Archive by category "Sustainability/GREEN"

Bridging the Gap between Sustainable Development & the pace of activity in Real Estate

As the nation embarks on its ambitious drive to boost infrastructure development and create 100 Smart Cities, there are concerns amongst environmentally-conscious citizens about the deleterious environmental impact. Globally, development and environment protection are perceived as antithetical goals. This need not be the case, if developers work on creating sustainable community living that promotes a healthy, active lifestyle.

In advancing the twin goals of national development and environmental protection, all companies should adopt the mantra of the three Rs: Reduce, Reuse and Recycle. Accordingly, the focus should be on sustainable development through the use of environment-friendly construction materials, energy conservation & renewable energy sources.

Although there’s no gainsaying that the realty industry uses trillions of kilos of wood annually, every developer should make it their corporate goal to plant 10 robust saplings for each tree cut down. While all the saplings won’t survive into adulthood, if well cared for, the final count will still be higher than that cut down.

Today, buildings account for almost 50% of the world’s energy, 1/6th of fresh water and 1/3rd of greenhouse emissions. Even if half of this consumption could be saved by efficient building designs and use of green technologies, the resultant impact on both the operating costs of businesses as well as the impact on environment will be enormous.

GREEN buildings have insulated roofs with reflective surfaces or even a roof garden. Outer walls are painted in light colours, ensuring lower heat absorption. Non-toxic paints, fly-ash bricks and bamboo are used to boost the green quotient. A green complex will also recycle water, switch off electrical appliances when not in use, recycle waste, save, and in some instances even generate energy, resulting in further bottom line savings. For an overall sustainable impact, the sewage treatment plants should be mandatory to treat waste water for use within a project. Rainwater harvesting pits should be built in all realty projects to capture the runoff from roofs and other areas. This can be filtered and made fit for use within the project, besides helping recharge the groundwater of the area.

A certified green office complex can assure a 25-50% saving on energy consumption costs and up to 40% reduction in water usage through innovative architecture and eco-friendly technology. It also produces 70% less solid waste and emits 35% less greenhouse gases. To achieve the best standards of Green construction, a net-zero energy home works on the principle of utilizing max renewable energy, independent of any electricity grid, by conserving the energy it consumes. Designed to be resource-efficient, GREEN structures use energy, water and other natural resources optimally, reducing the overall impact on environment – thus sustaining a healthier tomorrow. Operation costs go down dramatically with less electricity consumption over a sustained period of time.

Recycling and limited use of water and other resources results in great value for money. It ultimately leads to a higher absorption rate as well as attracts higher rentals due to the payback mechanism in the long run. As a result, buyers and tenants are getting increasingly aware and inclined towards sustainable real estate.

To boost the anticipated demand for “Green” projects, a comprehensive training framework needs to be put in place with a target of producing green certified structures. Given that the ‘’Green’’ market in India is at a relatively nascent stage, many challenges still need to be overcome to ensure its success. Besides a lack of skilled professionals which could impede the ability of the market to meet the demand for green buildings, there is also the challenge of ensuring the flow of adequate investments into green building projects.

Nevertheless, the Green building movement is gaining momentum, and there is absolutely no doubt that with rising awareness, aided knowledge and friendly policies from the authorities, the fast pace of infrastructure and development will be optimally balanced by the adherence to environmentally sustainable practices, in the time to come.

Green Buildings & India’s potential for Green Structure

Today, buildings account for almost 50% of the world’s energy, one-sixth of fresh water and one-third of greenhouse emissions. The energy drain is due to the dependence on conventional energy sources for power, coupled with lack of efficient energy utilization.

There is however a positive change being witnessed across societies. Green Building, which makes use of such design and construction features that offer intelligent choices in the use of water, power and recycled material, is the new paradigm in real estate. In the Indian context, as the number of environmentally-committed consumers and companies is growing fast, the real estate sector is also witnessing a sweeping change. What is pushing this trend further is the increasing awareness and concern about the impact of buildings on human health, environment and the economy. Even if half of the existing consumption is saved by efficient building architecture-design and use of green technologies, the resultant benefit on both the operating costs of businesses and the environment will be enormous.

