Real Estate Regulatory Bill should make everyone accountable: Habib

Regulatory authority for real estate is a welcome move. But in the present form it would only tax the developers. Just because a few developers took the customers for a ride, it is not fair on the part of government to rate all developers in one scale. The Bill should bring realty brokers, financial institutions, agents, government authorities, consultants and even architects under the purview, says WS Habib, Managing Director, Ramky Wavoo Developers and Treasurer of CREDAI Chennai. Excerpts from an interview with KR Iyer.

WS Habib, Managing Director, Ramky Wavoo Developers

Can you brief us about RWD?

Ramky Wavoo Developers (RWD) is a joint venture between Hyderabad-based Ramky Group and Wavoo group of Chennai. While Ramky group has been into infrastructure, waste management and property development and have presence throughout India and 8 countries, Wavoo is Chennai-based and I am from Wavoo family. We were landlords basically and I got into property development in 1996 in the name of Wavoo Realty and Investments. As we grew, we realised the need of a partner to launch bigger projects. That is how we launched RWD in 2005, a fifty-fifty collaboration between the Ramky Group and Wavoo Realty and Investments .Together we have completed three projects and currently doing four in and around Chennai. 

    Real estate market in India suffers due to various macro-economic conditions. What is the impact on RWD?

Land prices are going up and also the construction cost – these are the major factors affecting the real estate market. Labour shortage too adds to our woes.  As for as Chennai, there is no visible sluggishness in the real estate market, as we are seeing a lot project launches which shows the demand. We are also affected by other external factors like Euro crisis, economic downturn and rupee depreciation.  But overall, one can say that real estate sector is growing, albeit slowly.  In Chennai, not much projects are coming up inside the CBT due to high price and low growth factors and most of the projects are now concentrated in the outskirts. RWD has a good match of projects in both - within the city and outskirts. As it caters to both young and older generations, we don’t foresee any erosion in our growth level.

Can you give us a brief account on your on-going and future projects?

Present projects

We have a project under construction at Nelson Manickam road called Atlantis. A premium commercial and residential complex, Atlantis is epitome of modern design, luxury and has eco-friendly values. Spacious and splendidly appointed, this 14-floor complex boasts of three floors for parking, three floors for commercial enterprises and 42 luxurious island apartments in one, two and three bedroom configurations.  Both residential and office complexes have separate entrance.

We have another project at Kelambakkam, OMR, called Elysium. This is entirely three-bed room apartments, and will be handed over by December. Both the projects are CRESIL five-star rated.

Our motto is to give more value of money to the customer. For example in Atlantis, we do not want to add amenities like gym, swimming pool etc, which will add up the buyers’ cost. If it is for outskirts, we would have added these facilities as prices are low there. The OMR project has all such facilities inside.

Future projects

We are planning to launch a multi-storey residential project in Vanagaram of west Chennai in next couple of months. It will have six towers to occupy 500 apartments of all denominations. We have also signed a high-end residential project in Egmore’s Pantheon Road. This will be launched sometime in May-June 2013.

Apart from this, we have one interesting project coming up near Chennai. Called Ecopolis, this is a farmland project situated 2-3 km from Vedanthangal, the birds sanctuary.  We are offering land sizes from quarter to half acre at a very reasonable price and also providing all facilities to the buyers to make it green. We have clubhouse where people can come and stay and do farming while enjoying the serene beauty of the place. It is part of our green initiatives. As farming is dying, we want the city people to come and do farming. Though we don’t expect any profit out of this project, we see it as part of our CSR initiatives. 

       What will be the effect of the proposed Real Estate Regulatory Bill on the real estate sector?     Do you think the Bill is developer- friendly?

Regulatory authority for real estate is a welcome step. But in the present form it would tax the developers. Just because a few developers took the customers for a ride, it is not fair on the part of government to rate all developers in one scale. We actually are doing the government’s job by providing housing at larger scale to people. We are already facing a lot of problems in terms of approvals and this (Bill) will only add to our problems. Obviously, corruption will seep into the system.  The Bill also warranted deposition of part of the project money to the regulator. This will cause liquidity crisis and developers will find it difficult to complete the projects in time, which will ultimately increase the cost.

Though the government’s intention is to put some check on builders, CREDAI has already following those regulations proposed in the Bill. In fact, all our members have signed a code of conduct and abide by the rules and regulations formulated by CREDAI. The objective is to have transparent dealings. More so, agencies like CRESIL rate the builders and projects. So, if a project is CRESIL rated, most of the checking about the project and builder’s credit worthiness etc would have been done by the agency itself. They check our track record, balance sheet, legal documents, agreement papers, project report etc. They also check the architecture details and even visit the site for first-hand information from contractors. In the competitive market, it is not prudent to spoil the name as you can’t come back again to do business.  People can choose CREDAI developers if they want trouble-free and transparent transaction with clear title.

Larger developers get affected

Most of the large developers are CREDAI members. The Bill will affect them the most compared to smaller ones.  There are some 2000-3000 small developers doing projects size of 10 or 15 apartments in Chennai. For them this bill will not have much impact. In fact, they have to be regulated as most of the violations are happening there. We can only accept the Bill if the government takes everyone including realty brokers, financial institutions, agents, government authorities, consultants and architects under the purview of the Bill. If this happens, it will be a win-win situation for everybody – buyers, developers and housing finance companies. In short, for somebody’s mistake, we should not be penalised. 

Despite low sale and receding demand, housing prices are going up across India.  Do you foresee price correction in the New Year?

As for as Chennai, I don’t see any price correction in the New Year. In Chennai, we are seeing good demand, both in city and outskirts. Though developers are not launching more projects in city due to price factor, more projects are being launched in the outskirts of the city. We are not responsible for price jack up in the real estate sector. In fact, we act as the facilitator. Though construction cost is going up, we have kept our margin tight. We buy the land, get all people in place, get the necessary approvals and sell while keeping our margin. It is not we who are responsible for realty price rise, but macro-economic factors and other factors such as unsteady prices of cement, steel and construction material, labour crisis, approval delays and finally, soaring land cost. 

 

What are the problems faced by the construction industry?

Labour is the major impediment apart from the approval delays and increase in construction cost. I think we have to adopt pre-caste construction technique to beat the labour issue. Two to three years down the line, this could be the situation in India as awareness about the pre-caste construction is growing rapidly.  But the mind-set of the home buyers should change. People still prefer brick to beam type of construction. They still have problem with hollow blocks and solid blocks. Few projects are coming up in Chennai using pre-caste technique and I am sure that the mind-set will change in the coming days and we can see more such projects. 

Pre-cast is the future

Apart from being durable, pre-caste construction has many advantages.  All over the world developers are using this technique to build large buildings and even bridges.  If metro- rail projects and bridges can be built using pre-caste method, why not homes?  Not only it will reduce the man power, it will also reduce the project completion days and cost of construction. 

About awards and certifications received by RWD

RWD has been awarded with the excellence in villa projects as Construction Industry Award 2012 by Kattumana Thozil in September this year. The company also certified by Bureau Veritas Certification (India) Pvt Ltd for the integrated Management system of organisation in accordance with standard ISO 14001:2004 & BS OHSAS 18001:2007. All our projects are CRESIL rated, that speaks volumes about our products. We are focused to get all our future projects green certified by the Indian Green Building Council.