Real estate developers are apprehensive that the regulators may adopt a tough stand against them, especially with regard to lack of transparency in transactions, following the Satyam scandal.
"Unethical practices have been prevalent in the sector. Due to speculation, genuine buyers have been out. The next target of the regulators will be the real estate developers," said D Subrahmanyam, executive director, Hudco, at the inauguration of Realty Expo 2009 by the Confederation of Real Estate Developer's Associations of India (Credai) in Kolkata on Tuesday.
While seeking finance, the balance-sheet submitted by the developers often did not reflect the financial health of the company, he said.
Due to the presence of a large number of unlisted subsidiaries under a listed company, several discrepancies were observed in the process of land acquisition by developers, Subrahmanyam said.
Also, West Bengal should amend the Urban Land Ceiling and Regulation Act, as it posed problems in the development of township projects, he said.
"Instead of the multiplicity of regulations, there should be a single window clearance system," he said.
In some cases, promoters did not collect project completion certificate from the government, before selling the project. This way, the developers often skip the fees payable at that time.
Harshavardhan Neotia of Ambuja Realty said, the real estate sector in Kolkata was undergoing a healthy correction.
"In today's market, we need to be quality conscious, and depend not only on pre-booking, but also own finances for completion of the projects," said Neotia.
Merits mention, the urban development ministry is mulling to create a statutory regulator for the real estate sector for quite some time. The Securities and Exchange Board of India (Sebi), regulates listed real estate companies. There is hardly any national level regulator for unlisted and small real estate developers, who often indulge in speculation for increasing property prices.
Speculation in real estate has often resulted in property bubble, as in Singur where property prices soared to unprecedented levels, soon after Tata Motor's announced setting up Nano factory in the area. However, after the withdrawal of the project, land prices fell.
