The Indian real estate industry is not out of the woods yet. Developers still face a cash crunch and new regulations such as the Real Estate (Regulation and Development) Act, 2016 or RERA are yet to settle down.
However, developers appear to be optimistic about the long-term prospects of the industry. Surendra Hiranandani, Chairman and MD, House of Hiranandani, spoke to Business Today about the sector's revival, the ease of doing business, and RERA. Here's what he had to say:
The evolving market: "Indian real estate industry is evolving rapidly post the regulatory developments. The long term prospects continue to remain positive and we are observing signs of recovery as the effects of multiple reforms have begun to shape up the sector. Focus on end-user driven demand and consequently shift towards smaller towns is at the focal point of this change. Increasing urbanisation and the expanding urban fabric of tier II and tier III cities in the country will be the prime drivers for the growth of real estate in the future. The market is now experiencing consolidation as unorganised players are struggling to cope with stringent compliance norms under RERA. Only credible developers who conduct their business with transparency will survive in the future. This is good from a buyer's perspective as one is assured of a quality product within stipulated timelines."
Ease of doing business: "The significant improvement in the Ease of Doing Business rankings validates the ongoing efforts of the government to boost transparency in the real estate sector. The policy changes introduced in the last two years along with a host of administrative measures have certainly improved efficiency in obtaining construction permits. It is important to note that as many as 50 approvals are needed in several states, before the commencement of a project and the time frame ranges from nine months to five years. To address this issue, several states and government bodies, have announced measures to streamline the approval process and speed up the construction of projects. The government can do away with unnecessary documentation which will help real estate players immensely. As of now there have been lot of announcement about single window clearance. We hope that this is soon put into practice which will not only resolve operational issues prevalent in the industry, but would improve the productivity of the real estate industry. There are delays with permissions coming at a snail's pace. Private sector participation in housing is necessary to bridge the gap between demand and supply and for that it is desirable to create policy framework to minimise and simplify approvals.
The progress under RERA: "The Indian realty sector entered a new phase after the introduction of RERA. It is a paradigm shift that has led to greater transparency and accountability. However, the implementation of the Act still remains an issue as many states are yet to implement it fully and most states are yet to appoint full time regulators. The necessary support infrastructure to back up the reforms is missing at certain places."