Tag Archives: NAREDCO

Policy advocacy contradictory in Indian real estate

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Track2Realty Exclusive

Bottom Line: Track2Realty observes that unlike many other matured & emerging sectors, Indian real estate has completely failed on policy advocacy. The local nature of the business, added to the fact that vested interests dominated the industry bodies, defeated the very purpose of the policy advocacy. The casualty has a direct impact on the professional practices in the sector. 

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, land acquisition bill, parliament of india, Government of IndiaDuring the CREDAI national convention few years back, a miffed real estate seemed to settle scores with the then Union Urban Development Minister Kamal Nath. Displaying stiff opposition to the proposed real estate regulator, the builders’ body went critique to say it is not actually a regulator bill, but builders’ harassment and public amusement bill.

The minister sitting on the dais kept smiling over the CREDAI allegation that after the implementation of the bill, the face of the sector is known only either to the God or to the minister. Kamal Nath, however, took no time to hit back on the same platform when he said that the realtors have got into the habit of living in an era of boom and anything less than boom is cried hoarse as doom and gloom.

Much water has flown since then but it seems when it comes to policy advocacy real estate and the policy makers are still at loggerheads. Realty body proposes and the government disposes on occasions more than once and policy advocacy is something which, if happens at all, is always on a one-on-one basis depending on the developers’ individual clout and personal rapport with the minister or official concerned. Sadly, most of such policy advocacy is actually back channel lobbying for the company concerned, with hardly any short term or long term impact over the fortunes of the sector.

Challenges of policy advocacy

Policy advocacy challenging due to localized nature of business

Lack of consensus among the developer biggest roadblock

Larger developers get what they want through back channel negotiations

Blame game of developers, instead of engaging with policy makers, also responsible for policy advocacy failures

In an eco system where most of the contentious issues have not been settled over the years, one naturally wonders whether there is any communication by the stakeholders concerned beyond the media eyeballs. Yes! There are two notable builders’ bodies called Confederation of Real Estate Developers’ Association of India (CREDAI) and National Real Estate Development Council (NAREDCO) that lobbies with the government for their interests but there seem to be a clear realization by the government side as well that these industry bodies are lobbying for their vested interests than policy advocacy in the right context.

The problem is that asking for industry status, the sector does not want elements of accountability that comes with the package. Quite opposed to the very idea of regulation, even after self-regulatory attempts didn’t work out, realty does not evoke confidence at the policy level and often ends up being at loggerheads with the government. Though policy advocacy is very much desirable in the sector, it is yet so debatable that the stakeholders have failed to evolve a consensus over its issues and agenda.

There are many within the sector who are forthright in accepting that unlike policy advocacy adopted collectively in other industries to create a level playing field, in real estate the business methodology does not support any such move since the larger players in the fray are too big for the boots of industry bodies concerned.

For example, when the CREDAI wanted to throw its weight to sign the code of conduct a few years back, it ended up with leading players’ indifference and eventually expulsion of three giants, DLF, Hirco and Hiranadani from its Karnataka chapter. No one is sure till date how many of its 11,500 odd members spread across 105 cities in 22 states have actually signed it. More importantly, whether they follow any uniform code of conduct in dealing with the homebuyers even after signing the CREDAI document?

The micro market focussed business with myopic vision makes the policy advocacy a distant dream for the Indian real estate. Even prior to the Union Budget when the business bodies of other industries lobby it hard to get the best deal for them, realty ends up with endless debate only to be left sulking in the end. In the past, industry bodies have made some blatant demands of the government to bring about certain reforms in the sector. However, most of these demands were put forth without having in place the adequate enablers of change, which could address the level of confidence needed in the sector by the government, financers and consumers alike.

Sachin Sandhir, Global Managing Director-Emerging Business of RICS believes it is absolutely imperative that stakeholders engaged across the sector take adequate steps in order to reduce its risk weightage in eyes of the lenders, improve credit worthiness to mitigate the lack of liquidity, and in the process instill consumer and investor confidence and arrive at a common consensus to drive the industry in a better and profitable manner – in the process being viewed favourably by policy makers.

“A common view from all quarters within the real estate and construction sector is acquiring the long demanded ‘industry status’ for the sector, along with an ease in accessing capital. While there has been consensus on these issues for long, the views and opinions in enabling these factors of change to find a place within the industry are varied across stakeholders. In my personal opinion, in order for the sector to acquire industry status and for capital to be more accessible, there is a prevalent need for the realty sector to undergo a much needed ‘image makeover’. It is imperative that the sector improves on its global transparency ratings and creates avenues for skilled manpower to be employed and retained in the sector. Should we choose to go down this route, we will attain a favourable response from policymakers, investors and stakeholders alike,” says Sandhir.