A certified green office complex can assure a 25-50% saving on energy consumption costs, up to 40% reduction in water usage, produces 70% less solid waste and emits 35% less greenhouse gases. A green complex will also recycle water, switch off all electrical appliances when not in use, recycle waste, save and also generate energy, resulting in further bottom line savings. Studies around the world show a pattern of green buildings being able to more easily attract tenants and to command higher rents and sale prices. As green homes are evaluated for a 10-20% premium on rental costs than conventionally built homes, they are also able to hold their price over the long run. A study conducted on life cycle costing on GRIHA rated green buildings in India concluded that “Green buildings are a boon to investors, yielding high returns as compared to investments in conventional buildings or other investments, in a shorter duration’’. The results suggest that an otherwise identical commercial building with an Energy-Star certification will rent for about 3% more per sq. ft.; the difference in effective rent is estimated to be about 6%. The increment to the selling price may be as much as 16%.

The “greening” initiatives of India’s building and construction industry received a boost recently when the country was ranked #3 among a list of the top 10 countries in the world by the US Green Building Council (USGBC) for LEED outside of the US. From a modest beginning of 20,000 sq. ft. in 2001, the country now boasts of 1 billion sq. ft. of green building area. India’s total built-up space of 25 billion sq. ft. is expected to increase to 80 billion sq. ft. by 2030. The share of green buildings in this construction boom could be as high as 20%. The Govt.’s ambitious plan of developing 100 smart cities will also provide the much-needed impetus to scale up the green index.

At the same time, demand for high quality, energy efficient, commercial office and retail spaces by multinationals, IT-ITES sector, health care and services industry, will spur the growth of green projects across India. Improving energy efficiency standards like the Energy Conservation Building Code, stricter government regulations and environmental policies will also create the necessary momentum and ground for the green building movement to prosper. Other incentives such as providing additional floor space, granting transferable development rights, fast tracking approvals and interest subvention can go a long way to promote green buildings.

To meet the anticipated demand for ‘’Green’’ projects, a comprehensive training framework needs to be put in place to nurture a core group of green building professionals with the well laid down target of producing green certified structures. There is also the challenge of ensuring the flow of adequate investments into green building practices and projects. A push on the policy front with tax incentives could bolster the trend, as it has in countries like the UK, the US, Japan, France, South Korea and China. For instance, framing policies that lower the tax component on all aspects of green building construction (design, material, solar or wind and other renewable energy sources plants, rain-water harvesting plants etc.) will surely give an impetus to development of more green projects and green investments in the real estate industry.

Advantages of buying a Property in Noida

By virtue of its planned development and well-developed infrastructure, Noida is one of the most preferred destinations for buying property in the NCR today. It is one of the most planned regions in the NCR with an excellent road network, drainage and sewerage facilities, water and underground power system. Abounding in reputed schools, retail plazas and malls, restaurant and leisure hotspots, hotel and hospital chains, the city stands out for planned layout of residential and commercial zones. Planned IT parks and industries, which serve as important avenues for providing employment and drawing in homebuyers, add to Noida’s appeal as a self-sustaining city.

Located very close to Delhi, Noida also enjoys excellent multiple connect points with the capital city and other parts of NCR. The social and physical infrastructure is comparable to Delhi, and some would say better than Gurgaon even though property prices are higher in those places. As a result, Noida and its sub-markets have emerged as an alternative cost effective office and residential destination to Delhi and Gurgaon.

