Rohtas Goel, CMD Omaxe Ltd & Chief NAREDCO Council
Real Estate Sector has all hope for a reformist and bold budget this time along with expectations for a slash in Repo rate from RBI, says Rohtas Goel, CMD, Omaxe Ltd and Chief National Real Estate Development Council [NAREDCO], to boost housing demand in the Country. Though Union Govt has undertaken a slew of initiatives to revive the sluggish sentiment in the sector, but things don’t end here. The Government’s mission to provide Affordable Housing as part of the mission “Housing for All by 2022” could be achieved through a series of policy reforms on its part among which the most vital is the Taxation issue in the Real Estate sector, according to Shri Goel.
Excerpts of his Interview with Sandeep Pattnaik of Gharabari.com…
1. Valuations of housing are at an elevated level and buyers are adopting a wait-n-watch approach for prices to fall in future. What is your assessment about the Indian realty space down the line? What are the expectations from the first full-year-budget of the NDA Govt this time pertaining to the sector?
Ans. Prices continue to be almost at the same level it was 12-16 months ago especially in metro cities. Customer queries have risen in the last few months but the overall sentiment suggests that the wait for fall in interest rate is the primary reason that has kept buyers away. The Reserve Bank initiated a 25bps cut in repo rate but that has not been passed on by banks to the borrowers. We hope the RBI makes deeper cuts in interest rates keeping in mind the positive signals emanating from the economy. We hope, with a reformist and bold Budget and consistent rate cuts by RBI, demand scenario could witness an uptick in the next 3-6 months. Besides, RBI must impress upon banks to pass on the rate cut benefit to borrowers.
The Government and RBI have undertaken a few initiatives for the real estate sector which includes relaxing FDI norms, REITs, affordable housing etc. We hope the Budget looks into taxation issues related to real estate sector, besides granting infrastructure status so that financing and executing projects can be easier.
2. Developers have been struggling with low sales, increasing inventory, high debt and liquidity crunch since the past couple of years. How NAREDCO is all out to suggest the Govt to back the realtors on track?
Ans. Naredco has suggested re-introduction of "tax benefit under section 80-1B(10) in coming union budget 2015 to provide tax benefits for the housing sector. This will immensely help the Government achieve housing for all by 2022. Naredco has also suggested withdrawal of section 43CA of Income Tax Act, introduced in the Budget 2013. Market rates should be the basis for calculating the dues instead of government fixed circle rates, because circle rates are quite higher in some cases. A balanced approach should be adopted in Real Estate (Regulation & Development) Bill by addressing the concerns of the developers, like accountability of development authorities. The city Master Plan should only be notified if it has all statutory approvals like change in land use, environment clearance, mining, maximum height from AAI etc so that the developer is able to start work in minimum possible time. The Government should focus on digitalization of records and quick approval of projects.
3. Builders/Developers credentials are at stake with defaults in delivering finished projects to the customers within schedule time and cases of frauds and cheating are on a rise. They are entangled in legal tussles and in few cases hefty penalties and fines levied on them. What is your suggestion to the developers?
Ans. In the builder-buyer agreement, all buyers are protected against delay through penalty clause. In fact all developers give out a mutually agreed rate as penalty in case of delay. While penalty is the last resort that any developer should look at, delivery of project and fulfilling the commitment is what must be the priority for all developers in order to win back the trust of buyers and bring back their confidence.
4. Sir, you are at the helm of affairs as CMD of Omaxe. Which are the EWS projects you have taken into hand with the Union Govt’s thrust on affordable housing space? Do you think the realtors would come forward in this category of housing as it might not add the expected revenue to their kitty?
Ans. 90% of our offerings are in the affordable segment in tier II and III cities. While townships mandate having some portion for EWS category, we, too, have earmarked the same in our projects. For affordable housing to succeed, the land rate and taxes must be at a bare minimum so that after adding for construction cost and other expenses, the overall price of the Flat is kept at an affordable level.
5. Which are the other thrust areas your group is concentrating upon?
Ans. We have our eyes focused on changing the landscape and enhancing the lifestyle of tier II and III cities and we have in the last two decades executed some really good projects in Lucknow, Indore, Bahadurgarh, Rohtak, Sonepat, Faridabad, Palwal, Greater Noida, Vrindavan, Ludhiana, New Chandigarh, Patiala, Bathinda to name a few. Presently, we are looking at both expanding our existing projects and also venturing in newer regions in tier II and III cities. The idea of Smart Cities is very exciting and we are looking at how we can make our projects Smart while also being a partner in Government’s initiative.
6. What is your view about the much touted ‘Smart City’ initiative of the Union Govt? Is it going to be a win-win situation both for the Govt and the developers? Will it be an easy affair on the part of the Govt to implement the plan, as Rs. 40 lakh crore for developing smart cities and another Rs. 20 lakh crore for maintaining them are needed, as recently said by the Union Minister Housing & Urban Development M Venkaiah Naidu in a consultation meeting on smart cities?
Ans. The idea of Smart Cities is extremely necessary in India today. Urban population is growing exponentially and it should be our endeavour to create cities that reduce time and effort of an individual while also being able to cater to every income group in the city. The use of information, communication and technology is extremely important to make our cities smart, intelligent, clean and eco friendly.