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Sonia Maria Sotomayor is an associate justice of the Supreme Court of the United States. She was nominated by President Barack Obama on May 26, 2009 and has served since August 8, 2009. She is the third woman to hold the position. Indeed, with such biodata, Sonia is the authority when it’s time to define the law or say making of it! And why I recalled her this quote because of one Centre-Page article about real estate in a major newspaper by one renowned architect Mr. Chandrashekhar Prabhu in Mumbai about real estate & laws (rules) related to it. And I am not surprised as only except when it’s time to get advertisements, the builders never get a centre page or such prime position in any newspaper for putting forward their issues about their business or their industry i.e., real estate, so no wonder it was by an architect! And one more thing, whenever any such professional or personality from other industry than the real estate, speaks negative things about the real estate (which they usually do) then only its highlighted in the media & tomorrow even if Mr. Warren Buffet also speaks something good about the real estate in our country, then he also won’t get prime position in any newspaper, is what I am sure of! All this treatment to the real estate is outcome of in this country emotions & not facts run the system & in the emotions of the common man, (is there any left?) builders & real estate are bad things; this has been impregnated on the minds of the people & the media writes only what people want to read & not what is fact, is a fact!
Ok, let’s keep aside my emotions & let’s see what Mr. Prabhu has written about builders. It’s about TDR & policies regarding redevelopment of the Chawls (Chali) which actually are vertical slums of Mumbai & how the new polices has been drafted by the govt which actually are by the builders & things like that. Going further he has given some statistics about development of a model proposal & displayed how a developer will end up earning crores of rupees through these rules & how the chawl owners will left with nothing & while doing that he has considered some sale rate of flats in the locality as well construction costs as well money he has to pay to the govt to obtain the TDR & all such details. I do respect Mr. Prabhu as he indeed is a studied man as well a technical person & why just Mr. Prabhu but I respect every professional as well other industrialists who write or speaks about real estate & concludes that builders make huge profits, so no need to show them any mercy leave apart making rules as per what the builders needs for doing their business! Ok, indeed builders does make money but then so does a hotelier, an automobile industry, Mr Mukesh Ambani & Mr Adani also makes money, so do Mr Azim Premji & Mr Sirus Poonawala, Mr Ratan Tata, Bill Gates & Zuckerberg, Larry Page & many more names also make money & for that purpose they are in the business, right? Now consider the case which made Mr. Architect to conclude that builders make huge money & they influence the system to make such rules which helps them to make such a huge profit. Because in the very week there was news which said nearly some lakh of crore worth rupees projects in real estate all over the country are stalled & many of them may be never ever get completed! Surprisingly, if there was huge money with profit in real estate then no such project would have been required to get stalled i.e., halted or abandoned, right?
Keeping due respect for Mr. Prabhu’s statistics & knowledge yet there are few issues which I will like to highlight, especially about the system i.e., govt making rules as per builders’ guidance or say for the builder’s benefits…
1.With all the sale rate & profits mentioned in the example, tell me, who guarantees the sale of the flats, as in the present market nobody is sure of. So, what if the flats in the said projects don't get sold?
2.What about un-accounted situations hampering projects such as lockdown which was the scene for nearly more than a year in Pune & Mumbai, who will bear the losses for such a period?
3.In all these calculations regarding profitability of the said project one thing is missing & that is, at present most of the clients are preferring to go for ready possession or nearing possession flats, so entire expenditure the developer has to pay from his pocket, for paying govt charges, even it’s a redevelopment project & no land cost is involved, so what about interest on these investments?
4. And more importantly from where the developer is going to get money as if the builder lobby has so much of power that they decide the policies, then why all the financial institute especially public sector banks have kept real estate as non-priority (good way of saying No) segment when its project finance! On the top of it do you know a fact, neither the builder’s employee nor the builder themselves get any personal finance for their home loans; while the very same Banks are happy to give home loans to the flat buyers at the builders at rate less than half of what they charge to the builder for the project finance in case some lucky builder gets the finance in the first place! Will like to know your comments about these finance policies which clearly shows who controls the policies of the govt for the real estate!
