Rosy Days Ahead for Real Estate

Says Mr Sunil Mantri, President, NAREDCO, in an interview with Maria R."





How do you see the extent of real estate business in the country, its expected growth rate in the coming months and prospects in view of emerging opportunities?
As 2013, draws to a close, it appears that the real estate sector can look forward to more dynamic times during 2014. Prospective governments should begin planning its approach in solving the housing shortage and other bottlenecks faced by the sector.

Looking forward to 2014, people expect that there will be a strong and stable government for the next 5 years. The recent reforms taken by the ministry, RBI will bring higher GDP growth in 2014, which will see a smile on the faces of the real estate players. I hope that the current year there will be an upward trend in the realty market.

Many individual people, corporate, NRI investors who are sitting on the fence will take their decision to buy property. I expect 2014 will witness 10% to 15% growth in the real estate segment on PAN India basis.

Considering the economic slowdown in the country; how do you see its reflection on real estate market? What are the things required to be done at government level to boost the buyers' confidence?
The economic meltdown is the major reason for the downfall of real estate sector.

The market conditions are tight. The liquidity crunch is getting worse and beginning to hurt every stakeholder, including the buyer. Also, there is a serious need for a better consistency and alignment in some of government's policies.

We want the government to grant us the industry status. The Union Government needs to take urgent steps to help us get single-window clearances for our projects across the country. The real estate sector needs government support to deal with acute shortage of trained manpower, technology up-gradation and project funding.

Your views on the decision of RBI to keep repo rates unchanged despite persistent inflationary conditions?
It is good that RBI has decided to resist the temptation of raising the rates. Though this may provide a temporary relief, it still leaves a hanging sword by postponing the decision to next month. It has been established that the government has not been able to bring down the inflation, particularly the food inflation despite bumper food production. We at NAREDCO believe that emphasis needs to be given to initiatives that will result into growth. RBI could have at least provided relief to infrastructure and real estate sector to improve the GDP.


What is your view on the proposed REITS funding? Will realty sector get a boost from this?
These trusts are expected to introduce globally-accepted funding practices to the real estate sector and therefore, revive the interests of both domestic and global investors. If introduced, this financial vehicle will serve two purposes. It will offer investors an opportunity to invest in the real estate sector and enjoy a regular income through an investment avenue which is less risky than under-construction properties, it will afford an easier exit route as well. At the same time, it will make stable funds available to the developer community and ensure that their project funding is not left to the vagaries of the markets.

On successful implementation, the sector can attract investments worth USD 10 billion in the next three-four years after its implementation.


A word about 'The New Land Acquisition Act' which has become affected from 1 January 2014.
It is not a good development for the industry, as the current policy is going to increase the land cost significantly, impacting the project costs and thus leading to rise in housing price.

If we see today the land valuation are already high, and land acquisition bill would further increase the valuation, making land acquisition difficult. It would impact several sectors and by bringing private negotiations for land under the government ambit. It would lead to several hurdles to buy land and increase procedural delays. Henceforth, the affordable housing' projects would not be affordable.

Maharashtra government has recently made hike in the ready reckoner (RR) rates. How this move will harm the industry in particular and the state in general?
In the last few years, the government has made RR the biggest cash cow, with a rise in its rates every year without any justification. Any increase in RR rates is totally unjustified, especially when the realty sector is passing through a tough time. In fact, my suggestion is that the government should reduce the RR rates and also cut the stamp duty to 2%-3% from the present level of 5%. This will ultimately boost property transactions.