The real estate sector plays an integral role in the economy and has contributedsignificantly to the country's overall gross domestic product (GDP). The sector has demonstrated unparalleled growth over the years, and currently accounts for almost 5 per cent of the total GDP. Real estate is poised to become one of India's largest sectors, with large companies entering the business and existing developers launching new projects to cater to the huge demand-supply gap.

However, it is also important to highlight that the real estate sector is still in a nascent stage, in terms of transparency and objectivity. With large-scale transactions across key real estate markets , there is a serious requirement for transparency and streamlining.

There are regulatory bodies that govern key sectors including telecom, finance, aviation and ports. The long awaited Real Estate Management (Regulation and Control) Bill, is expected to establish a regulatory agency in a bid to restructure the sector , is due for introduction. Several proposals for a Central Real Estate Regulatory Authority have also been mooted in the past by various administrative ministries.

But given the absence of a central regulatory body in the Indian real estate and construction market, it is essential for industry veterans and long term stakeholders to take proactive measures in safeguarding and educating consumers and investors.

There is a lot of speculation and ambiguity in the market and it is not easy for real estate developers to instill confidence in home buyers or establish credibility for their projects. Prospective home buyers find it difficult to get credible information relating to to land records, quality of construction, finances and background of the developers.

Some of the key transparency issues in the Indian real estate sector are:

Clear land title: There are fundamental difficulties that result from unclear property titles. According to various surveys a major proportion of land in India does not have clear titles. This is due to poor record maintenance and outdated processes. Projects are announced, but are later revoked because of an unclear land title.

Area of housing units: Clarity regarding carpet area, built-up area and super built up area needs to be provided to the customer. This will help them understand what are they paying for and the area such as garden, space, parking, recreation space that are included.

Assured amenities: Sales agreement and brochures comprise a list of several amenities and facilitates that are assured by developers at the time of purchase and are part of the total price component. However in some instances, developers delay or fail to provide these amenities post possession of the apartments.

Project completion issues: Several factors including, lack of funds, demand-supply mismatch and budget overrun, poor planning and execution, are the main causes for delay in the completion of projects.

It is also important to note that there are real estate developers who ensure professional standards. So, is there a method in which real estate developers can opt to distinguish themselves and acquire credibility for their projects more efficiently?

Excellent initiative

The recently launched Crisil star ratings' for real estate projects is an excellent initiative introduced with the objective of benchmarking and ushering a transparency mechanism to an unregulated and fragmented sector.

Crisil evaluates projects and assigns a rating based on several stringent project-specific parameters such as the quality of legal documentation, construction-related risks and quality, the financial flexibility of the project, and the background and track record of the project sponsor. This multi-point rating procedure also includes document verifications, in-depth interviews with company officials, vendors, project architects, contractors and site inspections. Since the ratings are based on important parameters such as structural/construction quality, legal documentation, financial planning, project innovation, developer's background , they are likely to serve as an overall performance indicator for projects.

The key purpose of real estate star rating is to empower consumers and investors and facilitate credibility in the projects they are looking to invest in. These exclusive grades will also assist in providing credible verified information on projects to an extent, that the rating can aid the marketing efforts of projects and will play a crucial role by raising the bar in recognizing excellence in the sector.

It is also imperative that the ratings be assigned to developers should be purely on the merit of each parameter and should be reviewed consistently, until completion of the project.

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