The advent of Metro in Noida about five years ago proved to be the tipping point in the region’s accelerated growth and development. Though Noida had come to be regarded as an established industrial and IT hub by the mid-2000s, the enhanced connectivity in the wake of Metro magnified the region’s appeal as a nerve centre of office, retail and residential development. Ever since Metro rail arrived in Noida in 2009, there has been a surge in the number of residential and commercial projects launched in the region. Extension of Metro link to Kalindi Kunj and Greater Noida, expected to be completed by 2017, will further raise the real estate profile of Noida.

With quality infrastructure, metro connectivity and good road network, real estate development in Noida has picked up a fast and furious pace. New and upcoming infrastructure projects are catalyzing fresh demand and growth. Several plans to further improve infrastructure facilities and promote real estate development in line with the revised master plan 2021 has been set in motion by the Noida Authority. Plans are afoot to build and develop more numbers of wide roads, elevated roads, flyovers, underpasses, bridges, roundabouts on expressways and sewer-treatment plants besides also setting up a new 400MW power grid and augmenting and broadening supply of Ganga water to more residential sectors. An estimated Rs.6,000 crore has been budgeted in the current financial year for infrastructure upgrade. The aim obviously is to bring Noida closer to the world city tag it aspires for.

The anticipated gains from prospective developments along with the continuously rising demand for residential, office and commercial space has inspired all major developers to plan and launch new projects. With so much development going on and in the pipeline, real estate here is set to acquire greater value. Quite expectedly, commercial and residential properties stand to gain from handsome capital appreciation over a period of time. This apect alone explains why Noida is such a hot choice for investing in property. To make investments in Noida even more appealing, many upcoming commercial projects today offer 12% assured returns. Factoring in the rental income along with growth in capital value over the years, the rate of return would be much higher.

Returns are no less alluring for investors in residential property as well. Property analysts opine that the appreciation in prices in the already established prime sectors of Noida is 30% annually while in the new and upcoming areas capital value appreciation is 10-15% YoY. As property prices continue to rise due to strong demand, the opportunity to earn large capital returns is very bright. Now, with mixed-use developments on the rise, the chances of appreciation are still higher.

Take, for instance, price trends in Sector-79, one of the prominent localities in Noida where our own Lotus Greens Arena project is coming up. In the April – June quarter of 2014, property prices appreciated to Rs. 4795 per sq. ft. from the quarter earlier. In the July-Sep 2014 quarter, the prices appreciated further to Rs. 4950 per sq. ft. Even in the new emerging pockets, such as those along the Noida Expressway, property prices have risen 9 per cent annually—from Rs. 4,300 per sq. ft. to Rs. 5100 per sq. ft.— between March 2012 and March 2014.

With average property rates in the range of Rs. 4,200-5,000 per sq. ft. and onwards, depending on the size of the property, amenities on offer, and location, Noida offers a wide array of options in the affordable, mid-ticket and luxury housing categories. From budget apartments to luxury villas, commercial complexes to retail spaces and hospitality, there are options and ticket sizes to suit the needs of different pockets and buyer segments. For instance, in prime residential sectors such as 44, 45, 50, 51, the price range of Rs. 5,500 – 9,500/sq.ft. is the general benchmark in the primary and secondary markets.

In the belt encompassing sectors 71- 79, which is currently witnessing good traction, properties are priced in the range of Rs. 4,000- 6,000/ sq.ft. In sectors 93, 96, 97, 98, 100, 110 and 126 to 137 and further to 143, 150, 168, which are aligned with the Noida Expressway, the areas in close vicinity to Delhi command prices the range of Rs. 4,000- 8,000 /sq.ft while price levels are more affordable for sectors comparatively more distant from Delhi.

But for homebuyers looking to a great combination of locational advantage, affordability, and features, sectors such as 78, 79, 75, 76, 82, 100, 104, 110 and upcoming sectors from 116-123, 137, 143, 144, 150 and 168 along the Noida-Greater Noida Expressway offer a large bouquet of investable options with their relatively lower prices and the incentive for future capital appreciation. While demand for mid-ticket housing is high, premium properties too have attracted buyers in prime locations along the expressway such as in Sectors 93, 96, 97, 98, 100, 104, 107.

