C ontours of real estate business and construction industry are undergoing kaleidoscopic changes. While new legislation such as RERA is urging compliance on multiple fronts, expanding Metro network in major cities is dictating transit-oriented development. Environment and sustainability issues too are impacting the way business is being carried out.
The slump in the industry and considerable decline of new launches in the residential sector combined with apprehensions as well as misperceptions with the emerging regulatory structure are the factors behind the transformative mode. Downsizing of IT and lower scale of new recruitments too have introduced imponderables in the sector. But cheaper home loans and industry status for affordable housing are expected to be the new triggers for revival of buyers’ as well as investors’ interest.
Relocations
Though the real estate in Bengaluru was the least affected during the recent slump, the IT downsizing is likely to impact the space use in the city in the days ahead. Technology companies directly employing nearly 2.8 million people are currently the largest space buyers in the major metropolitan cities. Sluggishness is expected to characterise the residential sector in these cities that are the major focus of real estate investment. Observers apprehend Delhi and NCR to be the most adversely affected as smog and poisonous air may force businesses to relocate out of the capital which may result in other cities being preferred destinations. Scarcity of water and plummeting groundwater table across all urban centres too is emerging as a source of worry.
Lesser number of players
Top realtors who gathered for panel discussions on some of the issues afflicting the real estate sector at the 9th Realty Plus Conclave, were unanimous that RERA was a positive step towards bringing in transparency in the business and boost confidence among investors as well as buyers. Murali Malayappan, Managing Director, Shriram Properties Ltd., foresees the legislation to leave only 10% of the large developers — from 300 now down to 30 — in the field 18 months hence. Murali says 90% of the investment in real investment happens in nine Metro cities and the 30 developers will be left to execute 80 to 85% of the business. “It is these cities which would be the principal magnet of investment”, he avers. Amit Wadhwani, Director, Sai Estate Consultants feels that the compliance with RERA provisions will bring in new professionals and new expertise in the sector.
Officials not liable
Several developers feel the RERA Act does not place any onus on the government for delays in approvals although the government and its officials are a major stakeholder in the process and should have been made liable for delays in approvals and sanctions. Ashish Purvankara, MD, Purvankara Ltd., citing rules framed by the Maharashtra government, says the officials in the State have been directed to issue approvals within three days of the application and Karnataka ought to have emulated the same while framing the State rules.
Yash Gupta, Chairman, Assetz Property Group, foresees accountability in the business. “We now see that the sale brochures choose the right pigment for the grass courts in total proximity to the one seen outside the apartment for sale as the consumers are increasingly becoming aware of risk of discrepancies between promised and delivered products.” Ashish Purvankara concurs with Yash and says it will be more advisable for builders to quote their RERA rating on the billboards than hiring the celebrities as brand ambassadors. Ashish foresees that developers may go in for launching the projects after 70% of the main structure has been completed as that would enable them to circumvent the uncertainty involved in raising the primary structures and delays in obtaining approvals. He says the launches have come down by 16% in Bengaluru this year.
Optimism
Chandrashekhar Hariharan, Chairman, BCIL Zed Home, a firm into development of environmentally sustainable homes and enclaves in Bengaluru, expresses optimism about realty’s growth. He says issues pertaining to sustainability have become crucial as 150 Smart Cities and green products are projected to spend $300 billion by 2020. He says the government proposes to spend Rs. 97,000 crore on roads, Rs. 14 lakh crore on 25,000 kilometre of roads and Rs. 20,000 crore on 50 airports by 2022. He sees prospects for employment of one lakh civil engineers in the road building sector alone. There will be four areas i.e., Energy, Water, Waste and Air (EWWA) quality where changes in conventional construction will be warranted and will offer opportunities for startups. Hariharan predicts decentralisation of services in urban management with effluent treatment, energy generation and water being taken care of by solar power, localised STP plants and rainwater harvesting respectively.
Grim future
John Kuruvilla, Chief Mentor, Brigade Real Estate, paints a grim future for Bengaluru where all norms of environmental protection have been thrown to the winds in the mad race for development. Kuruvilla says in 1973, the city had only 5,683 hectare area under buildings while 48,650 hectares were under vegetation. Today, in 2017, the vegetation cover is down to 2,108 hectares while the built-up area has grown to 66,455 hectares. According to him, in 1973, the city had 217 lakes spread over 2,324 hectares . Today (2013 figures), 93 remaining lakes cover only 446 hectares. He says 98% of the land under the lakes has been encroached, 90% of the lake water is polluted and only 30% of the sewage gets treated by the STPs.
Architect Naresh Narasimhan dismisses Transit-oriented Development (ToD) as non-viable and non-applicable in the Indian scenario as India has not built any planned city since Independence except one (i.e., Chandigarh) and says terms such as CBD and ‘suburbia’ did not apply to Indian cities as development had always been mixed, nay ‘mixed up’. He suggests that planners should rather than pursuing these alien concepts, concentrate on pedestrianising the city’s core area and laying tracks for bicycles. He also advises giving up endless development of cities and urges building new cities away from the older ones.
