As per a recent report prepared by the global property consultant, CBRE, Assessing the Economic Impact of Indias Real

Estate Sector, The real estate sector of India is estimated to have a total pipeline of nearly 3.6 billion square feet lined up for completion in 2013, out of which 98% is concentrated in the residential areas. The real estate sector, an inherent component of the construction industry, has a tremendous potential in our country. The proper tapping of the real estate sector will also generate considerable economic opportunities. Real estate is also an employment intensive sector and the predictions are it will generate employment for at least 17 million people by 2025. However, exhaustive cooperation of the Government is necessary for the real estate to become an economically viable sector contributing consistently to the national GDP. The 2013 statistics of the real estate sector shows that an investment of Rs 2,54,000 crore is necessary for the implementation of the construction projects in the available land mentioned in the CBRE report which in turn will generate a revenue of Rs 3,70,000 crore and provide countrywide employment opportunity for 7.6 million people. Challenges faced by the Real Estate Sector The growth of the real estate sector, in spite of its immense potential to contribute to Indias economic development and its wide employment providing capacity, is restricted by many factors. Borrowing costs are extremely high, a creaky infrastructure undergoing very slow development, approval processes after crossing numerous red tapes prove to be extremely lengthy, a majorly choked supply line and of course lack of proper institutional funding are some of the major impending factors. Real Estate consultancy, Cushman & Wakefield, furnished a report on private equity (PE) in real estate investments according to which, Around US$ 2 billion (Rs 11,854 crore) is available with PE firms for deployment in the Indian real estate sector. However, PE investments plummeted by 46% in the first half of 2013. The PE investments recorded in the first half of 2013 was a discouraging US$ 276 million (approximately Rs 1,638 crore), as compared to last years valuation of US$ 514 million (Rs 3,050 crore) for the same period. 2013 also witnessed a very low number of major real estate deals, only 13 in the first half of 2013. Cushman and Wakefield attributes this to an uncertain market, and the sudden deceleration in Indias economic growth, the major factors for which are the record devaluation of rupee against dollar and political deadlocks (factors that has been plaguing numerous industries all over the country). However, Sanjay Dutt, executive managing director, Cushman and Wakefield, South Asia, commented, It is noteworthy that despite a slowdown in the construction market and reduced number of investment worthy projects in India, real estate features as the fourth most invested sector by PE funds. Currently, it was estimated that about US$ 2 billion is ready to be deployed in the real estate sector of the Indian market. Though PE funds are still interested in investing in the real estate sectors, the market sentiments paint an entirely different picture. Because of the current shadow of uncertainty looming over the market, funds other than the PE funds are only interested in investing in real estate deals with solid basis, so the exploration for the right projects continue, which is slowing down the development of the real estate sector. Points of encouragement Real estate has always been a much preferred investment sector due to the supernatant nature of the sector. An educated guess on the positive side is Indian economy will be able to turn around in time to arrest the free fall of rupee against dollar. That will definitely help to lift the shadow of uncertainty currently hovering over the market and prove to be a shot in the arm for the real estate sector. Besides the keenness of the PE funds to invest in the real estate sector is definitely another encouraging factor. Once again a positive anticipation would be that the Government will show further understanding and cooperation towards the real estate sector of our country and be proactive in resolving the political stalemates and introduce timely economic reforms that are posing to be major hindrances in the development of this extremely potential sector. Once the real estate sector gathers the necessary impetus, new doors to more investable options will be flung open, attracting a hefty investment from the core investors, both domestic and abroad.

