Look­ing at the state of In­dian re­alty ret­ro­spec­tively

2018 was the year of re­forms but will this lead to a new era of trans­parency and ac­count­abil­ity for this sec­tor?

HT Estates - - FRONT PAGE - Nam­rata Kohli let­[email protected]­dus­tan­times.com

There are years that ask ques­tions and years that an­swer. 2017 in­tro­duced two cat­a­lysts of change RERA and GST and 2018 was about ac­cept­ing the changes.

Spec­u­la­tive in­vestors were kept out of the mar­ket, thanks pri­mar­ily to de­mon­e­ti­za­tion that re­duced the cash com­po­nent in the mar­ket. All gen­uine buy­ers who had been pushed to the cor­ner un­til now, took the cen­tre stage. How­ever real es­tate as a pure in­vest­ment no longer seems at­trac­tive and other in­stru­ments such as mu­tual funds, stocks, fixed de­posits have over­taken in­vestor’s port­fo­lio with real es­tate be­ing rel­e­gated to a haven for the home­buyer, a safer one at that, now.

Ready-to-move-in op­tions con­tinue to find favour with the end user due to clear lack of buy­ers’ con­fi­dence in devel­op­ers’ abil­ity to fin­ish projects on time. The projects find­ing tak­ers are ei­ther ones near­ing com­ple­tion in the pri­mary mar­ket or those up for re­sale in the sec­ondary mar­ket.

Af­ford­able and mid seg­ment hous­ing con­tinue to be the flavour of the year. Af­ford­able is so much the term in vogue that even pre­mium devel­op­ers are seen open­ing sep­a­rate com­pa­nies for af­ford­able homes, and that which is lux­ury is also be­ing sold as ‘ af­ford­able lux­ury’. Ac­cord­ing to Pra­soon Chauhan, CEO, HomeKraft, “Th­e­seg­ment, which has seen max­i­mum trac­tion in 2018 is af­ford­able and­mid­in­come hous­ing as there is mas­sive de­mand-sup­ply mis­match in this seg­ment. More­over, In­dian govern­ment has been in­cen­tivis­ing this seg­ment by of­fer­ing home loan in­ter­est sub­si­dies and other ben­e­fits to en­sure least in­ter­est bur­den on end-users and first time home­buy­ers.”

2018 was marked by a se­ries of reg­u­la­tory re­forms and land­mark leg­is­la­tions. For in­stance, the RBI hiked repo rates by 50 ba­sis points dur­ing 2018 and GoI en­hanced car­pet area of MIG houses from120 to160 sq munder MIG-I and from 150 to 200 sq m un­der MIG-II cat­e­gory and. The Cen­tre set up a ded­i­cated af­ford­able hous­ing fun­dun­derNHB­for pri­or­ity lend­ing, tar­get­ing to build 1 crore houses in ru­ral ar­eas un­der­PMAYthisyear. But the most sig­nif­i­cant was the amend­ment to In­sol­vency and Bank­ruptcy Code (IBC) 2018 that treats the home­buyer at par with banks and other in­sti­tu­tional cred­i­tors for re­cov­er­ing dues from re­alty firms that turned bank­rupt. Ac­cord­ing to In­jeti Srini­vas, Sec­re­tary, Cor­po­rate Af­fairs Min­istry, “By virtue of this new def­i­ni­tion of home­buyer qual­i­fy­ing as a fi­nan­cial cred­i­tor, each and ev­ery home­buyer has the right to trig­ger the in­sol­vency process in the event of a de­fault. So if there are 10,000 home­buy­er­stoapro­ject, any­one of those ten thou­sand buy­ers can pull the com­pany to the in­sol­vency process. There is a sword hang­ing over the head of the builder and ma­jor threat that a builder faces that he can be brought into the in­sol­vency process. I don’t think any bonafide builder will have that ap­petite to de­fault.”

2018 was also the year when Court made an ex­am­ple of devel­op­ers who failed to de­liver on time on ac­count of fund diver­sion. The Supreme Court’s stern warn­ing to the home­builder say­ing-’Don’t play smart or we will ren­der you home­less’ did send out a strong mes­sage to de­fault­ers. Re­cently, the top court slammed Am­ra­pali for play­ing “fraud” and “dirty games” with the court and had or­dered at­tach­ment of all bank ac­counts and mov­able prop­er­ties of 40 firms of the group and en­trusted State run de­vel­oper NBCC with the task of com­plet­ing the stranded projects. This was the year of set­ting right the mis­takes done in the sec­tor.

