The real estate sector has always had an image issue: the image being usually of the bad guy and the buyer as usually the sufferer, with her hard earned savings being left to their not very tender mercies.
Statistics by entities tracking the real estate sector bear out some of these preconceived notions.
For instance, global financial investors have tended to stay away from investing in the Indian real estate sector despite the sector clamouring for such funds. Of the 11,500 developers who are members of Credai, the industry umbrella organisation, only124, amounting to around a mere 1 per cent, have consistently developed their projects over an 11-year period, from 2005-2016.
There are many reasons for global investors to stay away from the real estate sector but the single most important factor is the opacity of the business. It starts with land ownership and just snowballs as it goes further on.
Among the boxes at the top of a potential investor doing his due diligence is the backing or any kind of relationship with politically connected entities. We all know what that means; spelling it out will mean the slapping of a defamation suit on me, so let’s just leave it at that.
As usual, we expect that waving the wand in the form of RERA (the Real Estate Regulations and Development Act) which is to come into force from May this year will automatically solve industry problems. It might sort out some but for it to really have any serious effect, it will have to be implemented and vigorously. Our shortcoming has usually been poor implementation of the existing law so let’s see how this one goes.
With a new financial year coming up and the Budget having increased allocation for affordable housing, there is hope for more `affordable’ housing.
Will this mean a reduction in slums or even in slum rehabilitation, a major health and governance issue in all towns and cities of our country? Doubt it. We’ve had one case in Pune where a so-called affordable housing scheme came under fire for some misrepresentation. That will happen but if the crackdown is swift and the law seen to be upheld, then there is some hope.
In this scenario, some builders from the Pimpri Chinchwad belt have been touting the township mantra. Townships have shifted to the PCMC area since there are still large open plots available; the Pune Municipal corporation area is all built up and no such large land parcel is available. Housing in such townships is admittedly higher priced than comparable dwellings in smaller projects but that is because all the `amenities’ like schools, hospitals, playgrounds, offices etc are to be located inside. Costs are passed on to the buyer for a higher quality of life.
Nowhere do these projects talk of housing for the lower income people necessary for the residents of these townships to maintain their lifestyles. Such homes require, at a minimum, two people to run the household: one a maid to clean (perhaps cook) the house and a driver cum gardener cum handyman. These two are supposed to live in shanties outside the gate because the high priced township can’t let them have a dwelling inside: that will bring down the premium cachet they are striving for.
This is an old grouse and developers have in the past told me they are trying to work out some deal with the government over higher FSI or some sops to ensure housing for domestics is located inside their premium projects. Hasn’t happened so far and I am not sure RERA has any provisions for ensuring city slums aren’t allowed to grow, leaving it to an activist citizenry to do something about it.
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