The demand for ready office spaces is increasing steadily, which has already witnessed an investment of over US$ 1.3 billion (Rs 7,705 crore) in the past three years. 2013 also witnessed the highest PE fund investments in the real estate sector namely US$ 131.6 million in Pune (Rs 7.8 billion), US$ 67.5 million in Mumbai (Rs 4 billion), US$ 38.8 million in NCR (Rs 2.3 billion) and US$ 16.9 million in Bengaluru (Rs 1 billion). In spite of the 46% slump in the real estate sector, the contribution of this sector towards the National GDP has been an estimated 6.3%, quite impressive considering the volatile market. Biowonder, an architectural marvel, a gift of the real estate sector Covering an area of 4,00,000 square feet, Biowonder is the first ever environmentally positive (E+) Commercial Hub of eastern India (Anandapur, Kolkata) and is simply an architectural marvel. It has been built by the Pasari group which is a leading real estate developers of Kolkata, for housing the future offices of Kolkata. The minimum office space here starts from 4,000 square feet. Keeping the environmental issues in mind, Biowonder is an entirely environment positive architecture with enough green area incorporated on every floor. The offices of this building will be unique in nature, with open terraces and open ventilation attached to all the working spaces so there will be no dearth of fresh air. Added to this are effective light and pollution management, waste water energy plants and solar energy utilization assemblies to name a few. In addition to offices, this mammoth architecture will also house hotel, health clubs, restaurants, banquet space (10,000 square feet), business center, green lounge and infinite swimming pool, to name a few of the numerous available amenities. The Green Quotient is the USP behind the construction of Biowonder which is aimed to provide a better working atmosphere. Biowonder was awarded the B est Sustainable Development Award- Future at the Cityscape Global Awards for Emerging Markets organized by Cityscape Global in Dubai. It is just a small but important example of what the real estate sector of India is capable of doing for the people and the planet given the right leverage.

A real estate investment trust (Reit) is a novel investment mechanism being contemplated by the Securities and Exchange Board of India (Sebi). A Reit owns and manages income-generating developed property and is designed to offer common units to the public as an investment option. Such units represent ownership in the business of managing income-producing properties. Reits will provide an avenue to real estate developers to commercialise developed property, providing an exit avenue. It will also provide overleveraged companies an opportunity to deleverage. It will increase the depth of the Indian real estate market and provide additional liquidity. Reits would also enable people to channelise their investments into India's realty sector through a regulated mechanism. Since the investment in Reits is asset-backed, it is ideal for investors wanting to invest in real estate without the hassle of checks on property titles and the plethora of regulatory approvals. Considering the current economic slowdown and paucity of funds, Reits are expected to infuse a fresh lease of life into an otherwise choppy market. Uneven Road to Reits The draft Sebi (Real Estate Investment Trusts) Regulations, 2013, seem well thought out. However, much is desired to make the Reit structure commercially viable. The obvious and much-discussed road blocks are taxation of Reits, foreign investments in Reits and stamping of agreements relating to transfer of property to the Reits. In addition to these stumbling blocks, there is a need to fix the following issues to make the Reit regulations workable. One of the basic premises of the draft Reit regulations is the need to provide an exit avenue and liquidity. However, the definition of "real estate" seems rather constricted. The definition of "real estate" or "property" should be broadened to include all commercial and residential property and completed infrastructure assets such as roads and highways that have a regular income flow.

