Real Estate Regulatory Bill will boost morale of the sector

The Real Estate Regulatory Bill is a welcomed move by the Government to boost the morale of the sector and bring in the right kind of momentum in the future as provisions such as the setting up of project specific escrow accounts, establishment of a Regulatory Authority, mandatory registration of projects, developers and brokers, and public disclosure of project details, etc will put our housing sector on par with many other developed and developing countries, says Sanjay Dutt – Executive, Managing Director, South Asia, Cushman & Wakefield.

 The approval from the Cabinet on the Real Estate Regulatory Bill is a watershed development for the real estate sector and a welcomed move from the government. This Bill to bring forth higher level of transparency and accountability from the developer community, which for long has been either self-regulated or working on best practices principles.

 This Bill will help institutionalize the sector, giving it the necessary fillip to move to a new phase of growth and development. Hopefully, this would also be a positive step in the direction of providing ‘Industry status’ to the sector – another long awaited demand of stakeholders involved in real estate.

Apart from protecting end-user / home buyers’ interest and bringing in credibility to the developer community, we also see this working positively in terms of attracting investments from domestic and international funds that have harboured skepticism towards investing in Indian Real estate largely on account of lack of regulation. With the safety features now proposed in the Bill, the RBI’s negative perception of lending to the housing projects as being risky will also be dispelled and developers will find it easier to access formal funding thereby not have to rely on sales to fund the construction of the projects.

The Bill will essentially change the way in which funding of housing development has been approached for a very long time, as it will require the developers to invest their own capital and launch only those projects that are well funded and have a time bound construction plans in place. This is a quantum shift, which may take time to settle in as a process.

In the short to medium term, after the Bill is enforced, we may see a noticeable slowdown in launches of new projects, as getting all the necessary permissions in place is a long and tedious process, which may delay the entire process of launching a project, unless the Government follows up with much-needed administrative reforms that speed up the entire process. Hence, the Bill may create an upward pressure on prices as there will also be some cost implications as developers wait to launch their projects with due approvals in place.

In all, the Real Estate Regulatory Bill is a welcomed move taken by the Indian Government to boost the morale of the sector and bring in the right kind of momentum in the future as provisions such as the setting up of project specific escrow accounts, establishment of a Regulatory Authority, mandatory registration of projects, developers and brokers, and public disclosure of  project details, etc put our housing sector on par with many other developed and developing countries.