Arvind Nandan, an independent property consultant, is candid enough when he says any talk of policy advocacy is meaningless unless the government is a willing party to come on board for dialogue and discussion. Developers alone can not take policy advocacy forward because they have been a partner in crime with project delays and illegitimate source of funding in the sector.

“The idea behind policy advocacy must be to bring government and private players together for meaningful dialogue and discussion for the benefit of all stake holders, including the consumers. What is happening actually is that sector lacks vision on reforms and hence policy means different things to different stakeholders. There are developers, financers, facilitators, occupier. Even when you say land owners, it can be either a developer or agriculture land owner, and to bring everyone on board for consensus you need credible industry forums. I am not sure unlike other industries a standalone face can represent the sector, since there is no superstar or charismatic leader in the sector today,” says Nandan.

Nikhil Hawelia, Managing Director of Hawelia Group admits that the non-seriousness of the policy advocacy on part of real estate industry bodies is now seen as deliberate in collective consciousness. According to him, no one within the sector want a level playing field due to non-cohesive nature of the business and hence policy advocacy is more about media noise due to which it often fails to address the core issues.

“I do admit that the developers need to engage with the government to make the officials accountable. But the problem is that there is no consensus on what are the issues to deal with as every micro market has its own set of critical issues. Moreover, there is no transparency among ourselves as to which issues are equally desirable to create a level playing field in the business,” says Hawelia.

Some analysts are of the view that in some other sectors people are vocal because they come from very powerful political background and are second generation entrepreneurs. Then, they are active at the federal level without any structural defect where policy at centre might help at some level and hamper at some other state level. Automobile policies, for instance, are framed for across the country.

Realty is predominantly a regional business, primarily on account of land being a state subject. Therefore, it is a tough task for one single body or association to represent the views and opinions of all stakeholders in the sector. Some sector analysts assert that few realty associations and public interest bodies are all working at some level in the same direction to improve dealings within the sector, albeit the medium used to communicate these views vary.

This school of thought hence insists that at the end of the day it is not necessary to be one voice in the industry, as far as the message is the same and consistent across any one whom delivers it. The question remains—has the voice been one?

Fitch finds India’s real estate outlook negative for H2 ’12

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fitch ratings, india real estate news, real estate news india, india realty news, realty news india, kumari selja, rohtas goel, Kapil Sibal, sonia gandhi, rahul gandhi, manmohan singh, Unitech, DLF, india property news, property news india, naredco, affordable housing, government of india, ndtv.com, ndtv, zeenews, aajtak, times of india, hindustan times, indian real estate forum, indianrealestateforum.com, indianrealtynews.com, cnn-ibn, rajdeep sardesai, sagarika ghose, vinod dua, arnab goswami, barkha dutt, raghav behl, prannoy roy, vikram chandra, ravi sinha, track2media. track2realty, DDA, delhi real estate news, new delhi, K.P. Singh, Rajiv Singh, Sharad Pawar, Jairam Ramesh, CBI, DB Realty, LavasaFitch Ratings says in a new report that the Rating Outlook for the Indian real estate sector continues to be Negative for H212, due to persistent sluggish demand, high construction costs and liquidity pressures.

Given Reserve Bank of India’s caution on interest rate cuts, high equated monthly instalments (EMIs) will continue to be a deterrent for potential home buyers. This, together with high property prices and elevated inflation will keep demand sluggish.

However, y-o-y growth of home loans by banks – which had been slowing for the 12 months to April 2012 – picked up markedly in May and June 2012, and if continued may help spur the sector.

Slowdown in the economy and subdued job growth in the IT sector, which was at its lowest quarterly level in Q212, will hold back demand for commercial and retail properties.

Real estate companies will continue to face margin compression from high construction costs for both building materials and labour. From December 2011 to April 2012 the price of steel increased 13% and that of cement by 12%. Notwithstanding the trend of deleveraging since Q311, slowing demand, high costs and thus declining profits will keep leverage high for most real estate companies.

Reliance of real estate companies on operating cash flow will assume significance in the near term as available funding options remain limited. Growth of bank lending to the commercial real estate sector was low at 1.5% y-o-y in June 2012. Except for some pick-up in private equity, other funding options are restricted. As a result, companies that derive significant revenue from lease rentals will have a more stable credit profile compared with their counterparts whose business model is based on outright sale.

SME has its own brand value to attract realtors

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By: Manu Sharma 

3rd of the series

Track2Realty Exclusive

- india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2Realty, ravi sinha In commercial real estate there is a general marketing strategy to showcase brands that book the space. Will SMEs cluster give the developer that cutting edge? Realtors believe most Indian mid-sized companies have already emerged as recognizable brands. Companies such as Gati, Angel Broking, Samsonite, Tarz Lifestyle, Donear and other such companies are well-known; hence it is the facilities that the developer offers take precedence. They are looking for the best value for money; hence there is a pressure on keeping the prices competitive and facilities as attractive as possible.