Policy Marshland This will widen the coverage of Reit regulations to cater to the funding requirements of not just real estate but the wider infrastructure sector in India. Further, the sponsor eligibility condition of five years' experience in the real estate industry on an individual basis should be widened to enable non-core real estate players like hotels, hospitals and other corporate houses with real estate to participate in Reits as well. The draft Reit regulations provide that a Reit cannot undertake an initial public offer without the prescribed minimum asset value. However, it may not be commercially viable for a sponsor to first transfer the assets and then approach the market for listing. Our lawmakers should amend this requirement and may consider a requirement to have the initial portfolio identified and tied in by way of definitive documents prior to the initial public offer and offering proceeds can be utilised to purchase the assets. Since the Reit would work akin to a mutual fund model, we can borrow afew concepts from the Sebi (Mutual Fund) Regulations, 1996, to make Reits more viable. The mutual fund regulations have a concept of co-sponsors that is conspicuously missing in the draft Reit regulations. Open Realty to Reality Currently, the minimum asset value of a Reit is marked at Rs 1,000 crore. While there is a need for ensuring financial soundness of the trust, one cannot dispute the fact that such a threshold will eliminate many small players. This can be reconciled by providing for the concept of co-sponsors, much like the mutual fund regulations. This would enable companies with a smaller portfolio to come together and set up a Reit. Further, clarity should be provided on the pricing and repurchase of unit along the lines of mutual fund regulations. In recent years, limited liability partnership (LLP) has emerged as a preferred vehicle for real estate developments owing to the various benefits due to it. The investment conditions with respect to Reits should be relaxed to permit investment in LLPs that house real estate assets, and the definition of "special purpose vehicle" and "body corporate" can be modified to include LLPs, thereby enabling real estate investments in LLPs that own real estate assets. Since Reit is a new product for the Indian markets, there may be an initial hesitation by the investors to explore Reits. Therefore, participation by anchor investor in Reits may be considered to inspire confidence among other investors to participate in the Reit. Additionally, discounts on the price of units to different investor categories may be considered to make investment more attractive. In conclusion, while the draft Reit regulations is definitely a step in the right direction for the real estate industry, it will not be a successful effort in mobilising real estate in India unless some of these key concerns are addressed. In the current scenario, where Indian real estate market is struggling with low sentiments, Reserve Bank of Indias (RBI) decision to keep the key policy rates unchanged, has surprised the real estate developers and property consultants. The rates had increased in the last two quarters and this somewhat contributed to the sluggishness of the real estate market. However, it seems that the decision to keep the rates unchanged this time, would infuse some positivity in the property market. In a recent decision, RBI kept the repo rate unchanged at 7.75 per cent, reverse repo rate at 6.75 per cent and the cash reserve ratio at 4 per cent. I think RBI has acted wisely by keeping the key rates unchanged. Though there was pressure to raise the rates due to the recent rise in Wholesale Price Index (WPI) and inflation. Still, the apex bank has managed to handle it and hold the rates to 7.75 per cent. This will give a positive signal in the market. We are confident that with a decrease in WPI and Consumer price index (CPI), RBI will also cut the key rates and bring it below 7 per cent by the next review. This is indeed a welcome step by RBI and will boost market sentiments, says Pradeep Jain, chairman, Parsvnath Developers. CREDAI-NCR President Anil Sharma says the RBI has sweetly surprised both the expe rts and industry players with its bold decision. We, at CREDAI-NCR, could not have asked for more given the high retail inflation of more than 11 per cent. The bold move by the RBI has infused positive sentiments in not only real estate sector but also other sectors of economy, says Sharma, who is also CMD of Amrapali Group.

