RERA—A win-win Proposition For The End User and Authentic Real Estate Developer

The Real Estate (Regulation and Development) Act (RERA) was passed by the Indian Parliament in March 2016. The Act came into force in May 2016.  According to the Act all projects with land over 500 sq. mts or with at least eight apartments will be registered with the Real Estate Regulatory Authority for launching the project. Once registered the developer will have to put all the details of the project on the website and its login will be provided to the investors. 70% of the amount being invested in the project has to be deposited in the banks. The developers will have to   sell the project based on the carpet area and not on the basis of super-built up area. A Real Estate Regulatory Authority and Appellate Tribunal will be set up state wise to look into the complaints of the investors. Stringent penalties are in place for the developers who do not show compliance to the provisions of the Act. The allotment has to be made on the promised time or else the investor can withdraw from the invested amount. Besides, there are many other provisions that protect the rights of the investor.

Definitely, RERA shall bring greater transparency and accountability in the business and promote a lot of positive sentiment amongst the customers. This in turn will differentiate chaff from the grain and only developers with a real and genuine legacy will be able to do business.

Points to be Taken Care of While Investing in Real Estate

Real estate is a sound investment proposition always. However, since it entails investing hard earned money in large amounts, one should diligently and watchfully buy an apartment or a commercial space. The most important thing in terms of importance is the history of the builder. The builder should have delivered his previous projects in time and should have a sound reputation among the customers and general public. Second, importance thing is the location. A property located at the right place is bound to register higher growth in terms of its cost as well as rentals. In case one wants to set up residence, the property should be accessible from prominent landmarks, schools, bus stops, airports, hospitals and shopping centers. The property should be free of encumbrances and all necessary permissions especially from the pollution control authorities have to be in place. The building should be quake resistant and conform to fire safety norms. There should be elaborate parking space and trained watch and ward staff. The residential complex should have important features like the club house, swimming pool and lawns for relaxation and recreation. One should also check for the maintenance arrangements and quality of facilities like the elevator. The building material used should also be of the highest quality.

After, all one should be sure and doubly sure before placing the eggs in the basket!

Demonetization and the Real Estate Perspective

Demonetization of the 500 and 1000 currency denomination is a step that has sent reverberations in the Indian polity and shock waves in the economy.  All of a sudden a major chunk of currency was sent out of circulation. As people turned up to deposit their demonetized notes in banks, people also started queuing up for cash to meet their daily needs. Since very little of Indian economy is plasticized, people faced tremendous difficulties in making cash transactions.

However, contrary to government expectations the public has deposited 14 lac crore value of old notes in the banks. This is almost 90% of the amount government believed was with the people.  According to government estimates it also included a large of amount in ‘black’, which it believed was the parallel economy that was slowing the pace of the economy.  The ‘redepoisting’ of that amount has belied government’s claim. Major opposition parties raised a clamour. Former Prime Minister Dr. Manmohan Singh has claimed that demonetization will have a retarding effect on the world’s fastest growing economy of India.

Politics apart, we need to understand, however controversial a major regulatory decision be, the government always thinks in the favour of the public and economy. We need to stand by the government.  On other hand, we should not panic and let our financial growth continue. The savings and investments should go on.  The property rates in the secondary market are stabilizing. It is also a win-win proposition to invest in branded property and that developed by reputed builders and developers.  Good builders stand by their commitment. Realty prices are likely to shoot up in near future so investing in a luxury property at a good location is always a worthwhile idea.

Mohali — The Gurgaon next

In the ‘90s and the first half of this century, Mohali indeed missed the bus. Mohali’s loss was Gurgaon’s or Bengaluru’s and Hyderabad’s gain in terms of IT and infrastructural development. Although, Mohali was much better placed in terms of manpower availability and living standards, as compared to the other cities, yet they got the lion’s share of investment. By the early ‘90s, Mohali became known as a semi-conductor city and an electronics shop. However, the entrepreneurs of Mohali could not keep pace with technological innovations of the day. Moreover, the rise of China as a manufacturing hub of most electronics components companies, further dented Mohali’s industry.

The IT industry, on the other hand, could not really take off and by 2005 Mohali had completely lost the game. The political leadership failed to create a visionary roadmap for the future, despite the city possessing a surfeit of things in its favour. Unfortunately, even Punjab Infotech, a government body that gave directions in this regard, could not perform to the required levels.

Big names in the global IT scenario like Microsoft, Sun Microsystems, Google, Yahoo, and Cisco, did not even consider Mohali. It was only Quark, the desktop publishing software leaders who came to Mohali, but that too was at the instance of Kamar Aulakh, the CEO, India operations of the company. This was purely an individual effort of Kamar, a local lad, who always dreamt of bringing investment to the city. If concerted efforts had been made in this direction, the region would have been a lot more prosperous with the generation of hundreds of thousands of job openings.

One of the biggest drawbacks attributed to the city was lack of an international airport. But now, with the opening of Shaheed Bhagat Singh International Airport, things are really looking up for the city. There is a massive opportunity for investment in the IT sector. A large number of computer professionals graduating from the engineering colleges of the region need jobs. There are a lot of investors, especially among the NRIs, ready to invest in Mohali, along with entrepreneurial talent among the local youth.

Branded and non-branded real estate sector is present in the region in a big way. While a large number of malls and residential enclaves are already functional, a lot more are ready to begin operations soon.

All that is required now is a bit of governmental support and initiative on the part of the entrepreneurs and Mohali could well be the Gurgaon next. Let us look forward to the giant leap ahead.

