C Shekar Reddy, founding member, Confederation of Real Estate Developers’ Associations of India (Credai), had an unexpected gift this Ugadi. The realty industry body elevated him as its national president to spearhead its activites. As senior vice-president, Reddy was instrumental in increasing Credai’s footprint across the country. If 72 chapters were set up in a decade, Reddy aggressively ramped up operations adding 58 new chapters in the past two years. As national president, he has already chalked out an action plan. First on his agenda is affordable housing followed by passing of the proposed Real Estate Regulatory Bill, Reddy shares in a free-wheeling chat with Sunitha Natti. He believes Telangana is a non-issue for buyers and predicts that prices of both land and built up area will rise this year by at least 25%. More in his own words.
Affordable housing can be done in three variations — built-up space of 300 sft for the economically-weaker sections, about 700 sft for lower income groups and nearly 960 sft for middle income groups. We are requesting the government to reduce taxation for all affordable housing units.
Currently, it accounts for nearly 40 per cent. For instance, if the unit is priced `10 lakh, taxation in the form of registration charges, land tax, VAT, building permission charges, service tax, etc, come up to `4 lakh! The government shoud look into this and bring it down to a maximum of 15 per cent.
Real estate slowdown
I strongly believe that the global recession and a regional issue like separate Telangana were not the major reasons for the sector’s slowdown. It was primarily because of excess supply. During the boom period, some global investors forayed and created unnecessary hype about their projects. Sensing competition, local players too started an aggressive expansion due to which the number of projects got multiplied several times while the number of buyers remained the same. This excess supply, thankfully, was sold off with several developers offering property only on a cost-to-cost basis or at low margins. In 2012, there was a price appreciation of about 15-25 per cent, but this was to absorb the increase in diesel, raw material prices and revised taxation particularly registration charges, which went up anywhere from 25 to 200 per cent depending on the type of the property.
Outlook good for 2013
This year is going to be good for realty developers. We anticipate price escalation in both land and built-up area by atleast 25 per cent by December, 2013. The demand for a separate Telanaga has become a non-issue for end-users now. Buyers are not really delaying decisions over the outcome on a separate Telangana. Inflation is being created by the government in the form of increase in market prices, registration etc.
Online sanctions for builders
According to a recent McKinsey report on Indian Urbanisation, because of the delays in getting government permissions and No-Objection Certification (NOC) from respective departments, the construction costs are escalating by 30 per cent. This applies to both residential and commercial buildings. Currently, builders have to get permissions independently from several authorities including irrigation, fire services, civil aviation (for high-rise buildings), Department of Archeology, Defence Ministry, local bodies, Ministry of Environment & Forests etc. For some projects, the delay in getting all NOCs goes beyond 3 years. We want to bring this down to 3 weeks if authorities implement online permission system.
The Housing and Urban Development, which formed a committee, is ready with its report on giving permissions online. We have to now ensure that the government enforces it. This could cut costs by at least 10-15 per cent.
Via : Newindianexpress.com