The consistent efforts of the RBI have already stabilised rupee against dollar, besides providing short term liquidity support to push growth simultaneously, he adds. Experts are already expecting inflation to ease following arrival of winter crop in the wake of normal monsoon. Though the real estate developers community will have to wait little longer to see interest rates dipping, but given the right intentions of the RBI, we are confident of flawless run of growth thereafter, Sharma said. Developers are hopeful that RBI would soon be able to cut the key rates. Abhay Kumar, CMD, Griha Pravesh Buildteck Pvt Ltd says, I understand that real estate sector is in urgent need of rates c uts, but looking at the current micro and macro economic conditions, RBIs step is justified. We are confident that if economy evolves, RBI will definitely announce some rate cuts in future.With this decision, RBI has certainly given developers and property consultants a real reason to cheer the new year. Delhi's 60% rise in property prices over the past two years is nearly 20 percentage points higher than Brazil's Sao Paulo, which is the second fastest rising international property market. From the first quarter of 2011 to Q12013, Sao Paulo, the largest city in the Americas in terms of population, witnessed a 43% increase in real estate prices. Hong Kong, the third fastest rising market for the same period, saw its property prices going up by 33%. Dubai also appears to be in a recovery phase after the bust of its early 2000s property bubble. The city witnessed a 29% increase in its real estate prices in the last year. The West Asian city had witnessed a marginal decline in prices between Q1-2011 and Q1-2012. In the past two years, for which comparable data is available, only 12 of the 43 countries saw double-digit growth in property prices. Most of these are emerging economies, not surprising given the fact that Europe has been battling the century's worst recession. Other countries where property prices went up by more than 10% are Turkey, Estonia, Philippines, Norway, Iceland, Indonesia, South Africa and New Zealand. The data indicates that property prices in America, the world's largest real estate market, are increasing as its economy recovers. The US real estate market saw prices appreciating by 9% between Q1-2012 and Q1-2013 after declining over the previous year. Similarly, Beijing's property prices too registered 8% growth during Q12012 to Q1-2013 after dropping in the previous year. Other large economies which have witnessed a positive growth in property prices in the past two years are Germany and Japan, where real estate prices increased by 8% and 3% respectively. However, in Germany property prices fell by almost 2% over the last year after increasing by 9.8% between Q-1 2011 and Q1-2012. The property market remains sluggish in other large economies. While France, UK and Russia saw stagnant real estate prices in the past two years, most other European countries are witnessing steep fall. In Croatia, Netherlands and the PIGS countries prices have fallen by more than 10% during this period. The PIGS (Portugal, Spain, Italy and Greece - Southern Europe's most troubled economies) are witnessing the worst fall in property prices. Spain and Portugal witnessed a 15% decrease in property prices while in Greece they fell by 21%. Data was not available for Italy. In India, nearly all cities have witnessed an upswing in property prices. RESIDEX, the National Housing Bank's property price index, indicates that only two of the country's 15 big cities have witnessed a fall in property prices since 2007- the base year of the index. (RESIDEX is also the source of Global Property Guide for Indian real estate data) Except Hyderabad and Kochi which witnessed decrease in real estate prices the property market has appreciated across the country and many markets have witnessed growth, even better than Delhi. Faridabad, Pune, Kochi, Bhopal, Mumbai and Chennai have witnessed higher rise in property prices when compared to Delhi. In the six years from 2007 to 2013 property prices have more than doubled in Delhi, Faridabad, Pune, Kochi, Bhopal and Mumbai while they have trebled in Chennai.

Press Information Bureau Government of India Ministry of Housing and Urban Poverty Alleviation 14-August-2013 14:44 IST Real Estate (Regulation and Development) Bill, 2013 Introduced in Rajya Sabha The Real Estate (Regulation and Development) Bill, 2013, as approved by the Union Cabinet in its meeting on 4th June 2013, was introduced in the Rajya Sabha today . The Bill has been piloted by Dr. (Ms) Girija Vyas, Minister of Housing and Urban Poverty Alleviation . Soon after its introduction, the Bill was referred to the Parliamentary Standing Committee on Urban Development for review and making suggestions. The Bill provides for a uniform regulatory environment, to protect consumer interests, help speedy adjudication of disputes and ensure orderly growth of the real estate sector and has been much awaited by all aspiring home buyers. The Real Estate (Regulation and Development) Bill, 2013 is a pioneering initiative to protect the interest of consumers, to promote fair play in real estate transactions and to ensure timely execution of projects. The Bill has been prepared by the Government after extensive consultations with States, experts and stakeholders. The Bill has been supported by the States along with Ministry of Consumer Affairs, the Competition Commission and Tariff Commission among others. The Bill is being proposed under Entries 6, 7 and 46 of the Concurrent List of the Constitution of India, which deals with Transfer of Property, Registration of Deeds and Documents, and Contracts. It contains elaborate provisions to bring in the much needed transparency in real estate dealings through provisions for registration of real estate projects and real estate agents with the Real Estate Regulatory Authority; functions and duties of promoters and agents; rights and duties of allottees etc., The Bill once enacted will lead to establishment of Real Estate Regulatory Authority and Real Estate Appellate Tribunal in every State for registration of all real estate projects and for speedier dispute resolution. Stringent penalties have been sought to be imposed on habitual offenders. This it is believed will act as a deterrent for those few erring builders who bring bad name to the developer community at large. Currently, the real estate and housing sector is largely unregulated and opaque, with consumers often unable to procure complete information, or enforce accountability against builders and developers in the absence of effective regulation. The Bill is expected to ensure greater accountability towards consumers, and to significantly reduce frauds and delays. The Bill aims at restoring confidence of the general public in the real estate sector; by instituting transparency and accountability in real estate and housing transactions which in turn will enable the sector to access capital and financial markets essential for its long term growth. The Bill is also expected to promote regulated and orderly growth through efficiency, professionalism and standardization. It seeks to ensure consumer protection, without adding another stage in the procedure for sanctions. Benefits and Advantages of Real Estate Bill, 2013 The Bill will bring about standardization in the sector leading to healthy and orderly growth of the industry through introduction of definitions such as apartment, common areas, carpet area, advertisement, real estate project, prospectus etc. Introduction of the concept of using only carpet area for sale which has till now been ambiguously sold as super area, super built up area etc., will curb unfair trade practices. The Bill like other sectors such as telecom, electricity, banking, securities, insurance etc. provides for specialized regulation and enforcement which includes both curative and preventive measures, with powers to enforce specific performance, not available under the consumer laws. The Authority has powers to give directions for specific performance powers to impose penalty for non-registration of projects including imprisonment for continuous violation upto 3 yrs and impose penalty in case of other contraventions.

