State for urban development minister hints at Model Act for real estate sector

Mumbai, Jan 30 Lower interest rates, land availability and creation of excess supply would be the solution to low-priced and reasonable housing, feel industry professionals. While discussing key challenges and prospects faced by the real estate sector at The FE Round Table Conference on the real estate sector titled Sustainable or Bubble? at The Hilton in Mumbai, select industry stated their visions before the chief guest, minister of state for urban development Ajay Maken.

Various processes and clearances were also seen as a obstacle to developing real estate projects. When real estate Companies look for consent to develop a residential building in India, they have to pass through 52 levels of authorization and guideline. The panelists expressed the need for a regulatory body to supervise the escalation in the industry and the minister too mentioned the “creation of a Model Act” to enhance the clearness in this key sector. Maken said developing a regulatory body would bring in more surplus of land, as developers will form more joint ventures for property development.

Niranjan Hiranandani managing director of Hiranandani Constructions talked about the scarceness of action taken by the rule makers to improve the circumstances. And Rashesh Shah, chairman and CEO of Edelweiss Capital pointed out that the 11% rate charged by housing Companies was possibly the maximum in the world when it comes to the differential between inflation and rates charged.

The central bank, panelists concurred, was probably overreacting to the risk factor. Anuj Puri, country head and chairman of Jones Lang LaSalle Meghraj said, “Ïn the real estate market, the real risk factor is the land fact as 80% of the rate is the land rate and 20% cost comprise cost of construction and other business deal costs. Hence, land possession is the most risk factor in the real estate sector.”

Anurag Govind, Parsavnarth Developers’ COO (west) shrugged off the threat of a slump in the market and mentioned the need for developers to have a well spread operational base to beat any correction that takes place.