New Delhi, August 07, 2020: Recently, reports have come out that the Indian real estate sector has witnessed one of the largest improvements globally and regionally in the transparency index. A report was brought out by JLL that placed India 34th globally on the index with higher levels of transparency, which is an improvement over 35th rank in 2018, 36th position in 2016, and 39th in 2014. It reaffirms the fact that the sector has witnessed marked improvement since the time multiple steps were taken by the government over the past few years. Progress in the Real Estate Investment Trust (REIT) framework, and other reforms such as the Real Estate Regulation and Development Act 2016 (RERA), GST, Benami Transaction Prohibition (Amendment) Act, 2016, Insolvency and Bankruptcy Code, and digitisation of land records have brought this change in transparency.
A major role is played by RERA, which recently completed 3 years. The statuette is in the process of transforming the real estate business was being done and weeded out the unwanted elements thereby opening up a new era where the trust of buyers has seen significant improvement. “Buyers are now only going for the developers of repute, who have lived in delivering quality projects on time. Now, buyers also know that they have a platform to complain about the errant developers and hence they are less skeptical about investing. And when the rotation of funds takes place with regular sales the sector will move towards fulfilling the dreams of millions of Indians,” says Vikas Bhasin, CMD, Saya Homes.
Most of the states have implemented it and are working tirelessly to improve their role. If we talk of Uttar Pradesh it can be said that the work is going on at the war front. “In fact, in the last one year, RERA has disposed of around 60 per cent of the complaints and the state leads the way in the number of cases being disposed of. The faith has improved as cases in consumer courts linger on for 5-6 years but RERA resolves it within 100 days. It has emerged as a platform that provides knowledgeable people resolving the problems. Millions of customers know that if they have a problem they know where they have to go,” says Dhiraj Jain, Director, Mahagun Group.
The advantage is that RERA does not only listen to the buyers but also the problems being faced by the developers and convey these problems to the right channels or authorities. In the longer term, the much-needed bridging of trust deficit has been achieved by RERA and there is a long way to go. Many developers were suffering from a reputation crisis because of the handiwork of a few and now the overall image of the sector has improved significantly post RERA.
However, work needs to be done in bringing authorities under the ambit of RERA. “It is of utmost importance as delays also happen because of the long time taken by the authorities in sanctioning and granting permissions. Similarly, banks and financial institutions should also come under RERA as many initiatives are announced by the government but timely disbursal has not taken place,” says Ashok Gupta, CMD, Ajnara India Ltd.
REIT framework is another major contributor to transparency in Indian real estate, and it will continue to attract more interest from institutional investors. This will ensure robust growth in the commercial segment as foreign investors show great interest in this segment. An increasing number of private equity funds showed interest in commercial office space in 2018, which was followed by the same in 2019. And now with news of India’s first REIT trickling in, the trend of commercial office space having an upper hand in real estate assets will stay. There is a likelihood of further infusion of liquidity in commercial property and developers will come up with more projects in this segment.
The ease of doing business initiatives by the government is also having a positive impact on the market and things will improve further. “Due to the investment potential of commercial spaces, developers are also responding to the demand, which will automatically generate demand for residential. So the symbiosis of commercial and residential bodes very well for the real estate market,” says Dhiraj Bora, Head, Marketing & Communication, Paramount Group.
In nutshell, the sector is now a place run by professionals and is aimed to meet the perennial demand for real estate to help the economy grow. With the pace of improvements being introduced in the sector, India’s real estate will soon reach the top of the charts in transparency.
