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The real estate market is expected to be valued at around $180 billion by 2020

The real estate market is expected to be valued at around $180 billion by 2020

Private equity players are slowly moving from investing in small housing projects to major commercial projects now. Foreign investors are also looking at the Indian market thanks to 100 per cent FDI in real estate. Sushil Raheja, CEO - Raheja Homes Builders & Developers - Sushil Raheja, Chief Executive Officer, Raheja Homes Builders & Developers

What is the role of real estate in India’s urban development?

Real estate doesn’t just mean housing properties. It covers both commercial and residential properties which includes shopping malls, townships, offices etc. In the past few years the industry has developed at a rapid speed - the approach is way more professional, latest and advanced technology is being employed and a lot of foreign investments are coming in. This market is expected to be valued at around $180 billion by 2020. The housing sector is already contributing about 6 percent of India’s GDP with Mumbai ranking the highest in terms of investments. Delhi ranks highest in commercial real estate and leasing office space. Foreign investors like Goldman Sachs, Google Capital, and The International Finance Corporation among many others have already made some major investments in the Indian real estate market. Other than this the central government has taken various laudable initiatives including the smart cities project, which is a major attraction for the real estate market. Likewise the urban population has increased leading to an increase in demand for overall growth of infrastructure which includes roads and highways, dedicated freight corridors, inland waterways, airports etc.

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?

The government is already focussing on the smart cities. The key challenge for the newer cities would be world class infrastructure. We need better roads, flyovers, connectors, airports and metro railway facilities. Apart from this, a close watch on the buyer-broker-builder chain is needed to prevent frauds. Clear demarcation of industrial and residential area, preventing illegal acquisition of agricultural land, sensitivity towards environmental issues during new constructions are some points to focus on. The cities must have a proper plan to prevent further clogging. A major challenge faced by developers today is delay in the completion of the project which might be due to various reasons - however, a timely clearance from all government related departments can help in speeding up the work. Funding and availability of clean water, electricity, telephone and internet services are among the primary requirements too. 

A good deal of spaces in Chembur may have to undergo redevelopment what are the changes you propose in the planning norms, to ensure such proposals are skilfully addressed?

Chembur has some very old buildings that are on the verge of collapse. The locality needs a more planned roadway system. The locality has high pollution levels coupled with drainage and sewage issues. The redevelopment must focus on allotting more space to greenery.

What are the current projects which are keeping you busy?

Right now we are focussing on two key projects which include Shakti Unicus based in Deonar and Shakti Regency based in Postal Colony, Chembur.

International designers are being utilized and cited as a USP by few builders. Considering climatically and geographically we are a different entity with a good monsoon; do you feel this is a healthy and a viable trend?

Bringing in international designers is indeed helpful in coming up with designs that are at par with the international standards. It certainly brings in a lot of new ideas along with innovative usage of new age technology. What would be a healthy trend is a good combination of home grown designers along with international ones to ensure that we learn and adapt rather than being dependant on foreign skills. However, one needs to remember that Section 37 of the Architects Act, 1972 prohibits any foreign architect to work in India without the permission from the Central Government. We have some fine Indian designers who are in tune with the Indian environmental conditions to come up with sustainable designs.

How will GST and the RERA aid the growth of real estate in India?

The GST is going to bring in a lot of transparency in the entire tax structure in this market through unified taxation. However, it is very early to say how it will impact the overall prices of properties. However, developers will have less tax related burden when it comes to raw material as there might not be multiple taxes. Similarly, RERA means better regulations, systematic processing and transparency. While the government believes this would ensure faster completion of projects, it is only possible through faster clearances from the government’s end. Both RERA and GST are indeed going to bring in a lot of discipline among developers. 

A lot of affordable segments are turning up in areas like Atgaon, Sahapur and Boisar, given the fact that these are stand alone areas with little or no connectivity to commercial or industrial spaces, how feasible or logical is the idea to come with projects in such far flung areas?

Given the fact that the properties available in Mumbai are beyond the reach of those looking at affordable homes, these three areas have much to offer in this segment. These locations have enough green space, budget homes and good neighbourhood along with a number of good facilities within the properties. Boisar is connected with the Vasai-Virar belt and Shahapur is connected with the Thane-Kalyan belt. Thane is already seeing major development and there are a number of good schools and shopping malls here. With the main city being clogged up, it is a good idea to invest in these suburbs for those who are looking at affordable luxury. Developers are also shifting their focus on these areas since they understand new age home buyers prefer quieter locations. 

Which cities will act as the growth drivers for real estate according to you?

Pune is one of them due to its proximity to Mumbai. In the last five years Pune has witnessed a massive growth and demand. The Mumbai-Pune Expressway has changed the entire scenario for good. Apart from Pune being listed as one of the smart city, it has a conveniently located international airport, a good bus transit system and a number of start ups. Ahmedabad is another promising city. The Gujarat International Finance Tec-City or GIFT an under-construction central business district between Ahmedabad and Gandhinagar is poised to act as a major game changer. It also has a metro rail project coming up ensuring connectivity with far flung areas. Chennai and Kochi are other two cities to watch out for in the next five years.

How can private equity play a beneficial role in development of real estate? And how can the PPP model help in creation of affordable housing?

Private equity players are slowly moving from investing in small housing projects to major commercial projects now. Foreign investors are also looking at the Indian market thanks to 100 per cent FDI in real estate. Since the market is growing, the investments are coming with low risk factors. The PPP schemes for affordable housing are more effective in urban states. It is a great way to meet up with the demands of large number of properties. There are several areas where the acquisition of land and construction is an expensive proposal so it is indeed a great help when the government comes forward in partnership. However, this needs a clearer framework so that even small players can participate in this exercise.

 

 




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