View Point

The Changing Scenario of Management Education in India
Prof. C. S. Venkataratnam, Member, FICCI Higher Education Committee & Director, IMI, New Delhi
Ms Shobha Mishra,
Joint Director & Team Leader, Education & Health Services Division, FICCI
AcademiaArticle: Towards a successful career
path: MBA in Retail Management
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By A Reporter

Affordable housing appears to be the flavor of the day. A recent FICCI survey on 'Indian Real Estate: Current Scenario' reveals that 34 per cent of the demand in the residential segment is in the price bracket of 5-15 lakh; 26 per cent in the bracket of 15-25 lakh; 22 per cent in the range of 25-40 lakh; 12 per cent in the range of 35-50 lakh whereas a mere 6 per cent for properties priced above 50 lakh.

The FICCI survey reveals that parking funds in affordable housing projects has emerged as the safest bet for the developers followed by developing demand based commercial spaces. SEZs and the retail segment are expected to be the least preferred asset class to drive the sector towards recovery.

According to the survey, although the real estate sector has started to show some signs of revival a majority of the industry experts expect the residential segment to recover by the end of 2009 with a 25-30 per cent renewal in demand. The commercial segment expected to pick up after the third quarter of 2010.

Real Estate experts believe that retail segment will revive only marginally by the end of 2009 by about 10-12 per rise in demand and will recover only by the last quarter of 2010.

Real Estate developers now seem to concentrate on high volumes and lower margins as against low volumes and higher margins and have shifted focus towards the affordable housing segment. Respondents strongly believe that although 'Rajiv Awas Yojana' is a laudable scheme its success lies purely in its implementation.

According to the survey findings, the stimulus packages and interest rate cuts have to an extent eased the accessibility for bank finance for the developers. However, banks are still cautious in lending and prefer lending to credible developers and for projects that are nearing completion to lower the risk.

Developers feel that transparency in operations by the developers could enhance their credibility and would help easy access to credit. While QIP (Qualified institutional placement) has emerged as one of the most sought after mode of raising fund in recent times, lack of awareness about REMFs and the ambiguous policy framework has led to the funds not haven taken off well in the Indian market. The taxation and exit related issues need to be resolved and the guidelines need to be comprehensive and transparent for them to do well.

The problems dogging the real estate sector were ranked by the respondents in the following order: Lack of standardized policies is the most serious issue. Multiple state laws hinder and delay the execution of projects; absence of single window clearance emerged as the second most critical issue; unclear land titles pose a major challenge in the development of the real estate sector; computerization of land records should be taken up by all states and unavailability of cheap of land for low cost mass housing projects.

The measures suggested by the respondents to overcome the pressing problems include: Granting infrastructure status to Real Estate (Including Housing, Townships & Commercial Buildings) for easy access of funds from banks; initiate PPP in low income housing in order to support the construction sector to drive housing projects in the affordable segment; service tax on renting immovable property should be abolished and streamlining and increased harmonization of registration and stamp duty rates across the states is essential and simplifying/reducing levels of taxation on various components (VAT, service tax, excise duty, stamp duty, registration, license fees) at central and state level.

As per the findings, the biggest hurdle facing the Green Building Concept in India is that of ignorance towards the long term benefits of such buildings. This is followed by a lack of integrated designing and insufficient infrastructure to support the green building construction. By laws should make it mandatory for the developers to adopt sustainable and green methods of development. Other issues facing the concept are a lack of awareness amongst developers and resistance towards adopting new practices and innovative practices.