As for RERA, it is slowly but surely mop­ping up the sec­tor even though for its full im­pact to be felt on the ground will take cou­ple of years. Cur­rently only three states have per­ma­nent RERA reg­u­la­tors and 15 states still don’t have a RERA web­site. North eastern states and West Ben­gal still don’t have a RERA author­ity. Still there has been progress with 28 States and Union Ter­ri­to­ries (UTs) hav­ing no­ti­fied the Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Act, 2016 in the coun­try. Ac­cord­ing to the Hous­ing and Ur­ban Af­fairs Min­istry, 20 States and UTs have es­tab­lished real es­tate ap­pel­late tri­bunals un­der the leg­is­la­tion, of which, seven are “reg­u­lar” tri­bunals while there are 13 “in­terim” real es­tate ap­pel­late tri­bunals. The com­ing of RERA has cre­ated a pos­i­tive sen­ti­ment and real es­tate is a sen­ti­ment driven in­dus­try.

Talk about the big­gest achieve­ment of year 2018 and ac­cord­ing to Dr Ni­ran­jan Hi­ranan­dani Na­tional Pres­i­dent NAREDCO, “2018 saw more­buy­ers yoy than 2017 and that was the big­gest achieve­ment.” How­ever he re­grets that the 12% GST levied on un­der con­struc­tion projects have led to the post­pone­ment of sales, un­til de­vel­oper ob­tains oc­cu­pa­tion cer­tifi­cate. This has in­creased the pres­sure of project fi­nanc­ing by the devel­op­ers in al­ready liq­uid­ity cri­sis mar­ket sce­nario and 70% funds blocked un­der es­crow mech­a­nism.

The one pain point in the cur­rent year has been the NBFC cri­sis in Septem­ber which has ex­ac­er­bated the liq­uid­ity crunch for the real es­tate sec­tor. Ac­cord­ing to Shob­hit Agar­wal, MD & CEO - ANAROCK Cap­i­tal, “NBFC loans to devel­op­ers have seen a phe­nom­e­nal rise since 2014, par­tic­u­larly due to the slow­down in bank loan dis­bur­sals. As per the cur­rent fis­cal, NBFCs alone ac­count for more than 50% of the to­tal de­vel­oper fi­nanc­ing, which is some­where close to INR 4 tril­lion in FY2018 as on date.”

What is the ex­pec­ta­tion from year 2019? Says Dr Hi­ranan­dani, “In 2019, we ex­pect the pos­i­tive im­pact of eco­nomic re­forms to con­tinue, to have en­hanced ease of do­ing busi­ness, to see num­bers of per­mis­sions and clear­ances ra­tio­nal­ize, to have on-line per­mis­sion set-up with time­bound clear­ances – and of evolv­ing to the sta­tus of an in­dus­try that is re­spected for the good work it does.”

In com­mer­cial and re­tail real es­tate, tra­di­tional phys­i­cal for­mats of brick and mor­tar is giv­ing way to think new strate­gies and raise the qual­ity of ex­pe­ri­ence. Co-work­ing is the new of­fice for­mat that is trend­ing. Ac­cord­ing to Nakul Mathur MD Avan­taBusi­ness Cen­tre-, “Look­ing at In­dia, with 34% of the coun­try’s pop­u­la­tion within the age bracket of 18–35 years, it is this de­mo­graphic group, or In­dian mil­len­ni­als that al­ready are, and will con­tinue to drive the con­sump­tion story across sec­tors, in­clud­ing real es­tate. Co work­ing is the an­swer to mil­len­ni­als in­her­ent need for mo­bil­ity, con­nec­tiv­ity and tech-en­abled work­ing spa­ces, plug and play and flex­i­ble of­fice space.” Lo­gis­tics and ware­hous­ing seg­ment have regis­tered growth on ac­count of agrowingecom­merce sec­tor in the coun­try.

2018 was also the year with far greater em­pha­sis on green con­struc­tion. Ac­cord­ing to San­jay Seth, CEO, GRIHA Coun­cil and Se­nior Di­rec­tor, The En­ergy and Re­sources In­sti­tute (TERI) – “The num­ber of build­ings (mostly com­mer­cial) get­ting green rat­ing has ex­actly dou­bled this year even though the green built en­vi­ron­ment is less than 3% in the coun­try but still things are look­ing up.” He cites the ex­am­ple of Ma­ha­rash­tra PWD en­gi­neers who re­cently pledged to retro­fit ex­ist­ing build­ings across pa­ram­e­ters of en­ergy ef­fi­ciency, wa­ter, waste, air qual­ity, with­out ask­ing for ad­di­tional funds.” As Pro­fes­sor He­len Lochhead, Dean UNSW Build En­vi­ron­men­tSyd­neysaysif­peo­ple ask you what is the cost of go­ing green, tell them that there is a long term cost of not go­ing green.” Even the global com­mu­nity finds it­self at a crit­i­cal junc­ture to­day. Says Prof Lochhead, “It has been es­tab­lished that the built en­vi­ron­ment can con­trib­ute to a more equal, in­clu­sive and co­he­sive so­ci­ety if the places where we live, the fa­cil­i­ties we use, our neigh­bour­hoods and meet­ing places are sus­tain­able, in­clu­sive, re­source ef­fi­cient and user-cen­tric.”


Af­ford­able and mid seg­ment hous­ing con­tinue to be the flavour of the year

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.