The question is whether focus on SMEs reflects a negative outlook on the commercial real estate where market has got saturated for the developers. Mayur Shah, Chief-Sales and Marketing, Ackruti City outrightly rejects this theory. According to him the focus is now on every segment of the market, which is holistic and allows a developer to offer a choice of options. Market was never saturated. Absorption took a backseat when the economy was hit and expansion plans were put on hold. In fact in some locations commercial realty has done better than the residential markets. People have realized that to keep the economy growing and their own businesses flourishing, they have to expand and the recent reports on absorption is a reflection of this realization.

“Most of the banking and finance companies started small and have grown only in the last six to seven years, which is a revelation in itself. Some well-known IT companies have grown in size only recently. India has more than 5000 mid- sized companies and at least more than half started their businesses in the metro cities. So SMEs being only in tier II and tier III is a myth. The idea is to offer office spaces at the right locations and offer the right mix of floor spaces and amenities,” says Shah.

ASSOCHAM suggests government for REIT & REMF

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By: Jaswinder Singh

india real estate news, real estate news india, india realty news, realty news india, kumari selja, rohtas goel, Kapil Sibal, sonia gandhi, rahul gandhi, manmohan singh, Unitech, DLF, india property news, property news india, naredco, affordable housing, government of india, ndtv.com, ndtv, zeenews, aajtak, times of india, hindustan times, indian real estate forum, indianrealestateforum.com, indianrealtynews.com, cnn-ibn, rajdeep sardesai, sagarika ghose, vinod dua, arnab goswami, barkha dutt, raghav behl, prannoy roy, vikram chandra, ravi sinha, track2media. track2realty, DDA, delhi real estate news, new delhi, K.P. Singh, Rajiv Singh, Sharad Pawar, Jairam Ramesh, CBI, DB Realty, Lavasa, gurgaon real estate, real estate gurgaon, gurgaon property, realty gurgaon, property gurgaon, gurgaon realty, FICCI, CII, NAREDCO, CREDAI, ASSOCHAMThe Associated Chambers of Commerce and Industry of India (ASSOCHAM) has suggested the government to introduce Real Estate Investment Trust and Real Estate Mutual Fund to enable investors to own a diversified portfolio of professionally managed assets in the real estate sector. In a note submitted to the government, the Chamber said that the Indian Real estate sector currently lacks any monetization vehicle for capital intensive verticals such as commercial offices and retail malls. Further, since the funding requirements for real estate projects are significant, broad based portfolio investments by individual investors is not feasible. A possible solution could be created in the form of REIT and REMF.

These vehicles are primarily characterized by their investment in real estate assets as well as limited liability for unit holders and they generally engage in professional real estate management as well. REITs have enabled small investors in most developed economies to hold a diversified portfolio of real estate assets which would otherwise not have been feasible. USA, Australia, Japan and Singapore are the amongst the more developed REIT / REMF markets, with the necessary regulatory framework in place and significant representation of such listed instruments on their respective stock markets.

ASSOCHAM has also suggested the government to make it mandatory for developers to provide Home Information Packs to their customers. These packs carry copies of documents related to clearances, deals, valuations, development plans, implementation milestones, and impediments, if any. Such initiatives can also act as confidence building measures, especially in India where real estate transactions are enshrouded by various surprises, controversies, disputes, and a subsequent loss of satisfaction and trust.

The Chamber said considering the magnitude of socio-economic value the real estate industry creates for the country, India’s vision for 2020 needs to be closely linked with our vision for this industry. A more prosperous India in 2020 will be characterized by a better-organised real estate industry which is transparent, efficient yet well-regulated and focused on sustainable development.

The prudent fiscal measures taken by the Reserve Bank of India the strength of our domestic demand and the restructuring measures taken by the real estate development community helped the industry reposition its focus and ride through a period of unprecedented turbulence. However, the fruits of growth have to also reach the common man in semi-urban and rural areas, and not just be restricted to a few big cities. As a country, our needs are changing. Looking at the demographic changes, it is a challenge to handle the escalating pressure on our current infrastructure and build new infrastructure to keep pace with our urbanization and population growth.

Setting up of a regulatory authority and an appellate tribunal will help organizing the industry, but only if they are efficient and enablers for the industry’s progress. In the developed economies, government regulations promote planned development without acting as hindrance. A real estate regulatory body (called real estate commission in some countries) licenses developers, agents and price evaluators, on the basis of their competence gauged through common qualifying exams.