The Hindu Business Line : Real estate developers protest against mandatory norm

REAL estate developers on Friday protested against a recent notification of the Ministry of Environment and Forests (MoEF), which makes it mandatory for them to seek clearance from the Ministry for any project above Rs 50 crore. They also called for reduction of stamp duty to five per cent levels in all the States.

A notification issued this July by the Ministry makes environmental clearance (EC) mandatory for all projects exceeding Rs 50 crore, or buildings housing more than 1,000 people or discharging more than 50,000 litres of sewage daily. Many States have also earlier protested on the move pointing out that it has led to lesser power in the hands of the States.

Speaking at the national convention of Confederation of Real Estate Developers' Associations of India (CREDAI), its Honorary Secretary, Mr Ranjit Naiknavare, said that this was one of the immediate concerns that needed redressal. The Hiranandani Constructions Managing Director, Mr Niranjan Hiranandani, also echoed similar sentiments and said the sector was ridden with corruption.

Experts also expressed concern on the rising land prices and said there was an urgent need to curb the same. The ICICI Bank Executive Director, Ms Chanda Kochhar, emphasised on the need to keep a close watch on upwardly spiralling land prices. "High land prices are going to create a problem for the industry," said Mr Hiranandani.

The HDFC Bank Executive Director, Ms Renu Karnad, said real estate developers should provide three-to-four years warranty to the buyers. "We are yet to see a warranty scheme in real estate development become a norm in India unlike the developed countries," she said. She also called for a single window clearance system for real estate developers.

The real estate industry could become a $100 billion industry by 2012 driven by an increasingly affluent and bulging middle class at the residential sector, said Ms Kochhar. The commercial real estate segment will witness a shift to Category B locations like Chandigarh and Jaipur as the Information Technology Enabled Services (ITES) segment moves to these cities, she said.

Many of the speakers, including those from ICICI Bank and HDFC Bank, called for relaxation of foreign direct investment (FDI) norms in residential real estate.

Mr Hiranandani also called for scrapping the Urban Land Ceiling Act across the country. "While Punjab, Karnataka and Gujarat have scrapped the Act, it still exists in States like Andhra Pradesh and Maharashtra."

Talking about the trends in the housing sector, the LIC Housing Finance Ltd Executive Director and Chief Executive, Mr A.K. Dasgupta, said that the growth potential is much higher in non-metros than in metros. The investments are likely to move towards non-metros since the demand supply gap is much higher in the non-metros, he added.

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