Rera to shape up Indian realty

Dubai - The Indian real estate market is going through a complete transformation with the advent of the bill

The Indian real estate industry is set to usher in a new era with the advent of the Real Estate Regulator Bill that will not only put in place institutional infrastructure to protect the interests of home buyers but also address problems faced by developers and builders, say experts.

The bill, which became an act on May 1, will transform the Indian real estate market and is expected to help attract sizeable investment from approximately three million non-resident Indian (NRIs) based in the Middle East and Gulf region. Experts say the Indian real estate industry has a lot of potential as various foreign real estate and finance companies have entered the market after 100 per cent foreign direct investment (FDI) was allowed in real estate development.
"The Indian real estate market is going through a complete transformation with the advent of the bill. It is testimony to how the country is taking required measures to iron out the concerns of today's home buyer," Ashwinder Raj Singh, CEO of residential services, JLL India, told Khaleej Times. He said this transformation will not only help buyers in India but also NRIs as they make purchases in their home country.
 "Challenges such as delayed possession, diversion of funds to other projects by developers and the constant confusion with prices being charged on carpet or super built-up area will be put to rest. This transformation will impart a lot of confidence to NRIs and help them to take swift and informed decisions," he said.
 "The bill can most easily be called the single-most transformative decision when it comes to the real estate sector in India. This is a historic step not only for buyers but also for developers."
Suresh Krishnan, managing director of Isha Homes and president of Credai Chennai, said the Indian real estate sector has traditionally been dominated by a number of small regional players with relatively low levels of expertise or financial resources. Historically, the sector has not benefited from institutional capital, instead it has traditionally tapped high net-worth individuals and other informal sources of financing, which has led to low levels of transparency.
"This scenario is undergoing a drastic change which is in line with the sector's growth. As of today, the real estate industry's dynamics reflect consumers' expectations of higher quality with India's increasing integration with the global economy," he said.
"As of today, there are about 76,004 real estate firms in India and about one million people buy a house annually. Most of it is unorganised, which leads to various discrepancies," he added.
Pioneering initiative
Krishnan said the current bill is a pioneering initiative to protect the interests of consumers, promote fair play in real estate transactions and to ensure timely execution of projects. "It aims at greater accountability, investor protection, transparency and efficient working in the real estate sector. It will regulate the sector at a greater level and bring in clarity for both buyers and developers," he said.
Raj Singh of JLL India said only serious players will remain and fraudsters will be eliminated over a period of time. However, a lot will depend on the effective and timely implementation of this bill in every state. "This bill can single-handedly make the real estate sector on par with global developed markets that are evolved and mature in terms of investments and buyers' trust. The ball has been set in motion. It can only move in a positive direction from here," Singh said.
Confidence and comfort
R. Srividya, general manager for corporate sales and brand engagement, Indian Property Show, Sumansa Exhibitions, said: "The bill seeks to regulate the country's property market and be vigilant regarding delayed possessions. Each state will get a real estate regulator which will settle disputes and impose compensation."
Krishnan of Credai Chennai said the Real Estate Regulatory Bill will help change the current sentiment among home buyers, boosting real estate appetite and give more quality options.
"The new bill seeks to make even small developers accountable, which was not the case earlier. It mandates that even residential projects measuring 500 square metres or with eight apartments to be registered with the regulatory authority."
He said the bill also provides an option to set up adjudicating officers and an appellate tribunal for fast-track dispute resolution. One of the big challenges for home buyers has been going for legal recourse.
"Not many people go for legal recourse in case of a dispute with a builder as it takes a long time to get resolved. The new bill provides for speedy redressal."
He said the compulsory deposit of proceeds in an escrow account (70 per cent of collections) will not only protect the interest of consumers, but also act as a confidence booster in the real estate sector. This provision has been introduced in the bill to ensure that money received for a project is primarily utilised for developing that project and reduce delays in project deliveries. "Builders will now have to pay equal rate of interest in case of default or delays as home buyers."
He said the current bill is a leap of faith and a step in the right direction. It will go in favour of consumers as well as developers who do clean business.
"If you look at markets such as the UK and Australia, they attract huge FDI in housing as they are transparent. Overall, the year ahead promises to be a good one for all those involved in the industry - builders as well as consumers. The future of India is set to usher in the gold rush of realty," he said. - muzaffarrizvi@khaleejtimes.com