All these sectors offer great scope for strong and sustained growth for all segments of the realty sector. Many of these locations enjoy mixed land use development, with easy accessibility to malls, schools, colleges, banks, MNCs & IT companies. Development drive in and around these sectors is inching up month by month, hence most of the sectors are poised for massive growth due to the rapid pace of realty expansion. A slew of luxury hotels, office space, retail outlets, and shopping malls are coming up at these locations, which will light up the commercial landscape of the region. With people increasingly looking to live in the affordable areas, demand, prices and rents will keep pushing up in the new emerging areas of Noida in the years to come.

Retooling PPP for sustainable Infrastructure Development

The Infrastructure story in India took off in right earnest about 20 years ago with the National Highways Authority of India adopting the public-private partnership model for the development of highways. Till date, over 240 highway projects have been implemented by the NHAI through the PPP route, despite the exit of a few private developers from PPP projects in recent years. The popularity of public-private partnerships in the delivery of public services continues to grow and spread. In recent years, the demand for infrastructure has grown phenomenally making it difficult for the public sector and government agencies to fund big projects by themselves. It has therefore become increasingly common for the public sector to look up to the private sector to provide financial resources, innovation, and technical expertise through the enabling framework of a PPP contract. Out of the proposed allocation of Rs. 51 lakh crore towards infrastructure investment during the 12th Plan period (2012-17), 47% is expected to come from the private sector.

According to a World Bank report, India ranks as the largest market for PPP in the developing world. Currently, there are over 900 PPP projects in various stages of development. These projects are spread over various sectors such as power, water, health, education, energy, roadways, railways, airports, ports, tourism and urban development.

Private enterprises have developed metro airports in Bangalore, Hyderabad, Delhi and Mumbai. The concessions for the operation of container trains have been awarded under PPP. New milestones have been reached with different forms of PPP implementation – turning minor ports into major revenue sources, such as in the State of Gujarat. Budget 2014 has given a further fillip to PPP projects by announcing new infrastructure projects on a mega scale. Among the most prominent is the 15,000 km gas pipeline. The most promising initiative in terms of boosting infrastructure development has been to allocate Rs. 500 crore for 3P India, a new institution tasked with the responsibility of refurbishing the PPP model.

Planners and development experts agree that PPPs can bring about constructive and productive partnership between the public and private sectors, which can be particularly useful and beneficial for developing infrastructure. For instance, India’s largest public sector behemoth, Indian Railways, which needs huge capital investments to finance bulk of its future projects such as high-speed rail and more freight corridors, is looking to raise substantial resources through the PPP route. Disclosing that the government needs more than Rs.9 lakh crore to complete the Golden Quadrilateral Network and another Rs 60,000 crore to introduce one bullet train alone, railway minsiter DV Sadananda Gowda, while presenting the railway budget in Parliament asked the House, “Can I depend only on hiking fares and freight rates and burden the public to realise these funds? This is unrealistic. I need to explore alternate means of resource mobilisation.”

As per a report (India’s urban awakening) by McKinsey Global Institute (MGI), India needs to invest $ 1.2 trillion over the next 20 years to modernize urban infrastructure and keep pace with the speed of urbanization. The need to upgrade India’s infrastructure is especially acute in its huge cities with the urban population projected to reach 500 million by 2017 from 377 million, according to the 2011 Census. Projects such as mass transit systems, better rail connectivity, industrial corridors, smart cities, highways and expressways, energy investments, new airports, etc, will be needed to uplift the quality of living for people in the city and regions around it. It requires government and industry stakeholders to come together to promote and encourage PPP models as a way to financing and delivering capital projects more efficiently and effectively.

Successful PPP models not only create long term infrastructure for public use, they help to earn decent returns for investors while begetting revenue share for the government, which also stands to gain from ownership of assets at the end of the concession period.

