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With 11 First Information Reports (FIRs) filed against three real estate developers- <keyword id="6361138" type="CITY" weightage="20" keywordseo="Unitech">Unitech</keyword>, <keyword id="2758718" type="COMPANY" weightage="20" keywordseo="Pal-Builders">Pal Builders</keyword> and <keyword id="822942" type="COMPANY" weightage="20" keywordseo="Vigneshwara-Developers">Vigneshwara developers</keyword>, for cheating home buyers, the stark reality of real estate has once again come to limelight. 
	 
	The police has registered five FIRs against Pal Builders while three FIRs each have been filed against both Vigneshwara Developers and Unitech separately. 
	 
	However, realty players are now questioning the reasons behind the agonizing delays that have cost them a fortune as well as their goodwill in the market. 
	 
	Tedious approval processes adding to realty players’ woes 
	 
	“Reams of newsprint have been dedicated to discussing the sufferings of consumers in the Indian real estate sector. Particularly, homebuyers’ woes related to late delivery of projects, deviation of housing projects from promised quality, additional payments due to change in apartment area and inadequate protection of their rights have been well-documented. The question that invariably arises is whether the developer is at fault, or whether larger market forces beyond the control of developers are at play,” said Anuj Puri, country head for JLL India. 
	 
	According to Puri, the tedious and prolonged procedure for getting innumerable approvals adds to the time taken to complete a project. He explained that any delay in obtaining approval required before the launch of a project to the delivery of it. 
	 
	“Delays here will cause cascading delays in delivering the project as per the promised time. Before a project is officially launched in the market and offered to buyers, there are myriad approvals that a developer needs to obtain from the state and central agencies and ministries. In any business, the longer raw material is held, the higher is the holding cost – which, in addition to interest costs in case of borrowed funds, causes an increase in the overall price of the finished product,” he explained. 
	 
	Commenting on the issue of rising costs, Puri noted that at present, a builder has to get 57 different permissions to actually start a project, which takes up nearly two years. “During this time, the cost of acquisition or even just holding the land for a project rises. Builders already have to cover external and internal development charges, license costs and often charges for change of land use from various departments, which have also risen. Cost of construction has gone up by more than 50%, as well,” he added. 
	 
	Changing norms behind skyrocketing project costs 
	 
	Besides the cost incurred on myriad of approvals, sudden changes in the real estate norms also result in the skyrocketing costs of the projects. “There are readily recallable examples of how abrupt changes in regulations governing real estate development can work against both developers and buyers. The revisions made in the DCR regulations in the Mumbai Metropolitan Region a couple of years ago caught the industry unawares, and added to development costs by about 15%,” he highlighted. 
	 
	Nevertheless, industry players have admitted that there have been instances where a developer has deliberately delayed the delivery of a project. “Yes, there are many cases, wherein it has been found that a builder deliberately delayed the project as the revenue generated in one project, has been used in launching another project,” said a residential property broker requesting anonymity. 
	 
	The challenges for the real estate buyer do not end here. Even after getting the possession of the property, a home buyer can see stark differences between the promised quality and the quality delivered by the developer. 
	 
	“A change in the apartment area after buying from the developer can occur if a change in project plan is necessitated due to a design or approval issue. A deviation of up to 10% is usually acceptable – for a higher deviation, a customer must definitely seek legal recourse. That said, project deviations can also happen because of structural deficiencies of the overall system, wherein rules are being made by the governing authorities in a reactive manner rather than on a proactive basis,” stated Puri. 
	 
	Any recourse for home buyers? 
	 
	So, what recourse does a home buyer have? According to industry players, a consumer can any day approach the consumer court for redressal of his grievances. However, experts believed that the current legal recourse is not adequately equipped to offer complete protection to real estate buyers. 
	 
