a situation of oversupply in many parts of the country,” adds Baijal.
The industry is anticipating relief in in Budget 2014-15, post elections. “As far budget is concerned, there could be some appeasement for votes and some concessions to developers for funds by the outgoing government,” says a property consultant on the condition of anonymity. “However there is a risk of those decisions getting reversed when the new government takes charge. Irrespective of who comes to power, the second half year will be consumed in reviewing, modifying and approving various reforms and policies. Its impact will be experienced in 2015.”
“The partial paralysis on the policy front has been one of the primary reasons for the slowdown,” says Anuj Puri, chairman and Country Head Jones Lang LaSalle India, a real estate consultancy. “Notoriously non-transparent, the sector certainly needed a fresh infusion of progressive reforms. The Real Estate Regulatory (RER) Bill and The Land Acquisition, Resettlement and Rehabilitation (LARR) Act are the major ones,” adds Puri.
“However, both have clauses which threaten to further escalate prices in a market craving for absorption numbers. While RER Bill raised developer’s funding concerns, the Land Acquisition Act has rendered the process costlier and more time-consuming.”
According to Anshuman Magazine, CMD, CBRE South Asia, “In principle, the LARR Act is meant to promote transparency in land titling while protecting land holders but owing to rising cost and associated risks in it, more developers are likely to opt for joint venture development.”
Another ray of hope is entry of Real Estate Investment Trusts (REITs). “Real estate is completely driven by market sentiments. REITs aim at better transparency and larger investment to further strengthen sentiment,” says Pradeep Jain, chairman, Parsvnath Developers.
Introduction of REITs in India failed earlier mainly due to economic slow-down. Capital markets regulator Sebi has released draft guidelines. However, if slow-down continues, REITs would run into trouble again. Further, if taxation issues are not resolved, the initiative may flounder yet again.
It was a vicious circle. High prices led to low sales and developers had piles of unsold inventory and lack of liquidity. This led to over-supply in