Strengthening our institutional mechanisms for PPP is a pre-requisite to its successful implementation and the recent initiatives will help the PPP model to become more robust. As PPP models are complex structures, care has to be taken that we structure and design PPP projects in a way that helps to improve transparency, creates investment incentives and allows for expertise to develop and negotiate complicated contracts. To make the best use of the opportunities PPP offers for sustainable infrastructure development, we must focus on improving the transparency and the accountability of the projects. In this context, it is important to analyse the projects well before tendering. Global experience and PPP best practices have established that highly competitive outcomes can be achieved with 3-4 competent bidders.

At the same time there is an urgent need to modify our approach to the planning, bidding and execution of infrastructure projects, and how we approach issues of infrastructure maintenance, management and operation. To begin with, the interests of “owners” and “contractors” should be aligned in PPP projects. The focus should be on optimising the total lifecycle costs instead of only the up-front costs. It therefore becomes all the more necessary to adopt the right contractual structure and allocate risks fairly.

Acting on these fronts will ensure that partnerships for infrastructure development yield the expected fruits – for the investment partners and for the communities supposed to benefit from them. We hope that the new government, with its emphasis on establishing a climate of lasting trust and real partnership, will be able to make PPP an effective instrument for serving the wider public good. At a time when people are looking up to the government to deliver on the huge expectations it has helped to build, PPPs can be the right medium for improving the lives of the people through more inclusive and sustainable development partnerships.

India’s Potential for Green Buildings

Globally, buildings are responsible for 1/3rd of greenhouse gas emissions. This is mainly on account of 2 reasons:

  • Buildings rely on conventional energy sources for power
  • Most buildings do not use energy efficiently

Green Building, which makes use of such design and construction features that offer intelligent choices in the use of water, power and recycled material, is the new paradigm in Indian real estate. As the number of environmentally-committed consumers and companies is growing fast, the real estate sector is also witnessing a sweeping change. What is pushing this trend further is the increasing awareness about the impact that buildings have on human health, environment and the economy.

Today, buildings account for almost 50% of the world’s energy, 1/6th of fresh water and 1/3rd of greenhouse emissions. Even if half of this consumption could be saved by efficient building designs and use of green technologies, the resultant impact on both the operating costs of businesses as well as the impact on environment will be enormous.

A certified green office complex can assure a 25-50% saving on energy consumption costs and up to 40% reduction in water usage through innovative architecture and eco-friendly technology. A green complex will also recycle water, switch off all electrical appliances when not in use, recycle waste, save, and in some instances even generate energy, resulting in further bottom line savings.

A certified green office complex not only has a positive environmental impact, it results in many direct financial benefits to the owners as well the tenants. On an average, certified green buildings (such as LEED):

• Consume 25-50% less energy

• Use 40% less water

• Produce 70% less solid waste

• Emit 35% less greenhouse gases

Thereby not only delivering a positive environmental impact, but direct financial benefits to the owners and tenants.

Taking into account the multiple benefits that green buildings offer, the green building trend in India is gaining both speed and strength.  According to one estimate, over the next three to four years, about 200 million sq. ft. of commercial space and 45 million sq. ft. of retail space is expected to be constructed across major cities in India, which indicates that there is a great opportunity for developers and consumers to promote and embrace the concept of green buildings.

Studies around the world show a pattern of green buildings being able to more easily attract tenants and to command higher rents and sale prices. This is because material used in green home projects is more durable than conventional ones. As green homes are evaluated for 10-20% higher values than conventionally built homes, they are also able to hold their price over the long run.

