CHALLENGES

Part 8

CONFERENCE ON REAL ESTATE

CHALLENGES

Despite these regulatory and policy changes Real estate Sector in India has been going through a dimly lit corridor during the past one year.

Dip in demand for housing sector and a weak economy has resulted in sluggish sales across the country. Further, lack of consistency in rules relating to development of SEZs, increased monitoring of the sector by regulatory agencies, tightening of rules for lending to the real estate sector and increase of key rates by the RBI several times during the last one year, have arrested the growth of the sector. Major challenges faced by the sectors are:

CHALLENGES

The government’s policy in easing of FDI norms is being seen as one big beneficiary move to bring affordable housing back on track.

With reports suggesting a shortage of around 18.78 million houses in the country, the finance minister has allocated Rs 4,000 crore for low-cost housing alone apart from Rs 50,000 crore for urban housing. With Slum development being made a part of CSR activities, the government seems to have its heart in the right place.

Tougher Land Acquisition Norms

While the Act had the objective of balancing the interests of land owners and land acquirers, the final draft of the policy did not really deliver on this front. The clauses that appear in the Act not only ensure that land costs go up for the acquirer, but it also renders the acquisition process more complex and time-consuming.

This is evident in the clauses pertaining to obtaining mandatory consent of 80% of the owners, future incremental gains from land transactions to be shared by the land owners, and different resettlement procedures for different sections of the population (such as scheduled castes/tribes).

Highly bureaucratic and slow approvals process

More than 15 approvals are required to be obtained from different authorities under the local laws to commence a Real Estate project in India.

The Government is yet to streamline the approval process, which significantly slows down the project launch date and adds to the cost burden of the developer.

Highly bureaucratic and slow approvals process

There is no clarity on which law will have precedence in the case of a dispute between the Central Government and state policies. The idea of fostering greater transparency may come at the cost of housing projects becoming more expensive if the approval process adds to the holding cost of the developer.

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