Real estate future prospects in India

The real estate is all set to see a boom by 2020. The realty pundits have predicted a positive future for investors and customers who are waiting for the prices to stabilize and expecting on-time schedules for colonizers’ projects.As per realty forecasts, the Indian real estate market may very well arrive at the figure of US$ 180 billion by 2020. Of this, the housing sector is set to make a contribution of 5-6 percent to the country’s GDP (Gross Domestic Product). The market has been expanding and is supposed to grow at a Compound Annual Growth Rate (CAGR) of 11.2 per cent. All the segments of real estate like retail, commercial buildings, and hospitality, are significantly seeing a rise in tide to match the growing needs of infrastructure in India. However, there are bound to be some basic transformations that will shape the new face of real estate. The consumer of today is a global citizen with a broader database of knowledge and exposure to international standards. In order to cater to this category of alert consumers, the realtors are also gearing up to meet the new challenges in their market. The trend has, thus, changed — real estate businesses are now being managed by professional hands rather than just families. The result — the best of knowledge and expertise in every field — right from project management to architecture to engineering, is now available at their fingertips.

Further, the growing presence of FDI in the Indian market is contributing to larger transparency in the real estate sector and the developers have revamped their accounting and management systems to improve their standards so as to gain large funding for their projects.

Throughout the country, real estate projects have seen increased investments by Private Equity (PE) funds and Non-Banking Financial Companies (NBFCs).

The increasing GDP per capita will further boost the real estate investment leading to great opportunities in India. In three to four years, investable real estate is destined to see a growth of more than 55 per cent, as compared to 2012.

Cities are growing fast and they will create a wider range of return opportunities. Add technology innovations to this, and the sustainability of buildings will increase manifold. Those who fail to adopt new technologies in their quest to provide the finest to their customers are sure to become obsolete. A very important feature here is the government’s role and partnership with developers to mitigate risks in urban development projects.

RERA—A win-win empowerment of the customer

The Act for setting up Real Estate Regulatory Authority (RERA) is a watershed in the history of real estate development of India. Now on, states stand empowered to set up their state authorities to regulate the sunshine sector of the economy. To be created on the lines of the already existing authorities in the booming cities of Dubai, RERA shall monitor both the residential and commercial sectors all over the country. The authority has been set up in view of the long pending demands of the consumer awareness groups and suggestions of various bodies for improving the market sentiment in the real estate sector.

Once set up, this authority would also be the grievance redressing forum for those investing in the real estate. This will happen after the ratification of the new law by state legislatures. Also, the builders will not be talking in terms of super areas; rather, the property will be sold in terms of carpet area. The builder will have to park 70 per cent of the project fund in a dedicated bank account that shall further strengthen the customers’ sense of security when they make the investment. The Act makes it mandatory for the builder to share the complete plan, layout, mandatory approvals and even the status of land title. Even the names of the subcontractors would have to be made available to the customers. Furthermore, the builder will not be able to make any changes to the plan once a particular product has been sold. In the eventuality of the project getting delayed, he has to pay the same interest as the EMI being paid by the consumer to the bank, back to the consumer. Any project of 500 sq mts or above and consisting of eight apartments or above has to be registered with the authority. It will also ensure entitlement of customers for the after sales service. Any infringement of the provisions of the clauses and sub-clauses of the working of the authority would entail heavy penalizing, even to the extent of imprisonment.

However, in the light of the provisions of the Act, the government too should further smoothen the procedure for giving permissions. Red tapism needs to be reduced and government reforms should be applied promptly all over the country. All information and status updates should be made available on the Internet.

If acted upon to its utmost spirit, the RERA Act will bring cheer to the sector as more and more end investors shall find themselves empowered and sure of their investments.

Apartments — the practical way of living in urban areas

Living in an apartment has not really become a way of life in our part of the country. Even in Delhi NCR, apartments are the preferred choice only in Gurgaon and Noida. As an inherent part of our culture, whenever we hunt for a place to put up, we instinctively start looking for a house. An apartment is generally associated with a constrained kind of living with a lesser degree of freedom. “It does not have a lawn, it does not have a courtyard, and has less connectivity with the immediate world,” is the general refrain when people are asked about their idea of living in an apartment. Yet there are others, especially the elderly, who find the use of elevators a risky and cumbersome proposition. However, there are certain big advantages of living in an apartment, which we tend to overlook or ignore.

Living in an apartment is comparatively safer than living in an independent kothi. If a family is extra-particular about safety, they have to hire guards. This is not a luxury anymore, but has almost become a necessity when the entire family has to be away due to travel or an event. An apartment has a multi-tiered security cover that makes it extremely safe all year round. Apartments come at a relatively lesser cost than an independent house. The money saved, thus, can be put in where it is needed more. An apartment gives you access to a private swimming pool, a clubhouse, a community centre, a shopping centre and other facilities that are exclusive to the complex. Access to these facilities elsewhere comes at a cost and entails a considerable running about. Apartments are always well-ventilated, airy and sunlit from all sides. These comforts are sometimes missing and not that well available, depending upon the direction and location of the house.

Maintenance charges of an apartment are generally less than that of an independent house. An apartment complex also comes in many options and sizes, and depending upon the size of the family and budget, one has the option of 2BHK, 3BHK, 4BHK or more. Those looking for extra luxury can buy a penthouse. Apartments are more feasible and a practical option as far as futuristic urban town planning is concerned. Space is increasingly becoming a constraint in metropolitan as well as Tier 2 and Tier 3 cities.

Apartments can accommodate more people and occupy less space. So, there should be no inhibition when opting for apartments as a living option. If there are, remember that Salman Khan and Sachin Tendulkar too put up in an apartment.