The Bill proposes to register real estate agents which have hitherto been un-regulated, with clear responsibilities and functions, thereby leading to money trail and curbing money laundering. The Bill aims to ensure consumer protection, by making it mandatory for promoters to register all projects, prior to sale; and only after having received all approvals from development/municipal authorities thereby protecting buyer investments. The Bill will promote transparency and fair and ethical business practices , relating to transactions, through disclosure of project details and contractual obligations vis--vis the project and the buyer, promoting informed choice for the buyers. This will substantially reduce the power asymmetry prevalent in real estate transactions. The Bill seeks to establish a regulatory oversight mechanism, through Real Estate Authority(s) and Appellate Tribunal in the States, to enforce accountability norms for the promoter buyer and the real estate agents. The Bill will infuse professionalism and promote planned development of the real estate sector through the promotional role of the Regulatory Authority. The Bill will ensure timely completion of projects, and prevent fund diversion . The Bill provides for a speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector. The Bill will catalyze domestic and foreign investment into the sector , thereby contributing to enhanced activity, and increase in GDP growth.

The salient features of the draft Bill are as under: Applicability of the Bill:

The proposed Bill applies to residential real estate i.e. housing and any other independent use ancillary to housing. However it shall not apply where the area of land proposed to be developed does not exceed 1000 square meters or the number of apartments proposed to be developed does not exceed 12, inclusive of all phases, or an area or number of apartments as notified by the Central Government on recommendations from the appropriate Government, which may be different for different States or Union territories but not more than 1000 square meters or 12 apartments. Important Definitions:

The Bill will bring about standardization in the sector leading to healthy and orderly growth of the industry through introduction of definitions such as apartment, common areas, carpet area, advertisement, real estate project, prospectus etc. Introduction of the concept of using only carpet area for sale, which has till now been ambiguously sold as super area, super built up area etc., will curb unfair trade practices. Establishment of Real Estate Regulatory Authority: Establishment of one or more Real Estate Regulatory Authority in each State/UT, or one Authority for two or more States/UT, by the Appropriate Government, with specified functions, powers, and responsibilities to exercise oversight of real estate transactions, to appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest; Registration of Real Estate Projects and Registration of Real Estate Agents:

Mandatory registration of real estate projects and real estate agents who intend to sell any immovable property, with the Real Estate Regulatory Authority on real time basis without adding another layer of approvals. Mandatory Public Disclosure of all project details:

