The planning norms should incentivize the developer to develop eco-friendly buildings and abide by greener norms Parth Mehta, Managing Director, Paradigm Realty.
What is the role of real estate in India’s urban development?
Real Estate in India plays a vital role in development of India’s urban development besides supporting 200 ancillary industries which are dependent on it. As time goes by the Indian real estate sector is gradually getting due recognition in India in the global markets as well. Indian real estate is being considered as an asset class and investors have taken a note of the same. Currently the market may be witnessing a slowdown but once the purchasing power of the urban youth increases the industry will pick up a sustainable pace, thereby providing the necessary impetus to drive growth.
The government has recognized the need for infrastructure building in order to sustain the economic health of the nation; this in turn has allowed real estate to participate in the concept of nation building. Initiatives and schemes have been mandated and what we probably need is micro level policy reforms. This in turn will allow ease of investment in real estate which will be beneficial for the overall growth and development of the country as a whole.
As existing cities get clogged and new cities open up, what are the facilities you feel the government should accentuate on to ensure the quality of life improves and real estate gets a boost?
For the growth and development of real estate in a particular region it’s important to develop the overall infrastructure of the space. The space needs to be made habitable which means infrastructural facilities like road, water, electricity need to be in place. Real Estate consumers are business or service oriented which amplifies the need for urban transportation facilities. People should be able to mitigate distances with ease. Considering the fact that we are a part of the mobile generation access to internet facilities too has become the norm. These are the areas where the government can play an active role.
In order to make the cities better and improve the quality of life the GOI has initiated schemes like 100 smart Cities and Housing for All by 2022. These initiatives if implemented in true spirit will change the landscape of the cities and make them attractive to both consumers and investors alike. We have witnessed the growth of satellite towns and new cities which cater to the increasing urban population; we have also seen how it facilitates the development of schools, hospitals, malls, restaurant, sky-walks and a host of allied factors. So the message is clear on the wall it is imperative for any government to lay the basic foundations of infrastructure to give a boost not only to real estate but all the sectors that thrive in the urban domain.
A good deal of the city may have to undergo redevelopment what are the changes you propose in the planning norms, to ensure such proposals are skilfully addressed?
Land is a scarce resource in Mumbai, being the financial hub of India is the highest employment generator of the Country. The Influx of population migrating to the city is the highest. The Growth of the urban population is the highest in this region. When it comes to availability of land in a city like Mumbai, it is quite a task. The rate of urbanisation of the city is also high since it sees a continual movement of human assets from other parts of the country. This has essentialised the development of sky rises and we require provision for more high rises along the lines of global cities such as Singapore and New York.
The city is booming vertically in such a scenario we require provision for more High rises along the lines of global cities such as Singapore and New York. Proper safety mechanisms need to be in place for any kind of emergencies that may crop up. The planning norms should incentivise developer to develop eco-friendly buildings thereby promoting the utilisation of environmental norms and a sustainable environment. Amidst planning the vertical growth of the city increasing the base FSI near the transit corridors will only spiral haphazard development of the city and it should be avoided. Instead it would be better if the DP Plan would incentivise the developer to develop cheaper housing option for the financially backward families by relaxing the premium charges paid by the developer on the FSI to the government.
How can private equity play a beneficial role in the development of real estate? And how can the PPP model help in the creation of affordable housing?
Since, the real estate industry is yet to earn the industry status from the government, procuring funds from various financial Institutions has remained its greatest challenge. Private Equity can play a vital role in the development of the industry as whole by providing structured funding at a cheaper rate for the development of their project. It will help developer to complete their project at a faster rate. As far as the PPP Model is concerned it should be undertaken between the government and the developer to develop sustainable and affordable mass housing projects. The PPP Model will help the developer to acquire the land at comparatively lower cost and built it at an affordable price for the commoner. As PPPs in India are becoming increasingly popular, major infrastructure development projects in India are being undertaken under this model. It mitigates a significant risk from the private developer to the government, as a collective responsibility the government provides relaxation to the private entity in terms of tax breaks and faster approvals for the development of the project. These finer aspects ensure that the real estate projects to get completed on time.
How will the Real Estate Regulation Act (RERA) benefit the real estate sector?
RERA is intended to bring transparency and accountability in the realty sector, thus buying back the customer confidence and helping this industry to function in a more organised manner. It comes as a relief to all the consumers since from now on the developer will have to quote the prices based on carpet area which has been clearly defined in the Act. And this includes to include usable spaces like kitchen and toilets, service lab, etc this will help buyer know what exactly he would be paying for. Another notable feature of this law is in case of delayed delivery of the project the developer will pay the consumer the same amount that he has to pay back to the bank in the form of EMI. This will boost the customer and investor’s sentiments to invest into real estate market and increase the cash flow and at the same time will also reduce discrepancy and malpractices with regards to delay in development of the project.
