“You have to work on the business first before it works for you.”... Idowu Koyenikan
As an internationally recognized consultant, Idowu helps individuals and organizations break through to new levels. He has been featured in most of the business media & his many inspiring quotes have been guiding the business fraternity & needless to say he is from the USA, a country which runs on sheer business mentality! And when it comes to our country with all respect to the few good people in the system (there are some such yet) the term “business” is only been in the phrase "mind your business"! Well, sarcasm & loads of it but when someone asks you to share what you think about ease of doing business in this country & about the industry you are in, well unfortunately sarcasm is the only way I start & I am sorry but I am not the only one who think like that!
Ok, recently to my surprise I got connected with one friend of mine & due to whom I am more surprised to know that our "Mai Baap" Govt is seriously trying to know what are the hurdles for real estate industry & will like to know how this industry can be smoothened on the front of doing business i.e. ease of doing business in real estate which I will nickname as EODB hereafter for ease of writing, lol, agreed that was a PJ & bad PJ but so is real estate! So, let’s know about what is pinching to the real estate & no wonder the pinch is none other than the money which it used to generate & which of late has been dried up! Very frankly neither the system (read as govt) nor the masses or say society never used to consider real estate as a business or an industry in the first place & the people in the real estate (read as builders mostly, though it’s not just builders) never used to bother because of the money it was making for them (read as all). And why not as any business's main intention is make some money, isn’t it & here was a business was making money for every person linked with it, right from the govt to vendors to financers (investors) to builders to raw material provider i.e. land & the end users i.e. home buyers (early birds I meant), so who has got time to complain about the hurdles the business has been facing! I am very clear about one thing, any job never makes you stressful or pinch only if your are genuinely liking that job which we call job satisfaction or the job is making enough money for you to fulfil your all needs & I don’t know about job satisfaction but later aspect was definitely there in the real estate! So, when everything is going good nobody bothers or cares to dig in for innovation or improvisation & we are famous for that that’s why not many wise minds are there in real estate, as what was going on, was a gamble actually! Well, many (read as most) people especially fellow developers won’t agree with my statement but then no gambler ever accepts that his earnings were outcome of luck, he (or she) always thinks he earned it because of his skills, wisdom or intelligence, whatever you call it. Indeed, some skill is required even for gambling but best gambler is the one who knows when to quit gambling & that understanding needs wisdom which is most "kamjor kadi" of real estate & outcome was though on the face nobody (read as govt) used to called real estate as gambling business but the treatment given by the govt as well the society(including media) to the real estate says what it things of a gambling business & that’s why we are in the situation which a gambler hates to face i.e. what if your luck run out?
And that’s why including govt, banks, financers, investors & all allied segments with the real estate, yes of course the builders too, have realized the need of EODB, as no more the luck factor is in favour to earn money out of this business! That way real estate was always a hard & tough & mean business because its raw product is land which is limited just like the gold & no science can create new land unless you learn to live on Mars or Moon which isn’t the case as of now so all you have is land which is available by nature & its decreasing i.e. available land for development. And obviously everything related to the land is complicated in the best possible way, right from 7/12 extract which is "sim sim" word for any land to the demarcation (mojani) maps of the land, all is a mess. And the mess has been deliberately created as if the land means key to the money then the system or person or authority that holds this key will make money by using the key & even the govt is no exception for this greed! First thing to make EOB in real estate is, wipe out old land or say revenue laws & the system defining ownership of any piece of the land on paper as well on ground, so it will reduce the time-lag (which is title of the land i.e. ownership proving of any land) causes in the real estate business! Just tell me one thing if any document unless registered with registrar, is considered as illegal then how any civil court in the country accepts claims made on just a plain paper deal or stamp paper or even notarized & how once a deal get registered even after then title of some land can be challenged? This single aspect of the land deals has increased stresses both mental & financial in the real estate business in worst possible way & high time to deal with it for the govt! (If it wants to!).
Once you are done with the land ownership front then the next stage is getting permissions for the development & they are bigger, lengthier & heavier than "Hanumanji's Punchh", sorry a phrase in Hindi & can’t be translated in English but take it as Herculean task! Because the number of govt departments (I call them, Sharks) involved in getting a plan sanctioned for even a bungalow are too many, that the normal developer which we can call as a common man surrenders to the system & either leaves the thought of development or give it to the builder, which knows how to swim in the ocean full of sharks! This is why so called corruption never ends here & I am not talking about corruption in the form of money but in the form of mental as well physical harassment which is at all levels in real estate. Here, a govt officer can harass you over implementing some policy as well a bank officer can harass you for sanctioning your home loan or an RTI activist can harass you for hiding something in the sanction which you can’t ever fulfil but accepted as there is no alternative, a neighbour of your building can harass you for not allowing work during his or her noon sleep hours & lastly police can arrest you for anything related to the site even a genuine accident & put you behind the bars like a street criminal! All this is possible because there is no alternative to revenue officer who is supposed to sign your NA order, there is no alternative to some building inspector who is supposed to sign on your plans & there is no alternative to the bank manager who approves your home loan sanction file & the list goes on for every NOC from every dept, you have ever heard of! If you want to get EODB (ease of doing business) for real estate then streamline the entire process of land records & sanctioning, taking away the monopoly of every govt & semi govt dept which squeezes all the blood, sweat & money from the real estate! If you think I am exaggerating then look at real estate in just one city, our Smart Pune & you will find right from Metro Rail’s TOD or TDR (whatever) to granting FSI on 6m wide roads to charging premium for road handing over to giving two FSI for road acquisition in PMRDA just in Pune region there are five sanctioning authorities which have different set of rules & oh yes there are other agencies like Defence which also interferes in the policies (height NOC) or DC rules in these all five local bodies & then there is ULC, revenue & irrigation , thanks god the AIDS control dept (yes there is one such still) hasn’t yet intervened in real estate sanction processes!
Ok, if you are done with sanctioning authority’s hurdles then there is the main & most vital aspect i.e. finance! Joke is every financial or banking institute has home loan wing which is happy to give loan to flat holders but to finance real estate i.e. builder is non-priority segment which in hidden words is No Finance industry of business! And if at you get to convince some banker for funding real estate then rate of interest is like this industry works on double profit (well that was the case) & you have to give equal amount collateral that of loan & with all this burden of finance the builder is supposed to sell at affordable price his product i.e. the home!
And last but not least is about the policy making process related to real estate & the delay it takes always, classic example is Unified Development Control Rules, which took more than five years to see the sunlight, making delay to thousands of the projects all across the city & State! As well, if the govt can make MIDC’s for ease of all other industries where every basic infrastructure like water, roads, power, transportation is available in proper way & cheaper rate then why can’t all such be made available for cities in proper time span as land is raw material for real estate & a land without infrastructure is as useless as an industry without raw material! At the same time policies regarding illegal constructions which is cancer for real estate must be decided & acted up fast, who has stopped govt doing that but we all know the reasons for turning a blind eye towards illegal constructions!
Finally all I will share is any business is risk & we are not talking about the risks here but the hurdles, which we only have created. It’s like we want to make an expressway for faster travel & we only build speed breakers on that expressway for speed reduction & then crying over the delay for travel on it; for govt’s approach to EODB (ease of doing business) regarding the real estate; I couldn’t have given better example, isn’t it!
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