The Real Estate sector has been volatile since a very long time and 2014 witnessed a drop in investor sentiments. The government has been successful in getting the real estate sector back on track in 2015. In his interview with 99acres.com, Sam Chopra, founder & chairman, RE/MAX India says, “With the upcoming Union Budget 2015, the real estate industry is expected to witness significant changes.” Edited excerpts -
What are the expectations for the real estate sector from Budget 2015?
For now, faster approval of projects is the biggest expectation from the developer’s community. This would cut short project delays and ease the capital investments required for timely project development.
With the introduction of supportive policies such as removal of multiple taxes, lowering of interest rates, reduction in prices of the raw materials, execution of Real Estate Regulatory Agency (RERA) and Land Acquisition Rehabilitation and Resettlement (LARR) to bring in structure and transparency in the sector and reduction in the minimum built area of projects, the developers can expect that the government is making ways to end the sluggish patch of the last two years and, thus, have a quick recovery of the sector.
They can also expect Budget 2015 to open avenues for quality investments into the sector and have a favorable impact on the sellers as well as buyers.
What are the roadblocks that will be faced in achieving Housing for All?
The Indian Realty market has an acute shortage of housing. Though there are a number of stake holders involved in this process to provide housing; the ultimate responsibility lies with the Central government. Since the Government cannot solely provide “Housing for All”, it needs to attract private developers. For that, developers should get the required funds to be able to construct and deliver.
It’s time to make practices such as licensing, training, expertise to monitor the technical and the financial developments of the projects and government intervention to regulate the investment activities come in action. The high land cost, delays in the approvals of the projects and the lack of a regulatory authority to streamline and review the development processes are some of the major roadblocks to the development of Affordable housing in India.
For a developer, what are the requirements to offer affordable housing to consumers?
The concept of Affordable housing is generic and is interlinked to a number of factors such as the income level, the kind of comfort, facilities, standard of living and amenities offered in that price range. In addition to all these factors, another parameter that plays a vital role in the sale of affordable housing is the target customer. For the low income category, affordable housing will be a dwelling that costs between Rs 7-12 lakhs, whereas, middle income category can look up to affording a flat within a bracket of Rs 25–30 lakhs. Thus, first the demand and the sale of such houses has to be determined by keeping all the above factors in mind and then only we will be able to take some positive actions to cater it to its actual takers.
Affordable housing has a potential to attract a lot of buyers and investors. The realty majors who previously focused only on mid-income and high-end housing projects are seriously looking at building up their presence in affordable housing as well.
What efforts, according to you, have been made to achieve this up till now by the Government?
The announcement of “Housing for All” by 2022 by the Modi government has set the ball rolling to get the concept of affordable housing in full swing and bring back the realty sector on track. With schemes like tax incentives on home loans, initiatives for Public sector participation for supporting housing for all, single window clearances for buildings and lay-outs; real estate will definitely get the required push. Increased interest rates to Rs 2 lakhs from Rs 1.5 lakhs on home loans could get the young working class of India to look up to owing a house of their own instead of renting one.
The large scale development of Affordable Housing requires a lot of funding and with a structured framework and strong coordination between the Centre and State, the Government can help the developers in implementing their business models around this.
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