Mandatory public disclosure norms for all registered projects, including details of the promoters, project, layout plan, plan of development works, land status, carpet area and number of the apartments booked, status of the statutory approvals and disclosure of proforma agreements, names and addresses of the real estate agents, contractors, architect, structural engineer etc.;

Functions and Duties of Promoter:

Duty of promoters towards disclosure of all relevant information and adherence to approved plans and project specifications, obligations regarding veracity of the advertisement for sale or prospectus, responsibility to rectify structural defects, and to refund moneys in cases of default; Compulsory deposit of seventy percent or such lesser percent as notified by the Appropriate Government, to cover the construction cost of the project, of funds received by the Promoter, in a separate bank account: Functions of Real Estate Agents:

Real estate agents not to facilitate the sale of immovable property which are not registered with the Authority required under the provisions of the Act, obligation to keep, maintain and preserve books of accounts, records and documents, obligation to not involve in any unfair trade practices, obligation to facilitate the possession of documents to allottees as entitled at the time of booking, and to comply with such other functions as specified by Rules made in that regard; Rights and Duties of Allottees:

Right to obtain information relating to the property booked, to know stage-wise time schedule of project completion, claim possession of the apartment or plot or building as per promoter declaration, refund with interest in case of default by the promoter, and after possession entitled to necessary documents and plans. Duty of allottees to make necessary payments and carry out other responsibilities as per the agreement; Promotional role of Real Estate Regulatory Authority:

The Authority to act as the nodal agency to co-ordinate efforts regarding development of the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector; Fast Track Dispute Settlement Mechanism:

Establishment of fast track dispute resolution mechanisms for settlement of disputes, through adjudicating officers (an officer not below the rank of Joint Secretary to the State Government) to be appointed by the Authority, and establishment of an Appellate Tribunal to hear appeals from the orders of the Authority and the adjudicating officer;

Establishment of Central Advisory Council:

Establishment of Central Advisory Council to advise the Central Government on matters concerning implementation of the Act, with a mandate to make recommendations on major questions of policy, protection of consumer interest and to foster growth and development of the real estate sector. The Council to have among others, five representatives of State Governments, to be selected by rotation;

Establishment of Real Estate Appellate Tribunal:

Establishment of Real Estate Appellate Tribunal, by the State Government to hear appeals from the orders or decisions or directions of the Authority and the adjudicating officer. The Appellate Tribunal is to be headed by a sitting or retired Judge of the High Court with one judicial and one administrative/technical member; Punitive Provisions:

Punitive provisions for non registration of a real estate housing project - Penalty which may extend up to 10% of the estimated cost of the real estate project as determined by the Authority . For continued violation or non-compliance of order for registration - punishment with imprisonment for a term which may extend up to three years or with fine which may extend to a further 10% of the estimated cost of the real estate project, or with both as determined by the Authority .

For knowingly providing false information or willful contravention at the time of applying for registration and for other contraventions under the law A penalty which may extend up to 5% of the estimated cost of the real estate project as determined by the Authority.

