Tuesday, January 6, 2015

Where is "Happy New Year" for Real Estate?










“Cheers to a new year and another chance for us to get it right.” …Oprah Winfrey.

Oprah Gail Winfrey is an American media proprietor, talk show host, actress, producer, and philanthropist. Winfrey is best known for her multi-award-winning talk show The Oprah Winfrey Show which was the highest-rated program of its kind in history and was nationally syndicated from 1986 to 2011. Dubbed the "Queen of All Media", she has been ranked the richest African-American of the 20th century! Well we all know about the great TV Queen & no two minds about her intelligence & wisdom. The quote just shows how she deserves what brains she have & while entering in first week of the New Year this is what the common man of Pune as well the State must be thinking when the subject is their own home, may it be existing or the one they hoping to buy! As of now it’s sure that more & more people will be living in cities than villages so urban development & policies will be having high expectations from citizen as well real estate segment. It doesn’t mean that govt should neglect agriculture or villages as they too are equally part of any development yet since all past years from our independence our most policies were focused around rural development & agriculture is a fact; though what it has achieved is a matter of debate but then that’s not object of this sharing!

The last quarter of the past year has seen a major rather historic change in entire nation & state on front of rulers. After many years the state as well central elections have been contested on issues like development, anti corruption & issues like religion or caste were put aside. And the voters also responded this change with positive attitude, the increase in numbers of voters vouch the same. Its start of New Year & time to stood for the expectations of voters & sure its acid test of both central as well state govt. As the real estate is a local issue, so we will focus our sharing to state govt & policies being expected from the same. The past year as well before that wasn’t much good for real estate; here many will say it just means builders have made less profit that’s all! Well, true in a sense but when we say real estate what we mean? Is it just builders or their suppliers & consultants & the home buyers? Some will say it’s nothing but a chain of builders, politicians, bureaucrats who all are interested in making money out of common man’s pocket, that’s what real estate is! Sadly the image is both true & false; as there exist such chains or else issue of illegal buildings would not have been so serious all around the state. Yet on other hand real estate means thousands of small vendors, contractors & millions of their workers whose daily wages are depending on this industry & then millions of people who are citizen of every small town or metros like Pune, Mumbai & their small dream rather call it a need in actual of having a home of their own! By me it’s these citizens who are real estate & not just the chain of some bunch of builders.  

When I say real estate didn’t has a good time it means these millions are being deprived from having their own home because it’s gone beyond their budget & that’s the main reason for rise in slums or illegal constructions. And it’s here on this front we are eagerly waiting for some policies by virtue of which the home making will be easier, faster & affordable for the builders who mean business & it’s not just money making for them.
For example lets take today’s news of making TDR i.e. transfer of development rights 2.5 from 1 all over state. I won’t go in much details of what is TDR, its potential of FSI i.e. sq ft of area one can build on any plot in proportionate with plot area. This will enable to make nearly 2.5 times the numbers of houses on a same plot; in nutshell if on a plot earlier 10 flats were possible to build now there can be 25 flats! This is a great move which is going to get criticized by media which usually favors NGO’s & they will be dead against this. But accept one thing land is limited & we need homes & unless we don’t increase potential of available land there can’t be more homes unless we find another planet to settle down! 