A study conducted on life cycle costing on GRIHA Rated green buildings in India concluded that “Green buildings are boon to investors, yielding high returns yielding high as compared to investments in conventional buildings or other investments, in a shorter duration’’. Another study on commercial building which have obtained Energy Star Label and or LEED rating clearly indicated its importance in affecting market rents and values of commercial space. The results suggest that an otherwise identical commercial building with an Energy-Star certification will rent for about three percent more per square foot; the difference in effective rent is estimated to be about six percent. The increment to the selling price may be as much as 16 percent.

The “greening” initiatives of India’s building and construction industry received a boost recently when the country was ranked #3 among a list of the top 10 countries in the world by the US Green Building Council (USGBC) for LEED outside of the US. From a modest beginning of 20,000 square feet in 2001, the country now boasts of 1 billion square feet of green building area.

Evidently, the green building movement in the country is getting well entrenched and looks set to change the course of the construction industry.

IGBC estimates that the Indian green building industry will be a $100-billion opportunity by 2015. India’s total built-up space of 25 billion square feet is expected to increase to 80 billion square feet by 2030. The share of green buildings in this construction boom could be as high as 20%. The government’s ambitious plan of developing 100 smart cities will also provide the much-needed impetus to the green building movement. Besides using information and communications technologies (ICTs), most smart cities will have to adhere to green building norms and reduce carbon emissions. This would make them both ‘smart’ and environment friendly.

At the same time, demand for high quality, energy efficient, commercial office and retail spaces by multinationals, IT-ITES sector, health care and services industry, will spur the growth of green projects across India. Improving energy efficiency standards like the Energy Conservation Building Code, stricter government regulations and environmental policies will also create the necessary momentum and ground for the green building movement to flourish and bloom.

To meet the anticipated demand for ‘’Green’’ projects, a comprehensive training framework needs to be put in place to nurture a core group of green building professionals with the well laid down target of producing green certified structures. Given that the ‘’Green’’ market in India is at a relatively nascent stage, many challenges need to be overcome to secure the success of the movement. Besides a lack of skilled professionals which could impede the ability of the market to meet the demand for green buildings, there is also the challenge of ensuring the flow of adequate investments into green building practices and projects. In an unstable real estate market scenario, the difficulty in sourcing green building materials and convincing developers to invest in green projects becomes all the more challenging.

A little push on the policy front and some tax incentives could help the green building trend in India’s real estate development to come into its own, as it has in countries like the UK, the US, Japan, France, South Korea, and China among others. Exploring various policy interventions at different levels can turn green building a grassroots agenda in India too. For instance, framing policies that lower the tax component on all aspects of green building construction (design, material, solar or wind and other renewable energy sources plants, rain-water harvesting plants etc.) will surely give an impetus to development of more green projects and green investments in the real estate industry. Other incentives such as providing additional floor space, granting transferable development rights and interest subvention can go a long way to promote green buildings.

Reforms to unleash Real Estate industry’s potential

At a conference in New Delhi recently, Union Urban Development and Housing Minister M. Venkaiah Naidu said the Government is holding discussions with various ministries on the need for single window clearance and also about giving infrastructure status to the real estate and housing sector. The minister also said the Government will introduce the Real Estate (Development and Regulation) Bill in the coming winter session of Parliament.

Judging by the spate of new policy measures and announcements over the past few months made by the new government at the centre, the minister’s pronouncements raise hope that the government means business and is serious about carrying out reforms in the real estate sector. In fact, some of the issues referred to by the minister have been raised by the industry time and again, and are long overdue.

Take, for instance, issues related to the granting of infrastructure status to the real estate sector, provision of putting in place single window clearance system and the passage of the real estate regulatory bill. The industry has flagged these issues for several years now and has been vociferous in asking the government to take initiatives on these policy fronts.

After all the toing and froing and years of foot-dragging on the matter, it seems that at last the industry may be close to gaining a policy breakthrough. Some of the recent measures and announcements of the government certainly portend good news and better times for the real estate industry. At least, the actions convey a new sense of purpose and resolve on the part of the government to move ahead in carrying out the much-awaited reforms in the real estate sector, which contributes about 6.5% to the national GDP and is a lifeline to several ancillary industries.