Hindusthan times The government has recently introduced the Real Estate (Regulation and Development) Bill, 2013 in Parliament. Once voted into law, the Bill will set up a strong regulatory architecture for the residential real estate sector with strong provisions for consumer protection. HT takes you through the details: Why is there a need for regulation in the real estate sector? The real estate sector plays a catalytic role in fulfilling the need and demand for housing and infrastructure in the country. While this sector has grown significantly in recent years, it has been largely unregulated, with absence of standardisation, and lack of adequate consumer protection, which has constrained the healthy and orderly growth of the industry. What are the most important provisions of the Bill? The proposed Bill applies to residential real estatehousing and any other independent use ancillary to housing. However, it is important to know that the Bill only intends to regulate transactions, that is, buying and selling of residential real estate, and does not intend to regulate construction which is the domain of states and urban local bodies. The Bill is aimed at infusing the much-lacked transparency in the sector and provides for mandatory public disclosure of all project details, with specified functions and duties of the promoter. What are the most important provisions of the Bill? The proposed Bill applies to residential real estatehousing and any other independent use ancillary to housing. However, it is important to know that the Bill only intends to regulate transactions, that is, buying and selling of residential real estate, and does not intend to regulate construction which is the domain of states and urban local bodies. The Bill is aimed at infusing the much-lacked transparency in the sector and provides for mandatory public disclosure of all project details, with specified functions and duties of the promoter.What about dispute settlement and grievance redressal? The Bill provides for establishment of Real Estate Regulatory Authority and Appellate Tribunal for a speedier dispute redressal mechanism. What does the Bill stipulate for regulation of intermediaries in the sector? One of the provisions of the Bill is the mandatory registration of real estate agents, which so far have been unregulated, with clear responsibilities and functions. The Bill also contains strong penal measures including imprisonment of promoters to clamp down on noncompliance and flouting of norms and rules. The punitive provisions include de-registration of the project and penalties are provided in case of contravention of the provisions of the Bill or the orders of the Authority or the Tribunal. Is it a populist move, with realtors body CREDAI saying the proposed law should govern all stakeholders of the industry and not only the developers? There has been a need for a real estate regulator, on the lines of telecom or those related to the financial sector including capital markets and insurance. Lack of regulation, it is sometimes pointed out, has slowed down domestic and foreign investment into the sector, which could have contributed to enhanced activity, and increase in GDP growth. The Bill

regulates transactions in the sector, and thus all the stakeholders involved in the transaction the promoter/seller, the allotte/buyer and the real estate agent, all three are regulated under the proposed Bill, with specified functions and duties. Why doesnt the Bill seek to regulate construction? The Bill does not regulate construction, which is the domain of States and urban local bodies. The main concern of the developers is the need for a single window system for project approvals and clearances, for which the ministry of housing and urban poverty alleviationhas constituted an Expert Committee represented by industry bodies to recommend to the States on ways and means to set up a single window system. As far as the Real Estate Bill is concerned, its mandate is limited to transactions, and thus regulates all parties involved in it. Why is there a concern that the Bill, once passed in Parliament, would result in about 30% rise in realty prices? According to the government the Bill is aimed at consumer protection, by creating an online system for information-sharing so that there is mutual trust between the developers and the buyers, and to ensure projects implemented in time. The enactment of the Bill will lead to enhanced activity in the sector, leading to more housing units supplied to the market. In the governments opinion, the Bill will bring in the much-needed confidence to infuse more investment and, in turn, stabilise house prices. Commercial real estate property is not covered under this regulation. Why? The proposed Bill only regulates the sale of residential real estate, and not its development. The promoter is free to carry on development, but what the Bill provides is that he can only sell after all approvals are in place and he has registered his project with the regulator.The registration requirements under the Bill are on a real-time basis, which does not lead to another layer of approvals. According to the government, limiting the application of the Bill to residential properties is to ensure the focus of the regulator on the retail consumer. Registration will not be mandatory for projects below a certain threshold. Does it not mean that many small developers will escape from registration and the government regulators control? The initial draft had provided for 4,000 square metres, which later has been reduced to 1,000 square metres or 12 apartments, whichever is applicable, after extensive consultations with the states and other stakeholders. Developers are selling flats on the basis of super-built area, which includes common passage area, stairs and other areas resulting in 20-30% more than the actual flat area. How does the Bill address this aspect? According to the Bill, disclosure of the number of apartments for sale by the promoter has to be based on a defined carpet area. The buyer should know what he is actually getting and paying for. The Bill intends to standardise the requirements to reduce the asymmetry prevailing in real estate transactions. When will the Bill become law? The Bill has been referred to the Parliamentary Standing Committee. The Bill will be taken back to Parliament after the committee submits its report.