Though NGO”s cry won’t be wrong as from last experiences of our any policy we rarely have cared about strengthening the infrastructure which is also a part of real estate & this we conveniently forget! And all over the State, scene is same buildings gets constructed first, then people come to live in them & then if at all whatever infrastructure is there, it follows! Let’s not forget only those cities has flourished or liked by the citizen which not only provides affordable homes to the residents of the city but gives all the necessary infrastructure also. And here the infrastructure means right from water, public transport, drainage, garbage treatment to medical as well educational facilities. And look at these fronts which city in the state is doing well? At the same time another looming danger on real estate is no control of govt on any of the rates of the segments associated with the industry! Raw material is land & there is no upper bar on what price a land lord should quote. Day by day land acquiring is a pain & clear title land is more precious than gold! Also this sky rocketing land prices have attracted bad money as well tendencies in the business & outcome of which is gang war, this too we are witnessing in & around Pune & even in smaller towns also! On other hand the cement manufacturing companies unites & hikes the rates or holds the supply & govt just keep watching. Same is true with basic materials like sand, khadi i.e. metal & steel. Any association gets united & hike the price of the material & no one has got any control on the hike. Reasons they give are also outcome of poor policies by the govt. For e.g. every year there is delay or no decision about sand digging so sand rates gets raised by the sand suppliers. Then there always is a conflict about policy regarding carrying capacity of the trucks which carries materials like crush sand or khadi & using this as a tool these rates gets hiked! Basic things like water which is acquired for the construction is again a neglected factor as local bodies ensure that they won’t supply water to the construction site; but then from where the water will come & at what rate the industry has to buy it? Who cares! MIDC’s i.e. industrial development corporation gets separate water lines from dam for various industries & irony is the real not only generates employment for millions but provides revenue through stamp duty & many other heads of billions of rupees to the state govt which can’t take responsibility of providing water to the construction of these homes!

Illegal structures issue keeps on lingering for years after years & slum developments keeps on getting regularized, making people go for illegal constructions as no one is afraid of any action on them. So the one who keeps on following every procedure for getting sanction just keeps on paying interest on his investments for the land he has made.
Leave apart infrastructural front even the procedural front for hundreds of noc’s & simplest things like NA i.e. non agriculture permission process needs to be simplified; policies for the same never comes in existence & the delay for legitimate constructions continues. Why can’t NA permission condition in itself is removed all together where development plan or regional plan of the city or region has been finalized is a question which no one wants to answer! Things like demarcation of land by the state govt & uploading all the data on central server & make “mojani’: i.e. confirming measurement of every piece of land, we keep on reading just in news but still we require six months & more for any demarcation is a fact. After agreement which is duly registered yet the name of new owner don’t come on property card or 7/12 unless there are numbers of follow-up visits to the talathi office, is a fact & we talk of digitalizing the state! Why just land agreement, even after taking completion certificate of a project one has to apply separately for getting name of the flat owners on property tax, what more jokes we are going to witness! Development plans of the cities gets delayed & entire city development gets stand still, many districts don’t have regional plans & those who have they are outdated. Modifications to development control rules like one stair case or parking policy or side margins & many such, needs approval from state urban development department & years after years these proposals remain hidden in files in Mantralay which has been sent by local bodies; if at all they has  been sent in first place! No one takes review of implementation of any development plan or regional plan but every local body does collect thousands of crores of rupees which come from various development charges & premiums of hundreds of projects which are ongoing without any infrastructure. If MSEB, now MSEDCL digs a road in municipal corporation limit then they have to pay to local body at rate Rs 2200/meter & if a developer digs the road for laying MSEDCL’s cable as it don’t have money to lay cable, the developer has to pay at rate Rs 4500/meter road digging charges & the cable is still owned by MSEDCL! This happens only in India that too in Maharashtra! The ever increasing stamp duty rates keeps reflecting the rise in home rates & again affects all rates of premiums required for the sanctions of a project to income tax calculations yet the real estate goes on!

After crossing all such hurdles a legal home comes in existence but at what cost? It has to take burden of every wrong or say delay in right policy of the govt & has to take the blame that people in real estate are here just to make money! Affordable homes everybody wants but what we are doing to make a home affordable, has any one thought of it? And who in the end is sufferer of all this mess in policy making? Well again, who cares! 

Somewhere right from top to bottom, every segment related to real estate may it be builders, suppliers, bureaucrats or so called elected members, it’s high time to wake up & change the system to understand that just saying “Cheers & Happy New Year” won’t make real estate happy! Rather it’s our actions towards making homes affordable is what will make real estate real happy, or else the new year will be just one more page on calendar & nothing else!

Sanjay Deshpande

Sanjeevani Dev.

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http://visonoflife.blogspot.in/2014/01/wanted-leader-for-real-estate-industry_8.html

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