Delhi NCR
Advising real estate developers from across the world for the past several years, Neeraj Bansal, Partner-Advisory, KPMG India, feels that the Indian real estate sector has come a long way but there are still miles to go. Here are excerpts of his interview with Vikram Jethwani of MagicBricks.com on what he thinks can take the sector to the next level:
Where does Indian real estate stand as compared to the global industry?
Indian real estate sector has much to do with respect to transparency, technology, Floor Space Index/Floor Area Ratio (FSI/FAR) and funding. The sector has strong potential and with a shortage of 18.74 million houses in urban areas alone, India could provide a long-term growth opportunity to global real estate developers, private equity (PE) funds and construction companies.
What kind of global best practices, in your opinion, are relevant and can be implemented in India?
Real Estate Investment Trust (REIT) market is among the most important requirements in India. Since the REIT market does not exist in India, developers often approach REIT markets abroad for raising funds. There is a significant potential which exists in domestic REIT market and government should evaluate this option to further open the sector to foreign and small local investors.Another important area for improvement is increase in FSI/FAR, which could help reduce congestion in the cities.
What is your viewpoint on the use of technology in real estate?
While some developers have started using latest technologies, by and large, the sector is still dependent on old construction technologies. Developers should upgrade to the latest trends followed globally. Usage of new technology could significantly reduce time and cost of construction.
What is your viewpoint on delay in projects related with urban development, roads, power etc? How does it impact our economy?
The delay in infrastructure projects affects the overall economic growth in two ways. Firstly, the delay increases the cost of infrastructure, affecting the overall availability of funds. Secondly, it leads to collateral damages since the benefits are also delayed.
Delay in the Kundli-Manesar-Palwal (KMP) Expressway, for instance, has led to heavy stress on the existing highway ie NH2. The highway is choked to its full capacity leading to wastage of fuel, higher accidents (leading to loss of life) and high maintenance cost.It is estimated that with proper infrastructure in place, the GDP growth could be propelled by 1-2 percent, annually.
What are the most critical factors that result in delay in key projects?
Land acquisition, approvals and securing funding are among the most critical factors resulting in delays. For instance, many residential projects in Noida Extension were affected due to the recent land acquisition row.
How can these issues be addressed?
While developers do not have control on the external reasons, such as land acquisition, inflation and funding, internal ones such as construction status, collection from customers and inventory status could be effectively monitored through project management.
MagicBricks.com Bureau
source:- http://content.magicbricks.com/proper-infrastructure-could-propel-gdp-by-1-2/
Advising real estate developers from across the world for the past several years, Neeraj Bansal, Partner-Advisory, KPMG India, feels that the Indian real estate sector has come a long way but there are still miles to go. Here are excerpts of his interview with Vikram Jethwani of MagicBricks.com on what he thinks can take the sector to the next level:
Where does Indian real estate stand as compared to the global industry?
Indian real estate sector has much to do with respect to transparency, technology, Floor Space Index/Floor Area Ratio (FSI/FAR) and funding. The sector has strong potential and with a shortage of 18.74 million houses in urban areas alone, India could provide a long-term growth opportunity to global real estate developers, private equity (PE) funds and construction companies.
What kind of global best practices, in your opinion, are relevant and can be implemented in India?
Real Estate Investment Trust (REIT) market is among the most important requirements in India. Since the REIT market does not exist in India, developers often approach REIT markets abroad for raising funds. There is a significant potential which exists in domestic REIT market and government should evaluate this option to further open the sector to foreign and small local investors.Another important area for improvement is increase in FSI/FAR, which could help reduce congestion in the cities.
What is your viewpoint on the use of technology in real estate?
While some developers have started using latest technologies, by and large, the sector is still dependent on old construction technologies. Developers should upgrade to the latest trends followed globally. Usage of new technology could significantly reduce time and cost of construction.
What is your viewpoint on delay in projects related with urban development, roads, power etc? How does it impact our economy?
The delay in infrastructure projects affects the overall economic growth in two ways. Firstly, the delay increases the cost of infrastructure, affecting the overall availability of funds. Secondly, it leads to collateral damages since the benefits are also delayed.
Delay in the Kundli-Manesar-Palwal (KMP) Expressway, for instance, has led to heavy stress on the existing highway ie NH2. The highway is choked to its full capacity leading to wastage of fuel, higher accidents (leading to loss of life) and high maintenance cost.It is estimated that with proper infrastructure in place, the GDP growth could be propelled by 1-2 percent, annually.
What are the most critical factors that result in delay in key projects?
Land acquisition, approvals and securing funding are among the most critical factors resulting in delays. For instance, many residential projects in Noida Extension were affected due to the recent land acquisition row.
How can these issues be addressed?
While developers do not have control on the external reasons, such as land acquisition, inflation and funding, internal ones such as construction status, collection from customers and inventory status could be effectively monitored through project management.
MagicBricks.com Bureau
source:- http://content.magicbricks.com/proper-infrastructure-could-propel-gdp-by-1-2/
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