The ‘triple tsunami’ of demonetisation, RERA and GST has in the ultimate analysis proved a boon for the real estate industry in the country, leading to its consolidation, with improved transparency, compliance of stricter rules and regulations, and resultant buyer confidence.
These views were aired by Col. Rajiv Bhargava, Associate Director, Indian School of Business (ISB) Mohali campus, while chairing a panel discussion on “Regulatory Issues & Financing In The Real Estate Sector” as part of the first ever Real Estate Summit for the Chandigarh Tricity organised by CII and Indian Green Building Council (IGBC) at the CII Northern Region headquarters on Wednesday. And, the participants, including representatives of builders, developers, consultants, state governments and regulatory authorities could not agree more.
Photos By : Life In Chandigarh
Quoting figures from a recent study to support the consolidation, Bhargava said 50% of the total developers that existed in 2011-12 across 9 top cities had left the market by 2017-18. In all 42,000 projects across the country had been registered under RERA. The sale of residential units had also shown an increase of 33% across the nine top cities, he added.
The developers and builders while overall welcoming the various rules and regulations framed under RERA to improve the image of the real estate sector, listed out various challenges coming in the way of timely execution of projects. One of the main reasons quoted in this regard was unduly long delays in receiving the plethora of approvals required before projects can be registered with RERA. There were also issues of raising capital by the developers before the start of projects.
In his welcome remarks, CII Chandigarh Council Chairman Sarvjeet Singh, while hailing RERA as a progressive legislation, felt that the focus of the real estate sector has to shift from mere living to liveability.
Industry Status Needed
PK Juneja, partner in Exotic Realtors & Developers, promoters of ‘Exotic Grandeur’, a super luxury 6-star rated project by CRISIL, on Zirakpur-Shimla highway, was of the opinion that only industry status to the real estate sector could resolve its capital starvation woes. Supporting the spirit of RERA, he said developers must gear up to deliver customised solutions to meet the needs and aspirations of various categories of buyers. “Building dwelling units without addressing the needs of buyers is like writing a love letter and addressing it to whomsoever it may concern,” he remarked in a lighter vein, triggering a round of laughter in the gathering.
Green Buildings
Dwelling on the concept of green buildings, M. Anand, Principal Counsellor, Indian Green Building Council (IGBC), said the rich traditional architectural expertise of India should be married with the latest technologies to deliver projects that are compliant with green benchmarks of efficient use of natural resources like water, energy and building materials for sustainable development of environment. He advocated grant of non-monetary incentives to green buildings like higher FSI (floor space index) also called FAR (floor area ratio).
Supporting this line of thought, Chairman of the Chandigarh Chapter of IGBC Jit Kumar Gupta said time had come when all buildings need to be sustainable and liveable. While designing a building it should be kept in mind that the initial cost of construction is a mere 10% as compared to 90% cost incurred in sustaining it through its entire life cycle in terms of consumption of water, energy, and other resources. The emphasis, therefore, has to shift from affordable housing to affordable living, he added.
Harish Gupta, President of the Builders’ Association of Zirakpur, while lauding various initiatives of the government aimed at cleaning up and promoting the real estate sector for the benefit of all stakeholders, including buyers and developers, particularly mentioned establishment of RERA, affordable housing for all and subsidy on interest component of housing loan for first time buyers as commendable steps.
Speed Up Approvals
At the same time he also asserted that buyers were not getting optimal benefits of these initiatives because of the massive delays in starting work on projects, given the 12 to 18 months minimum period it takes to get the plethora of environmental and other approvals, a mandatory condition for registration with RERA. Unlike in the past, when developers used to raise a bulk of their initial capital by pre sale of their projects, RERA rules and regulations prohibit any such practice before a project gets registered with it, leading to capital starvation for the developer, he added.
Seeking speeding up of various sanctioning and regulatory processes, critical to the viability of any project, Gupta observed that delay in starting construction on projects leads to piling up of additional burden of interest payments on loans taken by developers to defray the high cost of land. Since an estimated 70% of all developers operating in the tricity are local developers, working on very thin margins as compared to their counterparts in the NCR, this delay in approvals rattles their bottom lines, he stressed.
Pointing to the very high external development charges (EDC) being levied by the authorities on projects (anything between Rs 5-10 crore per project), he claimed that invariably these funds are diverted elsewhere and not spent on developing facilities in the surrounding area, for which these are meant. He demanded that at least 25% of EDC charges collected from a particular project should be exclusively spent on developing amenities like water supply, electrification, roads, sewerage, etc in the vicinity of the project.
During a brief interactive session, former Chief Town Planner of Punjab MS Aujla felt that all integrated townships being planned around Chandigarh should have quality inbuilt facilities of educational institutions, health centres, eating joints, shopping complexes, etc, so that residents do not face the inconvenience of having to move out to fulfil their basic needs. He wondered how these inbuilt basic facilities would be possible if the minimum requirement of 100 acres to set up an integrated township was to be reduced to 25 acres, as was being done in Haryana.
