How a Robust Policy and Regulatory Environment Will Encourage Real Estate Growth

India’s real estate sector has seen many ups and downs in recent years, struggling with unsold inventory, low buyer confidence, project delays and negative cash flow. However, a number of growth-enhancing regulatory developments and initiatives announced over the past couple of years are helping to revive the industry and are expected to pave the way for strong industry growth in the future.

Furthermore, it has been noticed that over the past two years, Indian consumers and NRIs have regained their confidence in real estate after a brief hiatus during the pandemic. Contrary to most reports, investment flows and demand for quality real estate projects continued to grow even after the pandemic.

Role of government

The role of government as regulator is crucial, as it must define its responsibilities in compensating those affected by government failures. In this regard, the computerization of government functions and their networking with other departments across the states are of utmost importance. It is important that the data is updated regularly and easily accessible to the general public. This would allow various services, such as obtaining a Congestion Certificate (CE) or Patta, to be provided more efficiently through designated service centers.

Apart from government support and implementation of various policies, transparency and trust are also enhanced by other factors, such as regulatory reforms and Indian government initiatives to develop the real estate sector.

Governments should set high standards for industry governance while encouraging creativity and innovation. This is because the real estate market is unregulated, making it difficult to find accurate information on factors that can affect prices and demand, such as sales records, ownership and other important data. . The quality of foreign direct investment (FDI) in the real estate market has declined due to the recent influx of individual investors, as opposed to high quality institutional investors. This lack of quality investors has a domino effect on various aspects of the real estate industry, from affordable sale and rental prices to disregard for laws protecting tenants’ rights.

Moreover, the real estate sector has a social responsibility to solve the growing global housing affordability disaster, while discussing the effective implementation of the Sustainable Development Goals. It’s not just governments that have failed to make affordability a priority – around the world, the 5 Ps (Planet, People, Public and Private Partnership) have also failed to find a solution that works for everybody. We are not saying that governments should be absolved of all responsibility, but that a collaborative effort is needed by all to arrive at a solution.

Transparency challenge

A transparent real estate market is essential for making informed decisions about urban infrastructure, as well as for sound long-term urban planning. It is also key to attracting new investment to a city, boosting business efficiency, and increasing employee well-being and productivity.

It is important to be transparent about green building regulations, standards and metrics as we move towards a cleaner economy.
Green building certification systems and energy efficiency standards are now widespread in countries that are leading the pack in sustainability. France, Australia, the United Kingdom, the United States, Canada and Singapore have been at the forefront of new sustainability initiatives and have adopted them quickly. For example, by developing national frameworks for net-zero carbon buildings, several Green Building Councils – such as UKGBC in the UK and GBCA in Australia – are taking a big step in the right direction to tackle climate change!

India recorded a global improvement in sustainability transparency, ranking 20th. This is due to the active role of organizations like the Indian Green Building Council (IGBC) and Green Rating for Integrated Habitat Assessment (GRIHA).

In China, market data, the proptech sector, land use planning, and green and healthy building standards have seen continuous improvement. With the outbreak of COVID-19, there is growing pressure to establish frameworks that could ensure healthy buildings. The WELL Building Standard and Fitwel, both originating in the United States, are still the most important certification systems available today, not only nationally, but also internationally.

Role of builders

Builders must provide potential buyers with transparency regarding the projects they are trying to sell. Additionally, they need to ensure that they get the proper approvals for their projects without misleading buyers. Builders and developers who follow best practices can be rewarded by local bodies or government agencies. It is also important to impose severe penalties on those who break the rules and to exclude those who are repeat offenders.

Role of real estate agents and buyers

As a real estate agent or broker, it is important that you are well qualified and always follow the guidelines set by NAR India. Professionalism and transparency are two essential qualities that you should always strive for. Although the role of the buyer or end user may be minimal, it is still of great importance. They must be aware of the responsibilities of other stakeholders so that their interests can be protected.

Recent regulations and reforms have had a positive impact on the real estate sector, with affordable housing being a particular bright spot. The government provides a GST subsidy to EWS, LIG ​​and MIG under the CLSS at a preferential rate of 8%, making it more affordable for those who need it most. RERA and the Benami Transaction Act have brought much-needed transparency and accountability to the industry, while building consumer confidence. Going forward, only developers who meet corporate governance and transparency standards will survive, while unserious and small players will be weeded out.

The real estate sector is one of the driving forces of the Indian economy. Infrastructure development and housing are key elements in reviving a country’s economy during a recession. In India, the real estate sector is responsible for creating about 15% of all jobs.

Moreover, all the industries necessary for the construction of houses will also have to adapt to this change. This will include cement, steel and aluminum companies who will have to meet the new homebuyer demands that will arise from this creative disruption. Technology will play an important role in how these changed standards are met by businesses.

Although the pandemic is wreaking havoc around the world, urbanization is an ongoing process that cannot be stopped or hindered for long. The real estate market is one that always manages to recover after a while and the 2022 sales are proof of that. It is expected that demand among the middle to upper middle income groups will be higher than ever as they are finally ready to invest in their dream home. The economy is slowly but surely starting to recover, with many sectors experiencing a resurgence, thanks to the vaccine that has been distributed so far.



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Disclaimer

The opinions expressed above are those of the author.



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