The realty sector urgently requires the government to introduce crucial reforms that will boost its growth,

The realty sector urgently requires the government to introduce crucial reforms that will boost its growth,

    Mumbai desperately needs to focus on sustainable development, say realty experts. "The country has hardly 2.8% exposure to the real estate sector of the entire credit whereas the global standards are 25%," says Lalit Kumar Jain, President, CREDAI - National, adding that the real estate and housing sector plays a key role in the country's economy.
    MCHI-CREDAI believes that it is imperative to put an end to the cash crunch that is prevalent in the realty sector in India. One of the ways to do this is by raising the credit limit available for projects, points out Paras Gundecha, President, MCHI-CREDAI. "The government should cut the interest rate on housing loans to boost demand for projects and also cut down on the delay in granting approval to projects. This would allow developers to save money and time. The cost savings can then be transferred to home buyers in the form of price reductions in projects," he says. Raising the credit limit will pave the way for improved policies in development of projects. Developers will be able to focus on sustainable projects, which are desperately needed in a congested city like Mumbai.
    "The current challenges faced by the sector such as land availability, delays in approvals, expensive and almost prohibitive funding and the ever increasing cost of inputs of cement, steel, sand and labour, if met appropriately, can bring about a significant change in the real estate sector," says Pravin Malkani, MD, Patel Realty India Ltd. Further, he says that there is an urgent need of suitable amendments in the foreign direct investment (FDI) guidelines in the sector.
    In order to make Mumbai a sustainable city, reforms such as a single-window policy can ensure easy accessible funding; speedy approvals and a higher and smarter FSI can help in bridging the house gap in a congested city and also bring transparency to the real estate sector. "Single window clearance will help in speedy clearances and increase in FSI will help in optimum use of the scarce land resources," says Lakshman Bhagtani, Chairman & Managing Director, Jaycee Homes Ltd.
    The government, meanwhile, seems open to listening to the plight of the realty sector now. Developers
on their part maintain that giving industry status to the realty sector is the need of the hour. "The realty sector has been demanding industry status for quite some time, but unfortunately the government hasn't yet acted on the same. By conferring industry status, the sector will grow manifold as investments will come in and lenders will not hesitate in lending to developers," adds Bhagtani.
    Jain says, "As part of the land reforms, according to the global urban sciences, the key to urban development success is by opting for high density vertical development." On their part, an important step that the developers are taking to make Mumbai a sustainable city is by going green. Developing green projects involves high cost, and developers will be able to build green buildings once they consistently have enough credit at their disposal.
    Lack of banking reforms also act as barriers in the success of housing sector. "Buyers can't buy because of high rate of interest, taxes and stamp duty excluded from home loans thereby wanting buyers to contribute upto 45% of cost," says Jain.
    Finally, the government should work towards easing the commute
time and allow access to vast land parcels outside the city, thus decongesting the primary cities. "The government must also either promote redevelopment of old buildings in the central parts of congested metros or provide good infrastructure to distant suburban locations where the population could reside while continuing to work within the city, " concludes Om Ahuja, CEO - Residential Services, Jones Lang LaSalle India.
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BYTES RAISING THE CREDIT LIMIT WILL PAVE THE WAY FOR IMPROVED POLICIES IN DEVELOPMENT OF PROJECTS
BY CONFERRING INDUSTRY STATUS, THE SECTOR WILL GROW MANIFOLD AS INVESTMENTS WILL COME IN AND LENDERS WILL NOT HESITATE IN LENDING TO DEVELOPERS