things would cer­tainly un­leash a whole new range of ser­vices and busi­nesses. For ex­am­ple, it would al­low en­ti­ties to ac­cess real-time data from sen­sors and more­over­the­data would­be­fully pro­tected thanks to blockchain.

Fi­nally, why did you choose Ben­galuru to launch this tech­nol­ogy cen­tre?


We looked at sev­eral pa­ram­e­ters be­fore we de­cided on Ban­ga­lore. These were avail­abil­ity of tal­ent, cost of tal­ent, avail­abil­ity of real es­tate, cost of real es­tate, so­cial and phys­i­cal in­fra­struc­ture and we found Ben­galuru top­ping the charts.


RERA com­pli­ance will de­fine realty in the fu­ture

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