“Currently the real estate sector in India is largely unregulated, leaving consumers with little recourse to redressal in case a developer defaults on promises. With the bill coming into force as an act, RERA has promised to introduce more efficiency and regulations for those seeking to protect the welfare of homebuyers, as well as help boost investments. RERA will boost customer sentiment to invest money into the real estate sector and increase cash flow. It will also reduce discrepancy and malpractices with regards to project delays. The act will help in injecting FDI in Indian real estate by strengthening transparency and accountability in the organisation.”
Vidip Jatia, Director, Belmac shares his view with Sandeep Sharma about his company’s footprint in the real estate sector, inspiration behind ‘Belmac Residences’, real estate market scenario in Pune, emerging trends in the Indian real estate sector, sustainable construction, Single Window clearance system, impact of Real Estate Regulatory Act, 2016 (RERA) and demonetization, affordable housing and need to streamline Project Finance in India. Edited excerpts…
Could you brief us about your company's footprint in the real estate sector? What’s the inspiration behind 'Belmac Residences' project in Pune?
Belmac was born out of a need of good quality residential homes which were lacking in the country. Earlier, design and technology wasn't used while understanding living spaces and landscapes. We found a need to bring thoughtfully planned architecture into the residential space which was previously cluttered with densely packed homes. This is how Belmac was born, with the focus on "It’s all about the little things". Belmac focuses on the use of technology and pull marketing strategies for brand building. It is our constant endeavour to provide nothing but the best to our customers. Our target group is very well defined and our presence is felt by those who appreciate good architecture and design. Belmac as a brand is very warm and inviting to whoever is inquisitive, expects quality first and wants the best for his family’s future.
Apart from 'Belmac Residences' which are the other projects you are currently executing or about to launch?
We are very bullish on the real estate sector and we have a vision for the next 10-15 years planned out in the space. Our marquee project Belmac Residences is poised to redefine spaces in the city of Pune. We are actively looking at JV opportunities in Pune city. We also have a land bank of 150 acre in Panvel (suburbs of Mumbai), which is planned to become the next smart city which will be 1.5 times the MMR region and will consist of the new International Airport of Mumbai. This project is already in the design stage and approvals are currently being applied for.
How is the market scenario shaping up in Pune? What kind of challenges are you facing in improving your project sales?
The realty sector in Pune has emerged rapidly, on account of growth of IT/ITes, education and manufacturing sectors. The city cites as a perfect instance of a real estate market where residential developments spur on account of stacking up of the commercial activities.Catering to the growing aspirations of property buyers, Pune has displayed a lot of potential for horizontal urban development; hence it is adding new areas to its borders on a consistent basis. Pune encounters a growing urban density comprising of both luxury and affordable home segment buyers.
Do you think Single Window clearance system can fast track realty projects?
According to me, homebuyers will be benefitted from a single-window clearance for the realty sector as it will pave way for quicker delivery of projects. Single-window-clearance system will help in streamlining, building and planning approvals and fast-track completion of projects, which is of great significance for the realty sector. The system will enable the developers to get approvals in a simplified and organised manner. By providing timely delivery and more housing options to the buyers, it will also help rationalize housing prices and address the housing shortage in the country to some extent. The introduction of a single-window clearance approval system would make it possible for residential developers to increase the supply of housing, which would help in addressing the country's massive requirement for housing.
Could you provide us insight about the emerging real estate trends and property market in Mumbai?
Everybody needs homes and it is a matter of time when the curve will go into an upward trajectory. Residential demand will pick up especially with the government’s drive to increase affordable housing segment. Commercial space is required to drive economic activity. Overall we feel that real estate will soon become like any other industry wherein design, planning and execution are key. The global meltdown around Western economies has paved a way for NRI investments in India. The depreciation of the Indian rupee has proved to be an exciting opportunity for NRIs to invest in real estate. This has led to luring offers for NRIs in real estate with competitive rates. The trend has been that since city centres are expensive, suburban and peripheral options offer investors a host of residential options to choose from. It is the ideal time for global investments to take place in India. The only factor to be considered is to choose developers with a good track record and projects situated around the economic corridors.
