Realty News

Moving towards organised real estate through RERA

Indian real estate sector witnessed a giant leap towards regulation with the Real Estate (Regulation and Development) Act, 2016 (RERA) coming into effect. The path-breaking Act is set to bring in discipline to the sector and keep unscrupulous activities in check. Among the 92 Sections of RERA that have come into force, is the rule that all projects that have not received completion certificates thus far, and that are yet to be launched, will come under its purview. Considering the rapid urbanisation and increased disposable income in the hands of the consumers both in the metros and Tier II and III cities, the demand for housing in the country is growing more than ever before. In such a scenario, a regulatory policy is indeed a welcome step for all stakeholders involved in the process of developing and buying a home.

 

RERA’s various beneficiaries

While transparency and accountability are the overarching benefits of RERA, each stakeholder stands to gain in diverse ways. To begin with, the process of buying a home is going to be much easier. As per the Act, it is compulsory for every state, and Union Territory (UT) to have its own Regulatory Authority (RA) and frame regulations and rules according to its provisions. This authority shall notify the various regulations covering both residential and commercial projects, within the state or the UT. It will also allow for the speedy redressal of disputes between buyers and developers and help in enhancing the trust between the two. Moreover, developers will not be able to sell or book apartments without a commencement certificate (CC) from the concerned authorities, thereby weeding out unreliable builders and making space for the reliable ones to flourish.

Under RERA, real estate developers will have to maintain a separate account for every project undertaken wherein 70 per cent of the money received from the buyers shall be deposited, to be used only for the purposes of construction and land cost. They will also have to furnish additional information regarding ongoing projects for the benefit of the buyers. Further, in case of delays both developers and buyers will have to pay the same penal interest of SBI’s Marginal Cost of Lending Rate plus 2%. From now on, developers will have to make public the original sanctioned plans and changes made later, total amount collected from allottees, money used, original timeline for completion, and the period within which the developer will complete the project, certified by an Engineer/Architect/practicing Chartered Accountant. Compulsion on sharing such key details will help developers to flag off loopholes or gaps that sabotage their project.

Since the Act seeks to empower home buyers and safeguard them from withstanding the worst of unnecessary project delays, it will increase their confidence of investing in a home. This will lead to a rise in demand for housing across the spectrum. While developers can now ensure smooth and timely transfer of homes into the hands of its rightful owners, lenders could witness a rush of borrowers looking for an attractive loan offer. At the same time brokers could cash in on through commissions, through an increased scale of consumers that will now be willing to put their money in real estate.

 

RERA as a necessity

This landmark Act was a necessity for several reasons. Untimely delivery of projects has been a financial bane for both the home buyer and the real estate developers. RERA brings in the much-needed relief to the home-buying experience, considered to be one of the major decision of a person’s life. That developers will now have to constantly furnish additional information regarding the ongoing projects for the benefit of the buyers, instills a renewed sense of trust among consumers. This will be indirectly responsible for bringing more investments in the sector, for the supply to match up with the impending rise in demand for housing. Consumer confidence shall be further reinstated with RERA coming to their rescue in case of any structural or defect in workmanship, quality or provision of services or other obligations within a period of first five years of the agreement. The responsibility to rectify such defects lies with the developers, and is to be done free of cost, within 30 days of the consumer bringing it to their notice.

A regulated market organises business processes in any sector. In addition to RERA, if gaps in easy access to land, financing and reducing the cost of construction are addressed, it will truly strengthen the real estate sector.

New west Bengaluru – A new beginning to holistic living

2016 was a dynamic year for the real estate market where policies like the Real Estate Regulatory Act (RERA), Goods and Services Tax (GST) and Real Estate Investment Trusts (REITs) paved the way for transparency and better investor sentiment in the market. 2017, is expected to be a year of fructification of these policies. Core cities are expected to witness an uptick in terms of real estate projects, lease and rent figures but the limelight this year, is on peripheral regions of these cities that are expected to emerge as new hubs for commercial and residential development.

A case in point is Bengaluru which, for decades, has lived by the name of the Garden City of India. Bestowed with a multicultural landscape, flourishing industry, a conducive weather cycle and extensive green cover, the city has been one of India’s most favourable living and working destinations. However, with the city’s increasing population density, it is an urgent need to diversify its development to nearby areas. Latest trends seem to substantiate this observation – that focused expansion into peripheral Bengaluru will help decongest Bengaluru of the pollution, infrastructure roadblocks and steer holistic growth in the state.

One of the fastest developing peripheries has been the Tumkur (Road) also known as New West Bengaluru on Bangalore’s Western Corridor. Acting as a gateway to North Karnataka and situated 70 km (43 mi) northwest of Bengaluru, Tumkur (Road) is on its way to being developed as a satellite city that will play a significant role in decongesting the Garden City. It is witnessing substantial growth in terms of new residential and industrious projects. Additionally, collaboration between city councils, governing bodies, real estate developers and industry has been ongoing to develop the region into a planned city, offering world class facilities, great connectivity and greener surroundings.

New West Bengaluru is set to witness major infrastructural developments like the proposed Mumbai-Bangalore Industrial Corridor that will allow connectivity to Bengaluru while maintaining exclusivity in living standards and comfort. Other initiatives like the Metro Rail – Phase 1 and Phase 2, and Peripheral Ring Road, which will form a half circle around the city from Tumkur Road to Hosur Road, are expected to significantly boost real estate development in the region. World-class facilities like Alur Cricket Stadium, Bengaluru International Exhibition Centre and Namma Metro, will further propel the development of New West Bengaluru as an international engagement hub with strong residential and commercial opportunities. Our latest report on the market outlook for real-estate, cites Tumkur (Road) as one of growth drivers for real estate in the state. With growing rents and better infrastructure, Tumkur is expected to set an example for the rest of Karnataka to follow. Investors, too, can capitalize on the location that forms a gateway between the old city and its upcoming smart regions.

Our report has projected an increase in end-user demand in Bengaluru. It also expects 2017 to witness more quality supply for retail real estate with an addition of almost 7 million sq. ft. of Grade A supply – a trend expected to be led by the southern cities of Hyderabad and Bangalore, with global and national brands entering and executing their expansions strategies to uniformly develop retail spaces across these cities. While these projections will drive the demand for quality and affordable living in Bengaluru, the effects are likely to also rub off on the peripheral areas.
The development of the New West Bengaluru is an indication of its growing importance as the next big location for the state of Karnataka. Upcoming residential projects in the region complemented with large scale infrastructural growth, will offer residents a peaceful existence while remaining connected to the bustling city of Bengaluru. Regions like Tumkur (Road) in the periphery of Bengaluru, with better planning, better technology, better governance and better design, can offer a picture-perfect option to meet the increased demand for housing amongst the city’s rapidly growing, working population. For residents and investors, this is a perfect time to be part of an international residential hub that is gearing towards sustainable and smart living.