Within days of assuming power, the government made a bold vision statement of providing “housing for all” by 2022. Other fairly substantive moves include the programme for establishing 100 smart cities, the recent notification of norms for launching REITs, efforts to bring in more flexible modifications to the new Land Acquisition and Rehabilitation and Resettlement Bill and the easing of norms currently underway for facilitating higher FDI in construction development sector.

The industry is waiting to welcome the roll out of more friendly policies and reforms so as to attract a lot of greenfield investments and new projects. Going ahead, we hope government action on several other fronts such as simplification of approval processes for real estate projects, higher FAR to ease cost pressure for developers and end users, push to sustainable construction, easier norms for real estate funding and the passage of real estate regulatory bill. Some regulatory push may also be in order for incentivising developers who are adapting practices for sustainable developments and affordable housing.

According infrastructure status to the industry will benefit the sector immensely. Taking this step alone would go a long way in resolving the issue of funding for real estate projects, reduce the timeline for project completion and thereby help to cut the overall cost of construction. Infra status for housing would help make projects more price-competitive for the end users and give developers the incentive to push for more sustainable construction and take up affordable housing in a big way.

Similarly, the implementation of the real estate regulatory bill will pave the way for a more attractive and transparent real estate market. The main purpose of the Bill is to safeguard the interest of customers and help developers do business as per stipulated norms. It will also improve market sentiments further and help to reinforce customer faith in the sector.

For example, the provision to launch or market a project only after receiving all necessary approvals will benefit customers and pre-empt projects that don’t have all the approvals in place. Misleading project advertisements will also become passé or risk attracting a penalty equivalent to 10% of the total project cost. Repeat offences could land defaulters in jail, with a full refund of the principal amount along with interest to buyers becoming due. Housing units will also need to be sold as per ‘carpet area’ (which denotes the wall-to-wall area inside a house) instead of the presently popular ‘super built-up area’. Additionally, with developers having to register all projects with the regulatory authority before commencing construction, customers would be able to track the status of every project.

On the whole, the passage of the Bill would be a welcome development for the industry, although the outcome would be even better if it also includes a mechanism for single-window clearance. With over 33 clearances required for a project from different authorities, unwanted delays abound for no fault of developers. Securing such approvals usually takes a minimum of eight months and can even stretch to a few years. Prolonged timelines trigger cost escalations beyond the control of developers, which get eventually passed on to customers.

Another point of concern, from the developer point of view, is the clause stipulating the creation of an escrow account on the part of a developer for each of his project. As per the clause, developers need to park 70% of buyers’ payments to facilitate timely completion. Thereafter, 10% extra could be added to the construction cost and that amount escrowed. Though the intention is commendable, the outcome will be unfair to developers, who would be victimized for delays in approvals over which they have no control.

As a real estate player, we therefor believe that a real estate regulatory bill, which provides for single window clearance as well, would bring about a paradigm change in the functioning of the real estate industry and be a win-win proposition for both developers and customers. While the concept of escrow accounts is sound, the target amount should only be formulated after consulting developers. Blocking the cash flow of developers is not good for the industry or customers because it will impact delivery schedules.

Moreover, construction costs vary across regions. In some cases, 30% may be required for construction, whereas in others it could be more or less. Given that approvals, debt and holding costs are high in realty, blocking 70% in escrow accounts will severely hamstring developers.

Overall, the government’s intention to eliminate ambiguities and introduce transparency through the Bill is creditable. Its implementation will reassure customers and also inspire developers to follow corporate governance guidelines as well as global best practices. As far as some of the reservations that remain about the Bill, the industry is hopeful that the government will, in consultation with all stakeholders, bring about the necessary amendments to ally the apprehensions of the industry. Ultimately, what’s required is a real estate bill addressing the concerns of all stakeholders, not just one section.