The Sureka group is a prominent player in the real estate sector in West Bengal. BE’s Saptarshi Deb spoke to Pradeep Sureka, Managing Director, Bengal Park Chambers Housing Development Limited, a part of the Sureka group, on the emerging trends in the real estate sector.
Q) How is the real estate sector in West Bengal presently situated?
A) The level of maturity among the real estate developers and investors has improved substantially compared to a decade ago. The growth of this sector is well complemented by the growth of the corporate environment and the demand for office space and urban and semi-urban accommodations. The construction industry ranks third among the major sectors in terms of direct, indirect, and induced effects in all sectors of the economy. In India, real estate is the second largest employer after agriculture and is slated to grow at 30% over the next decade. It is also expected that this sector will incur more non-resident Indian (NRI) investments in both short and long term tenures.
Q) West Bengal is yet to implement the RERA. How do you view this?
A) The West Bengal government has taken a different route as far as RERA is concerned. In an effort to provide a transparent policy in the housing sector and for protecting the interest of the buyers, the Bengal government has passed The West Bengal Housing Industry Regulation Bill, 2017.
This West Bengal Housing Industry Regulation Bill appears to mark the beginning of a new era of accountability, efficiency, and transparency in the real estate sector. The main purpose of the legislation is to keep the interest of the buyers at a higher ground. The new rules will also create an atmosphere to encourage private investment in the sector, with an emphasis on ‘housing for all’.
Q) Is the affordable housing segment generating maximum demand in the sector?
A) Most definitely! It has never been a better time for affordable housing in India. The segment has lost its ‘down market’ label and become a serious and respectable business sector for real estate developers. The government is now collaborating with private builders and developers under a public-private partnership model (PPP) to make the vision of Housing for All by 2022 a reality. We will see affordable housing action on the ground unfolding at an increasingly rapid pace.
Q) Which policy level interventions can enhance private participation in mass housing projects?
A) There are few fields in which the government can work to make the mass housing sector participate more in terms of private participation in mass housing projects. First and
foremost, the approval process should be streamlined. There must be a transparent digital online approval process taking minimum time for approval and efforts must be made to put an end to the existing multiple layered approval system.
Secondly, infrastructure needs to be improved. Availability of land with infrastructure like road, water, and electricity will be a major boost for private level participation in mass housing projects. The affordable housing segment will be the top runner in the next few years and this is where we can expect more favourable provisions from the government. Moreover, the real estate sector has been given infrastructure status now and this should encourage more private participation in the coming years to avail the associated benefits. Thus, the segment offers tremendous scope for private players.
Q) As a key player in the sector, how do view the impact of the GST?
A) The GST will free home buyers and investors from the hassle of paying several state taxes at different levels and therefore, remove the double taxation impact. Therefore, 12% tax rate under the GST regime looks favourable for the industry. We are definitely looking at a significant improvement in buyer sentiment and perception after the GST roll-out. Developers too will find the GST regime much simpler to work with, with the benefit of input tax credit being an added advantage.
Q) How is the luxury real estate segment shaping up after demonetisation? Are HNIs and NRIs the only prospective consumer base?
A) The first big impact of demonetisation was seen in the humongous dip in property registrations, in the range of 35-40%. The panic among existing buyers and lack of clarity even for the builders took some months to grapple with. But as the dust settled, the benefits were for all to see. With the sudden shortage of unaccounted money in the market, there’s a huge sigh of relief for the legal luxury home aspirants. This opens up a much wider bandwidth of options to choose from in the luxury home section. Amidst this demonetisation phase, the projects undertaken by credible developers will remain unaffected. As far as the buyers are concerned, those buying properties by taking home loans and carrying out transactions in the legal way will remain unaffected by the current development.