Bottom Line: On the first year of RERA coming into reality, it is time to take stock of the ground realities to assess its effectiveness.
“For me this RERA (Real Estate Regulation Act) is like battle of 1857. Those who fought for it never got anything, but it helped those who fought in 1947. So, may be in future after many trials & errors the policies are fine tuned for the benefit of the common homebuyers. Much water (read homebuyers’ hard-earned money) will be flown down the real estate market by then,” says Ratna Saloni, a homebuyer in Kolkata.
RERA is one year old now and already the homebuyers are questioning the legislation, in the absence of any visible changes on the ground. The developers, on the contrary, feel RERA has already identified the challenges and hit the nail. Within the built environment the debate is inconclusive as to what extent RERA has brought in transparency and accountability and to what extent has it enhanced homebuyer confidence.
Though one year is a pretty small timeframe and being the State subject its implementation too has been with different ferocity by different States. While some of the States have been pro-active in setting up RERA, others are still into trial & error stage.
What probably has not gone down well with the homebuyers is the fact that the market is yet to see one landmark judgment that could set the precedent for the erring developers and instil confidence in the minds of the homebuyers. One such historic judgment could give them confidence that they too can fight against exploitative developers in the same spirit.
One year of hits & misses with RERA
Less project launches & focus on execution
Developers’ focus on compliances to avoid litigation
Escape window to existing projects with relaxed delivery timelines
Not one landmark judgment that could set precedent
The developers nevertheless have their reasons to feel RERA has changed the market dynamics in such a short span of time. Anita Arjundas, Managing Director, Mahindra Lifespace asserts RERAis India’s first serious attempt to regulate an industry which has traditionally been perceived as less than transparent. A year into the implementation of the Act, we can sum it up as a year of transformation and volatility and, at the same time, as one that holds the promise of new opportunities.
“Developers with a long-term outlook and good corporate governance have been frontrunners in RERA compliance. However, recalibrating to a RERA-regime has resulted in a slowdown in launches, with greater focus on project execution and sales of existing inventory. Overall, the Act has improved consumer confidence and attracted institutional funds into Indian real estate, which is indicative of a positive impact on the sector in the mid-long term,” says Arjundas.
Ashish R. Puravankara, Managing Director, Puravankara Limited, believes 2017 was a turnaround year for the real estate post RERA. It altered the dynamics of the market, where for the first time the customer was in the driver’s seat with access to data and information at click of a button. This robust transparency has resulted in an upward trend in the buyers’ sentiments. This landmark policy helped in renewing consumer confidence in the real estate industry and this has led to a proportionate rise in customer queries and bookings. With this reinvigorated customer interest the sector is looking towards promising days ahead.
“The initial days was a little difficult for many in the sector, and this may have even resulted in some fly-by-night operators to shut shop. Hence, one of the most apparent impacts of the reform is consolidation in the sector with the larger serious players having emerged stronger and seeing more JDs & JVs come their way. These alliances over the past year within the new regulatory framework ensured better planning, implementation and management of projects,” says Puravankara.
Beyond the euphoric industry voices, the moot point today is why has RERA not bridged the trust gap between developers and homebuyers, by bringing in the kind of accountability and transparency as envisaged.
Nikhil Hawelia, Managing Director, Hawelia Group, finds a method into the madness when he points out that the trust deficit with RERA in the minds of buyers is mostly because of the ongoing projects. According to him, probably the regulators are also conscious of the fact that too much of forceful nudge with the ongoing projects could lead to project failures & non-delivery. The developers who launched projects in the recent past beyond their execution capabilities need room for breathing space to align with RERA realities and deliver.
“In my opinion, moving forward, many of these developers won’t be launching new projects alone. They will go for JV and JD model to play safe. Moreover, regulating the new launched projects won’t be as liberal as a homebuyer today finds with the ongoing project. RERA also has to see the structural problems of the sector. Too much hammering can only lead to many ongoing project failures, and affecting the buyers,” says Hawelia.
It may be too early to do a cost & benefit analysis of RERA in just one year time. But what could be vouchsafed is the fact that it has not lifted the sentiments of the homebuyers. Mind you! We are only talking about the States where RERA is functional. At this point of time, the homebuyers can only wish & prayer is that it actually doesn’t prove to be like battle of 1857 that could only bear fruits in 1947.
By: Ravi Sinha