Why Govt Must Heed DLF Chief's Advice On RERA
Real estate tycoon Kushal Pal Singh is a dexterous businessman. He is the reason why DLF is among India's best-known names in the real estate sector. The 84-year-old man from Uttar Pradesh' Bulandshahr knows how to make the best use of an opportunity.
"The launch of projects like Make in India, StartUp India, Housing for All, Smart Cities and Digital India have the potential to open new vistas for developers of high-quality commercial spaces and galvanise greater demand for the housing sector. Your company is eminently capable of providing quality real estate products by embracing innovative technology, maximising efficiencies and delivering state-of-the-art build-to-suit products," Singh told his employees at the company's annual general meeting (AGM) on August 31.
Great opportunity for the company indeed. Who can ever question the sharp business instincts that Singh possesses?
However, it is not just his company for which Singh made great suggestions. Addressing the AGM, a copy of his speech is available on the BSE site, Singh pointed out to some obvious "anomalies" in the recently passed Real Estate (Regulation and Development, Act, 2016), which, if not plugged might dampen the spirits of entrepreneurs. "While the (government) intention is laudable, and RERA (Real Estate Regulatory Authority), will indeed be a game changer, there are some serious anomalies in the actual provisions of the new legislation which, in my view, pose certain grave concerns for developers and other risk-taking players in the real estate business," Singh said.
Singh has listed these five key areas of concern:
- There is no provision for a single-window clearance of approvals in the Act, which could plug project delays to a great extent, apart from cutting red tape by a huge margin.
- There is a lack of clarity on the distinction between an occupancy certificate and a completion certificate.
- Unless land rates are based on books of account, all costs incurred prior to the project will not be added, hitting developers' profits.
- The law in its current form would adversely impact joint venture agreements.
- The mandate that all sanctioned plans must be posted on company websites would raise intellectual property rights issues.
"The country can ill-afford a situation akin to the 1960s and 70s, when punitive laws and restrictive policies stifled private sector growth and investment in the housing sector, and led to a serious mismatch between supply and demand, and demand for real estate products, which we have still not been able to bridge," warned the DLF chief.
It must be noted that India's real estate sector has also faced a rough time in the past couple of years and the things have started to look up only after the Centre and developers put in their combined efforts to revive the sector. According to subsequent PropTiger DataLabs reports, home sales in major cities of the country declined for several quarters before they saw an uptrend in the first quarter of the financial year 2016-17. This is a crucial juncture for the sector, and any mistakes at this point might be harmful to investor sentiment. This is why the government must pay heed to Singh's suggestions. While there is no denying the fact that it is a buyer's market; but we can also not overlook the fact that seller (read developers) are an equally important stakeholder here.
The law makers in the country must take Singh's valuable feedback in their stride and work on putting together a better legal framework.