Realty sector desperately needs organised funding

With the two most important agendas of the Narendra Modi government being Housing for All by 2022 and development of 100 Smart Cities, real estate stakeholders are expecting something exciting from the upcoming Budget 2015-16.

Om Chaudhary, founder & CEO of FIRE Capital, the first India-centric Real Estate Fund to be registered with Securities Exchange Board of India shares his expectations from the Budget.

Chaudhary says the first thing that should come to the sector is organised funding, as the developers are facing serious liquidity crunch at this point of time. He expects the finance minister to introduce some measures such as lowering the current interest rates to make this happen.

Granting 'industry' status:

Given the requirement for large quantum of funds and the long gestation period in the real estate development of projects (townships and large commercial/mixed use), the sector needs patience and low cost capital from banks and ECB (External Commercial Borrowings), if ‘industry’ status is to be granted to the real estate sector.

Real Estate Regulatory Bill:

The enforcement of the Regulatory Bill will ensure the formation of a Single Window Clearance mechanism. Through the Bill the government needs to make all stakeholders responsible and create a single window clearance mechanism at the state level for a time bound approval process. Chaudhary reinforces that once there is certainty and less scope for corruption and delays, organised capital will flow, especially Foreign Direct Investment (FDI).

Regulations on REIT:

Chaudhary wishes the finance minister to sort out the tax/structuring issues and make the Real Estate Investment Trust (REITs) a reality, thus making investments in the real estate sector more organised for retail and institutional investors. This will ensure developers get the much needed liquidity.

Source: PropertyatNeoDevelopers.Wordpress.Com

Cabinet defers approval of real estate regulatory bill

The Cabinet today deferred a decision on setting up a regulator for the real estate sector.

According to sources, the Cabinet discussed the Real Estate Development and Regulation Bill but deferred a decision on it.

The bill, which was introduced in the Rajya Sabha in August last year, seeks to protect home buyers from unscrupulous developers.

It was then referred to a Parliamentary Standing Committee, which had submitted its report in February.

The bill provides for mandatory registration of all projects, besides mandatory disclosure of information like details of promoters, layout plan, land status, schedule of execution, status of various approvals and carpet area.

It also seeks to enforce the contract between the developer and buyer and provides for quick remedial measures in case of disputes.

Real estate developers have been opposing the proposed law, saying that it does not cover all the stakeholders including the government authorities that give project approvals.

However, Minister for Housing and Urban Poverty Alleviation Venkaiah Naidu had last month assured the industry that "there will be no strangulation, only regulation".

"The bill will be a people friendly and construction sector friendly bill. In a democracy, regulation is required," Naidu had said.

Source: The Economic Times