5. Look at the UDCR & the kind of FSI it is generating, which fool (read as builders) will make such policy when by virtue of it the entire market is going to be overflooded with FSI i.e., in nutshell more & more supply of homes, which at many places surpasses the demand of the homes itself! There was money in real estate because of the gap between demand & supply of the homes & now when supply is unlimited, no need to be a financial wizard to predict about the reduced profit margins as well increased risks, what about this aspect of the real estate, can Mr. Prabhu comment on it?
6. And then if the builders have got capacity to make the policies regarding real estate, then why are hundreds of our demands still hanging unanswered such as Metro TDR or Uneven Fire Premiums or Road Development Charges to be paid for giving our own plot for roads & many such!
7.And if Mr. Prabhu still believes we the builders, make the policies then have a look at these facts in Pune (as my work jurisdiction is in Pune), all the sanctioning authorities (PMC, PCMC, PMRDA) sanctions the plans but refuses to take any responsibility about providing civic infrastructure such as roads, water & drainage to the citizens but put that responsibility on the builders while they charge for every single sq. ft., they sanction to provide the infrastructure! And on top of it RERA authorities blames builders for cheating the clients in such cases, do you still believe the builders make the policies here!
8.And the very same authorities don’t come under scanner or are responsible to any adverse order passed by tribunal like RERA or authorities such as Aviation (Defense) or Environment Committee & many others. Rather even the big boss of real estate i.e., Urban Development Dept. also shrugs its shoulders saying that is another depts' quarry or order & the builder should deal with it on his own, case wise! Had the builders made policies, wouldn’t we have streamlined all these flaws on priority?
9.Where is “Ease of Doing Business” & ‘One Window Clearance” type processes for the real estate about which everybody speaks but nobody does anything? Nearly hundred plus NOC’s are needed to acquire to complete even a small project of 10,00 sq. ft land area & that too from every known dept of the govt & yet when it’s time to lay electric cables which is MSEDCL’s (MSEB) job & a builder has to do it as MSEDCL has no money the other depts’ i.e., PMC & Police, considers it as private work & charges the builder four times for the same! Had the builder made policies, do you think we would have been allowed to force such unjust laws on ourselves!
10. Lastly, (I mean somewhere I have to stop) when any site accident happens or a real estaters’ business goes in loss then the police arrests the builder (yes, sir it can happen to us also); tell me name of any other industry where the owner or the board of directors is imprisoned for the loss of the company! Rather recently, I read the news about CMD of one very big mobile network company honorably getting retired from his post while the company with the equity of Rs 25,000 crore has loan of Rs 1, 50,000 crore & he realized it’s impossible to run the company & publicly even asking for support of the Central Govt to save the company, imagine what the system would have done with the builder for such act if such huge loss would have been to a real estate company!
Sir, I understand this doesn’t mean all the developer are good & the entire real estate is honest business but then it’s not as dark as the system (media) see or paint it, is also equally true! This is one business where competition is never fair & you can’t compare even two adjoining projects as the parameters differ on many fronts! High time for the builders to face the facts & changed times & streamline their work practices as anybody can be a builder just like a Kirana Shop (Grocery store) but the buyers are the same. You will be served “Unlimited Thali” (Food plate) but how much you can eat as per your body’s need, this you only have to decide, is the scene in the real estate! There is no harm in making money rather for that purpose a person enters in to any business or profession (even you also in your profession), point is all the builders are not bad & many of us wants to do business for a moderate profit & by following good practices & fact is the system or the govt doesn’t listens to one bit to make a policy to support the good builder, is what I wanted to tell to the world! So, Mr. Prabhu, thanks for your Centre Page write-up about the builders making policies of real estate, as at least it gave us the builders, an opportunity to reassess our own industry once again!
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Sanjay Deshpande
Sanjeevani Dev.
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