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Housing segment to be the top runner in the next 5 years: Shriram Properties

Kolkata, Feb 28 (UNI) Managing Director of Shriram Properties M Murali today said with the
increasing demand and tremendous scope for affordable housing segment of the real estate,
this segment will be the top runner in the next five years.
“This goes along with our Honourable Prime Minister Narendra Modi ji’s vision of ‘Housing
for All by 2022’ which is a national objective where we can expect more favourable provisions
towards affordable housing and Economically Weaker Section / Lower Income Group Housing,”
he said
Mr Murali said reforms and policy initiatives of the Centre as well as some State Governments
have encouraged private developers to evince interest to launch projects in the affordable
segment in the recent times. But the participation forms a minuscule percentage.
The Pradhan Mantri Awas Yojana (PMAY) has been designed envisaging a big role for private sector, but no private sector participation has been enlisted under PMAY and private developers
remain reluctant in the scheme, he said.
“If we analyse, there are several bottle necks and reasons that restrict the private developers.
The bottlenecks are: the high gestation period of housing projects, long and not that much
transparent approval process, expensive capital, non-availability of land with infrastructure and connectivity, spiralling land and construction costs, high fees and taxes as well as unfavourable development norms - needless to say about ‘wafer thin margin’ private developers get through
this business segment,” Mr Murali said.
“Thus first and foremost is that we have to make these Housing projects attractive and a
viable proposition for private developers and to kindle their interest to take up,” he said.
Mr Murali said it must be appreciated that the private real estate sector faces considerable headwinds today. Rising cost pressures and a difficult regulatory scenario are among the
primary concern areas that hold back private developer’s participation in a big way.
Currently, it takes nearly two to three years for a developer to commence construction after
having entered into an agreement for land purchase. The real estate developers today are
required to pass the approvals through 150 tables in about 40 departments of central and state governments and municipal Corporations. Every day delay means – it is a drain on profitability
for the developers, he said
Mr Murali said there must be transparent digital online approval process taking only minimum
time for approval and putting an end to unethical practices. Digital approval mechanism, better co-ordination among the multiple authorities in dealing with various permissions/approvals will encourage private real estate developers to invest in the affordable housing segment.
States can be asked to frame by -laws in a transparent manner for every division / region of
a city and bring out checklist for approval compliance and the approval process shall be made
online thus eliminating intermediaries, avoidable unethical payments and expenditure. Stricter
penal provisions shall be clamped within a time limit of 10 years for any wrong
reporting /compliance if it comes to notice in future, he said.
The Managing Director of Shriram Properties said availability of land with infrastructure like
Road, water and sewerage is a big drag for private developers. It will be appreciated that
providing infrastructure like road water and sewerage is the obligation of the state and may
have to be met out of the Cess and tax collected from the project. If the State can take care
of this arena, there shall be more private players evincing interest to take up the projects.
“We need measures similar to one brought in 2000 by the then PM Vajpayee ji by introducing
Section 80 IB (10) of the Income Tax Act which aimed at promoting constructions of housing
projects. We can undoubtedly say that this was a break through provision introduced bringing in
a big real estate revolution particularly in augmenting the housing supply,” he said.
Mr Murali said to recall, the years 2000-2004 was the turnaround period in the real estate
sector and in housing supply - with large number of private players entering and augmenting the
housing stock/housing supply. But this good progress with increased housing supply was short
lived. The subsequent Government brought in MAT. This move by the next Government
dis-incentivized many of the players and again there was dip in housing supply.
The kind of measures that was introduced in 2000 will attract private players to participate in the national mission like PMAY in a big way, he added.
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