	“The Real Estate Regulation and Development Bill - long languishing on the policy drawing board and still under consideration by the government – was intended to offer vastly enhanced protection to buyers. However, after the most recent revisions to RERA, it seems that it will in fact now be less protective towards buyers. While the bill aimed at providing an alternate redressal mechanism, the new provisions are talking of no recourse to other consumer forums. This can, in fact, lead to pressure on this regulatory body in terms of an increased log of cases, though it will reduce instances of multiplicity of suits,” asserted Puri. 
	 
	Until complete protection is not offered to home buyers, buying a property continues to remain a murky affair. As of now, Prime Minister Narendra Modi’s dream to provide affordable housing for all by 2022 will remain a distant dream!

Is Indian realty sector
in need for a makeover?

If you have been thinking of buying a new apartment in the coming new year, you have probably done the right thing in waiting for 2015 to end. The <a href="http://www.businessinsider.in/Real-Estate-Demands-Single-Window-Clearances-From-The-BJP-Govt/articleshow/45204372.cms">real estate market</a> in the country is expected to get back on a positive growth trajectory along with a price correction of the properties. 
	 
	According to industry players, 2015 was not exactly a year of great sales. However, towards the end of the year, some action was seen in the market. “Launches have reduced in cities like Mumbai, slightly lowering the inventory. Developers’ initiatives like offering attractive schemes and deal terms, coupled with lowering of interest rates by the <a href="http://www.businessinsider.in/Heres-why-RBI-governor-Raghuram-Rajansno-rate-cuts-decision-is-a-wise-move/articleshow/49994748.cms">Reserve Bank of India (RBI)</a>, have activated fence-sitters,” said Anuj Puri, chairman and country head of JLL India. 
	 
	Besides, the realty sector also had its share of controversies when reputed developers were caught in the net for failure in delivery of the properties. These included Unitech, Vigneshwara and Adel Landmark against whom FIRs were filed for non-delivery of projects, cheating and fraud respectively. 
	 
	Apart from this, the much awaited price-correction too did not happen due to macro-economic factors. There was a stark gap between demand and supply in the market, which did not allow any price correction to happen. 
	 
	2016: What’s next? 
	 
	Industry players expect the sector to be on a growth trajectory following the various initiatives launched by the NaMo government in 2015. With Real Estate Investment Trusts (REITs) in place now, both buyers and developers should expect more transparency in the industry. 
	 
	Also, initiatives such as <a href="http://www.businessinsider.in/PM-Modi-to-announce-20-smart-cities-in-January/articleshow/50379889.cms">Smart Cities</a>, AMRUT and <a href="http://www.businessinsider.in/PMModis-Smart-Cities-Housing-for-All-is-smart-but-ambitious/articleshow/47814233.cms">Housing for All by 2022</a> will also propel the growth of the sector. As the projects are of very large magnitude with both the government and private sector equally involved, industry players expect such initiatives to be a catalyst in the sector, with adequate investments being made in the sector. Initiatives such as these are also expected to phase out dubious players from the industry. 
	 Besides, <keyword id="44528" type="ORGANIZATION" weightage="20" keywordseo="FDI">FDI</keyword> norms for this sector have also been eased, which could bring in more investments in the industry, thus accelerating the work on current projects as well as launching new ones. 
	 
	“Though 2016 will bring in regulation, it will remain fragmented and moderately inefficient. We could see it become a well-regulated, consolidated and moderately efficient industry by around 2020. Growth in the Indian economy will definitely see favourable reflection in the real estate sector, as well,” added Puri. 
	 
	With <a href="http://www.businessinsider.in/Revised-real-estate-bill-to-bring-relief-for-buyers-ensures-faster-action-against-defaulters/articleshow/50122879.cms">Real Estate Bill</a> likely to pass in 2016, developers hope that the sector becomes more transparent and better regulated, which in turn, will give home buyers the much-needed confidence to buy their dream home.

Still sitting on a fence to buy your dream house? 2016 may be a good year to do that!

You Searched For "Vigneshwara Developers" and got 2 results

Is Indian realty sector in need for a makeover?

Purba Das

Still sitting on a fence to buy your dream house? 2016 may be a good year to do that!

Purba Das

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