Sanjay Dutt Cushman & Wakefield The much debated Land Acquisition, Rehabilitation and Resettlement Bill, 2012 (LARR Bill) was cleared by the lower house of parliament in the first half of the Budget session. This crucial Bill that seeks to replace the antediluvian Land Acquisition Act, 1894 with a fresh legislation wherein the component of compensation for resettlement and rehabilitation of the project affected families is added. The Bill covers land acquisition including for infrastructure and industrial developments bringing in government, quasi- government and other. Also read: Here is why India Inc is miffed by Land Acquisition Bill The LARR Bill is expected to majorly affect the development of large infrastructure development projects, industrial projects, integrated township projects and if they are brought under the ambit of this law. While the populist objective is to ensure people losing land should be adequately compensated, the obverse that this will help the acquirers of the land to be more assured of the acquisition process and there by rule out problems of unwarranted claims and issues of inadequate compensations. The provisions of the Bill will be applicable in cases of land acquisition of 50 acres in urban areas or 100 acres in rural areas. The compensation for land acquisition will now at least double in urban areas and will go up by 4 times in rural areas, according to the new LARR guidelines. Thus, the cost of land acquisition will surely go up for all projects irrespective of them being government or private or publicprivate-partnership (PPP) projects as they will have to adhere to the new norms. Further, the clause of mandatory consent of 80 percent of owners for private projects and consent of 70 percent landowners for PPP projects will delay the process of land acquisition and the projects in turn. As land titles are not clearly documented in our country, it will take quite some time to change the current situation. The bill is expected to add to the cost of a project substantially as the expected time taken for acquisition of land thereby delaying the entire process. Apart from the existing requirement of going through the regular the legal and regulatory process which usually adds up to the time and cost factor of any major large scale project. Impact on infrastructure & urbanization Infrastructure projects are the ones that will receive the sharpest blow. In many instances, this rise in input costs is likely to yield the projects unviable. As it is, the infrastructure projects are under pressure, especially those in the rural areas as it is difficult to monetize them; so the private sector is not interested in them. The growth of India is largely dependent on the infrastructure development which the government cannot take up single handedly and co-operation of private sector becomes necessary. The consent clause will delay the start of the project; further making the required returns from the project difficult to achieve. Thus if Indias growth story is to continue then a user development fee will have to be charged and the price of utilities like electricity, water etc. will have to go up to rake in the revenues. All in all, this is a laudable reform by the government for providing equitable sharing of profits while also moving a step closer to laissez faire kind of environment. The high rate of migration and natural growth rate of our population in urban areas highlight the need for building new cities as existing ones are overburdened. Satellite towns depend on the parent city for their work and employment requirements, while the need of the hour is to build self-sustaining urban centres. With the LARR Bill developing cities on a large scale would be difficult due to the requirements of getting consent from 80 percent of project affected people, arranging for their rehabilitation and resettlement (R&R), as well as paying a premium price for land shooting up the overall budget to very high levels. Higher land acquisition & overall real estate cost For the real estate industry too, the addition of R&R component will be a big financial burden due to which the LARR Bill has received flak from them. Post the Bill, the cost of land acquisition will increase across the board and the real estate developers intend to pass on this increase in input cost to the buyers. So certain sections of the industry feel that an increase in property prices will ensue the LARR; thus negatively affecting the ordinary buyers. Considering the present scale of projects, most of the residential, commercial and retail real estate projects

occupy an area of land smaller than the stipulated parcel size. Many big private real estate players have bought the land at market prices and with 100 percent consent of the landowners. However, their input costs will rise as a result of the increase in compensation and minimize the profit margin. Since the developers will want to preserve their profits, we will see more joint development projects happening, wherein the profits as well as the resources and the risks will be shared. Already in many Tier-1 cities, joint development is route followed by developers, so this practice will now spread all over. Looking at the current scenario, the Bill should exempt open market transactions from its aegis to avoid the decline in investments and undue rise in the price of land for private purposes, thereby adversely affecting economic growth.