Ajay Maken hints at Model Act for real estate sector

Written by Corporate Bureau | Mumbai, Jan 30 | Updated: Jan 31 2008, 09:54am hrs
Lower interest rates, land availability and creation of excess supply would be the panacea to cheap and affordable housing, reckon industry experts. While discussing key challenges and opportunities faced by the real estate sector at The FE Round Table Conference on the real estate sector titled Sustainable or Bubble at The Hilton in Mumbai, select industry expressed their views before the chief guest, minister of state for urban development Ajay Maken.

Multiple processes and clearances was also seen as a hindrance to developing real estate projects. When real estate companies seek permission to develop a residential building in India, they have to pass through 52 levels of clearance and regulation. The panelists expressed the need for a regulatory body to oversee the growth in the industry and the minister too mentioned the creation of a Model Act to enhance the transparency in this key sector. Maken said developing a regulatory body would bring in more surplus of land, as developers will form more joint ventures for property development.

Niranjan Hiranandani managing director of Hiranandani Constructions talked about the paucity of action taken by the policymakers to alleviate the situation. And Rashesh Shah, chairman and CEO of Edelweiss Capital pointed out that the 11% rate charged by housing companies was probably the highest in the world when it comes to the differential between inflation and rates charged.

The central bank, panelists concurred, was probably overreacting to the risk factor. Anuj Puri, country head and chairman of Jones Lang LaSalle Meghraj said, n the real estate market, the real risk factor is the land fact as 80% of the cost is the land cost and 20% cost includes cost of construction and other transaction costs. Hence, land acquisition is the most risk factor in the real estate sector.

Anurag Govind, Parsavnarth Developers COO (west) shrugged off the threat of a slump in the market and mentioned the need for developers to have a well spread operational base to beat any correction that takes place.