The real estate sector is an important component of national economic activity, but it is often under-estimated, and sometimes demonised due to misconceptions, said N. Ram, chairman, Kasturi and Sons Limited.
Speaking at the inauguration of ‘CREDAI Southcon 2013’, Mr. Ram said the media tends to rush to judge the sector, because of the misperception that it fattens itself on hyper profits or super profits. Real estate is a high-risk sector where decisions are based on intuition in the absence of scientific data. Print and electronic media fall victims to this perception, he said.
Mr. Ram cited instances of confrontations between media houses and the Confederation of Real Estate Developers’ Association of India (CREDAI), where the real estate sector that has an advertisement budget of Rs. 5,000 crore a year complained that news coverage was unfair. While it may seem ‘fair enough’ he added that sometimes the industry too should not be over-sensitive to news, especially in times of economic slow-down as long as the media got the facts right.
He commended CREDAI for organising the sector and setting forth a voluntary code of conduct. If this was binding, enforced in a fair and transparent way and addressed customers needs, a ‘tremendous job would have been done,’ he said.
‘Government cannot blame developers’
It was shocking to hear that nearly 40 per cent of the sales cost of housing is due to approval costs, he said. The shortfall in social housing needs to be addressed by the Central and State governments through subsidies. While builders too need to contribute, governments cannot broadly blame the real estate developers for public sector failure, Mr. Ram added.
Right from registration of a property to completion of a project, there was large-scale corruption, said T. Chitti Babu, chairman of the CREDAI Southcon 2013. This, in turn, delayed the project resulting in escalation of costs. Existing practices and prevailing old systems were being forced on the real estate sector. It would take several years to get an approval for a housing project and the situation was prevalent all over the country, he said.
“Most of the developers concentrate on developing houses or office buildings for IT sector. But, there is good scope available in other sectors such as healthcare, entertainment and educational,” he added.
Simplification of the application process needed to be done immediately at the State-level, said C. Shekhar Reddy, national president of CREDAI. For this, the State presidents of CREDAI have to approach the respective state governments, he said.
Lalit Kumar Jain, chairman, CREDAI, said as far as the real estate sector was concerned, a few cities such as Bangalore and Pune were doing well. In India, the process of approval had become very slow, he said, pointing out that in Maharashtra alone, nearly Rs. 125 thousand crore worth of projects were waiting for clearance.