Clean, Green & Smart Tricity
Participating in a round table with municipal commissioners on ‘Clean, Green and Smart Tricity’, Rajesh Jogpal, Commissioner, Municipal Corporation Panchkula, in his detailed and impassioned address highlighted a slew of measures undertaken by the corporation to meet the benchmarks of a smart city despite it not finding a place in the list of 100 cities named by the Union government under its Smart City initiative. Her was only one to attend from among all the three tricity municipal commissioners invited by CII.
Jogpal expressed confidence that some of the bold initiatives, some implemented and others planned, by the Municipal Corporation, including a solid waste management plant, dedicated corridor for non-motorised road traffic on an overburdened route which hosts 85% of the city’s traffic, intelligent traffic management system, a network of CCTV cameras and registration plate reading equipment and a dog pound to attend to 1,000 stray dogs, will be good to be replicated even by Chandigarh.
Some of the other initiatives of the corporation are introduction of electric buses, smart and safe revenue-generating bus queue shelters, redesigning of accident prone roundabouts, bicycle sharing system and handing over upkeep of public toilets to Sulabh International, a renowned NGO working in this field.
There is no dearth of funds with the municipal corporation as it was sitting on Rs 300-400 crore of unutilised funds, from previous years of extreme politicking, when he was given charge of the corporation by the state government in 2017, Jogpal claimed.
Strongly advocating a regional approach to long term planning in what is now being looked at as Greater Chandigarh area, comprising adjoining and nearby towns of Punjab, Haryana and even Himachal Pradesh, the commissioner expressed his conviction that for Chandigarh to meet the benchmarks under the Smart City initiative its adjoining and nearby areas also need to achieve those benchmarks.
Man Mohan Singh Kohli, Past Chairman, CII Chandigarh Council, emphasised that though technological inputs are important for any city to achieve the status of a smart city, but more importantly you need a smart mind to make a smart city. The community also has an equally important role to play in a smart city initiative by taking ownership and discharging its responsibilities in association with the authorities. He supported a holistic and integrated tricity approach to long term planning and development for optimum results.
Giving the example of Indore as the only one among the 100 selected cities under the Smart City initiative to get an Impact Assessment Study done professionally before undertaking execution of various components of the smart city concept, Sandeep Garg, Founder & Managing Director of Mohali-based Eco Group, said this is the way to go for long term positive results of all the efforts and investments.
Regulatory Issues
Participating in the panel discussion on “Regulatory Issues & Financing In The Real Estate Sector”, Palbachan Singh Sandhu of Helios, a prominent RERA consultancy, vouched for RERA Punjab as being a non-biased regulator and watchdog protecting the interests of all stakeholders, including the buyer, developer and the government along with its various concerned agencies.
He maintained that the authority had been able to restore the confidence of the buyers and investors, which was in the overall interests of the developers, by monitoring timelines for completion of real estate projects and ensuring that the funds collected for a particular project are not siphoned off elsewhere.
Sandhu, however, wanted greater government indulge to ensure that the promised fast track approvals for projects through the single window mechanism are actually seen to be fulfilled on the ground. All irritants need to be removed in regular consultation with the developers to achieve a win-win outcome for all, he added.
Neeraj Sharma, Director, Grant Thornton Advisory, felt that for RERA organisations in states to be truly effective a strong infrastructural support is needed in terms of staff strength and expertise. Hinting that a large number of real estate projects continued to remain unregistered with RERA across the country, he said the number of projects in three major centres of the country – NCR, Mumbai and Bangalore – alone far exceeded the 42,000 projects which have been registered under RERA in the entire country.
In order to bring more and more projects under RERA, he advocated all states to replicate the Bangalore model of not allowing registration of individual real estate units until they have a RERA number.
Agreeing with a suggestion by Jit Kumar Gupta that the provisions under RERA need to be harmonised with other related local laws like PAPRA (Punjab Apartment and Property Regulation Act) of 1995, Sharma said the entire sanctioning and regulatory machinery governing the real estate sector has to work much faster than it currently is to stamp RERA as a positive game changer for buyers and developers alike, and to take the real estate sector to new heights.
Neeraj Garg, co-partner in Exotic Realtors & Developers, while listing out various challenges being faced by the real estate sector, demanded that after the formation of RERA this sector should be taken out of the purview of consumer courts to prevent duplicity. Demanding faster approvals, he also sought the government’s early intervention to address the pressing issue of capital starvation facing the real estate sector.
Another session was devoted to the subject ‘Going Green – Role of New Construction Technologies and Emerging Concepts’ in which apart from representatives of IGBC, the experts who participated included Ganges Reddy, CEO & MD, BlueDrop Enviro, who spoke on ‘Waste Water Treatment Solutions’, and Anurag Joshi, Senior Sustainability Consultant, AEON Integrated Building Design Consultants, who spoke on the topic ‘Journey to Net Zero’.
