The implementation of the Real Estate Regulatory Act (RERA) across India is likely to incentivise more foreign capital into India’s real estate sector. Foreign capital is badly welcome as the sector gears up to boost its supply response to achieve the “housing for all” mission by 2022. Sensing that there is a growing appetite among foreign funds to be a part of India’s unfolding consumption story, the government has asked all state governments to speed up RERA’s implementation in their respective states. “The Real Estate Act is one of the most important reforms for the sector, which would bring benefits to all stakeholders,” said Venkaiah Naidu, Minister of Housing & Urban Poverty Alleviation. The minister has persuaded all state governments to therefore establish the Real Estate Regulatory Authorities and the Appellate Tribunals, maximum by 30 April 2017. “The timelines are important as the Act would commence its full operation from 1 May 2017,” the minister said and warned that the states that fail to comply would be in a vacuum of their own creation. So far, only four states (Gujarat, Kerela, Uttar Pradesh and Madhya Pradesh) have erected legislative structures required under the Act of which the appointment of a regulator remains the most important component.
As India gets ready with RERA, “higher transparency and accountability will also improve institutional fund flow into the sector,” says Ramesh Nair, COO-Business & International Director at JLL India, adding that very often, under-construction projects fail to meet the obligations of the existing regulators and as a major relief to homebuyers as well as developers, the RERA – due for nationwide implementation in May this year — will ease most consumer concerns such as delayed delivery and change in project layout, among other concerns. “Penalty clauses often push a good cause, and we are likely to see more of this as RERA gets implemented,” feels Nair.
“RERA would obviously lead to more comfort for foreign investors,” agrees Anurag Jhanwar, Business head (Consulting and Data Insights), PropTiger.com and Makaan.com. Besides the countrywide implementation of RERA, the growing enthusiasm among foreign players for India’s real estate landscape is also due to expected pick-up in housing demand. But as RERA makes the sector more organised and with so much of latent demand for housing in India, “I think that in the medium term, surely more funds would be attracted towards Indian real estate,” expects Jhanwar.