Mumbai has seen increased traction in the residential segment, with home seekers preferring the affordable and mid-segments of housing. However, there was limited traction in the high-end segment as well, and the luxury segment is likely to remain under pressure, due to high price points. Mumbai is also a magnet for immigrants from all over the country because of rapid urbanisation and high employment opportunities. The constant need-based migration to Mumbai encourages landlords to hold on to high prices.
How far demonetization has affected the real estate sector?
It’s an incredible move by the government. It will help establish norms and bring transparency in the real estate sector. According to me, it will not have any impact on the primary residential real estate market. Small players will be the most affected with this decision as most of their transactions are in cash. As renowned builders and developers use banks as a medium for their transactions. Demonetization will also lead to correction of real estate prices in market where most of the investments was done through black money.
People who have stashed a lot of black money will have a huge difficulty. With this decision, everything will come into forefront and under the scanner of tax department. Actual investors/customers won’t be affected much. I see a way forward for home loans. I envisage that there will be a slight imbalance in liquidity in the market. We need to see how fast the money gets circulated, how fast the liquidation creates a way for the real estate industry.
Do you find adequate project finance for funding real estate projects?
Project finance is very limited in this industry. Developers having a good brand equity and good financials are the ones who have access to project finance. Private equity firms need to begin infusing equity capital rather than only debt if the industry has to thrive in the long term. With RERA and other regulations coming in place, the amount of transparency will increase thus making project finance more widely accessible to developers.
What's your take on adopting green building development?
According to me, using fewer resources efficiently, reducing pollution on industry level, preserving greenery in the area are some of the solutions for a sustainable future home. To contribute towards the environment, developers are now keen to add green features in their projects. At Belmac, we have spent qualitative time on designing green solutions in our project. Usage of right materials, installation of sewage water treatment plants, external swamps for rainwater harvesting with separate storage tanks, installation of solar panels, are some of the eco-friendly features at Belmac. We have built hydroponic farms, which offer nutritious super food to promote a healthy community. The project has 70% greenery at its site and we have also tied up with Swach for waste segregation and garbage collection.
What can be the impact of Real Estate Regulatory Act, 2016 (RERA) on the real estate companies and the buyers at large?
Currently the real estate sector in India is largely unregulated, leaving consumers with little recourse to redressal in case a developer defaults on promises. With the bill coming into force as an act, RERA has promised to introduce more efficiency and regulations for those seeking to protect the welfare of homebuyers, as well as help boost investments. RERA will boost customer sentiment to invest money into the real estate sector and increase cash flow. It will also reduce discrepancy and malpractices with regards to project delays. The act will help in injecting FDI in Indian real estate by strengthening transparency and accountability in the organisation. We understand the importance of RERA hence at Belmac, we have already incorporated the key elements of the Act: Escrow account for customer receivables, all approvals in place, APF’s with all major banking institutions, a MOFA compliant Agreement, are some of the aspects that we already follow.
Is there any hope for common man to buy home at affordable rates?
With the increasing population, demand for housing as a basic necessity has come to the forefront of even the middle class population for India. The Govt. of India has made affordable housing a national agenda with a mandate of 22 million homes by 2022. The Union cabinet has also passed the Real estate Bill and it has various positive measures for the industry such as single window clearance for real estate approvals. This will be an opportune time to lead the real estate sector towards the affordable housing goals. Though we see these positive announcements being made, real estate still remains elusive for a common man in India and a lot needs to be done to meet the affordability of a home buyer in India.
India under the leadership of Prime Minister Narendra Modi gears up to develop 100 Smart Cities across the length and breadth of the country. What kind of opportunities do you see for your company in the Smart Cities development?
India's Smart Cities Mission will provide opportunities for high volume real estate development considering the highest chunk of the proposed capital investment in smart cities. About 89% of the capital investment has been allocated to build environment (urban development & housing, buildings, waterfront development etc.). The Smart City initiative would be a game changer in raising the standard of infrastructure in Pune. Pune Real estate sector will be impacted positively with a momentum to the infrastructure growth as well as the economic activity for Maharashtra.