Real estate sector has been one of the most unorganised sectors of the Indian economy and the situation has only worsened over the years due to the ever increasing presence of fresh entrants. Eventually, it is the end user who is taking the final hit because it’s them who have invested their hard earned money. Customers put in their savings or take over additional loans, but this decision is usually taken in a hurry without proper checks and verifications, hence the trouble. Also, they need to payout their current rentals, pledge the fixed EMIs against the loans borrowed, etc. which adds to the mess. With no promise of delivery, no time frame disclosed on the progress of work, no details divulged on the work style of the developer, but still there is an investment which has now turned into a non – performing asset. In light of the recent happenings, which incited buyers of Unitech who had no way out but to knock on the doors of the judiciary, one can imagine the extent to which people have been exploited by developers.
Sharing his views on such developments off late, Mr. Rajesh Goyal, Vice President CREDAI-Western U.P. & MD, RG Group shares, “With more and more new players coming into Indian realty, people have been spoiled with options to invest their money but that also brings along the need for home-buyers to be even more cautious while short listing or finalising their home. A lot of nuisance is being created by these newbie who either do not carry a strong background or sound technical knowledge/ expertise or professionalism that the sector demands thus failing to deliver their promises and bringing a bad name to the whole sector. We are hopeful that, in 2016 the implementation of RERA will put an end to all these misdoings.”
What has been in store?
This sector has brought cheers to a lot many people but off late it has gained the status of a swindle. The sole reason being the entire hoax which has been rough-hewn by the new builders and isolating these from the lot is like finding needle in a stack of hay. Not only are the end users affected, even the channel partners are also on the suffering side. Adding weight to this, Mr. Vikas Khurana, Co-Founder, HomzCart believes, “We being channel partners are no less at risk in these scenarios. In our model of business when we get into contract for the exclusive marketing and branding rights of a project and the project gets delayed, we cannot expect to sell out the project on time. Be it any reason, the end user who invests will never understand, the simplest reason being consumer psychology. If you are paying for anything, either tangible or intangible, you will definitely expect the product or services to be delivered on time. Failing this, you are sure to gain mistrust in the market.”
Taking NCR realty market as an example, the average delay range from 3-5 years and this has definitely played it’s part in the boil up to these events. Many builders had raised money from the market on the promises of assured returns but even after substantial time has elapsed, there is no construction work in progress and neither has there been any word on the returns which they had promised to the investors and buyers. There are various reasons which builders cite for the delay in projects like the authority not providing necessary approvals on time, limited availability of raw materials, labours, etc. but the actual reason is something else. Once a project is launched and they pick up money from the market, they tend to invest that money in acquiring land for new projects. Explaining further, Mr. Kushagr Ansal, Director, Ansal Housing states, “Most of the times, the greed to earn more is what makes these builders err and come in the wrong sight of the buyers. Once they are able to achieve a pompous launch to their debut project and collect handsome amount from the market, they invest that money in acquiring new land masses for future projects rather utilizing the funds on the development of the project. What follows then is what we all are very well aware of and the ruckus it creates.”
Will RERA be the saviour?
Various reforms and policies are in the pipeline to be implemented in the coming months which will change the entire landscape of real estate in the country, and several important ones have been lingering in the parliament for its approval. The most important being the Real Estate Regulatory Act which will redefine the concept of real estate in the country. Also, it will help regularise this sector which till this date stands much unorganised. Speaking his sentiments on the same, Mr. Ankit Aggarwal, CMD, Devika Group states, “No doubt the real estate sector is one with very high returns but the allurement to make more on immoral grounds has led us to this juncture wherein even prominent developers are looked upon with suspicion. A lot of effort will have to be put in to clear the pond which can commence only after RERA is implemented. This will not only restrict irrelevant builders to enter the developers’ fraternity but also tighten the noose on those who are already in it but not performing by the standards of the sector.”
Once RERA is implemented in full force, bills like GST, Land acquisition, etc. can follow suit. The sole reason to impart such high weightage to RERA can be adjudged by the recent amendments in the bill which were approved by the cabinet. Some significant points of it were to maintain escrow accounts for individual projects to ensure there is no shortage of funds for the project, making sure that builders stick to their proposed plan unless major architectural revamps are required, etc. Adding substance to this, Mr. Vikas Bhasin, MD, Saya Group avers, “In addition to RERA, single window clearance will hold key to the real estate sector coming to it’s own because agreeably or disagreeably, approvals do eat up a lot of time. Once these issues are addressed, notorious developers will definitely run short of excuses to give and help bring some sanity back in the sector. To some extent, RERA will also ensure much effective implementation of land acquisition bill and awarding of industry status to this sector.”
Aware of the dubious nature of this sector and the image it has built for itself, Mr. Vikas Sahani, CMD, Property Guru concludes, “RERA is not the ultimate goal of the real estate sector but yes, once RERA is in place, the road ahead for major revamps like Industry status for the sector, Single Window Clearance system, etc. will become easier because RERA will help ensure that malpractices in the sector are curbed and processes are streamlined. The roads ahead are tougher and tougher with deadline for various schemes like AMRUT, Housing for All, Smart City Mission, etc. in near vicinity, RERA will hold key to all these because it will work as the centre’s eyes to monitor developments on a Pan India basis.”