Housing and Urban Affairs Minister Hardeep Singh Puri on Tuesday asked real estate companies to focus on corporate governance and bringing right products at competitive price to cater to the huge demand for housing and commercial properties.
The minister highlighted that the new real estate law RERA, which was passed in 2016 and came into effect from May 2017, is a revolutionary step that has brought new paradigm in the sector.
He also said home buyers of major stuck projects in Delhi-NCR could get relief soon.
Puri also announced that the the government will soon bring model tenancy law to promote rental housing.
"I am confident that in the coming weeks, thanks to action of apex court because many home buyers went to the Supreme Court, we will be able to get remedial action on three big projects which are accounting for much of the narrative being vitiated in the National Capital Region and then we can deal with the rest of the system," Puri said at a CII-CBRE real estate conference.
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The minister did not name the projects. Lakhs of home buyers in Delhi-NCR are stuck because of default in delivery of housing projects by various players, including Jaypee Infratech, Amrapali and Unitech.
Puri said real estate and construction sector has an important role to play in the economic growth as it is the second largest job provider.
"If the economy has to continue to grow at around 7 per cent and we have to make a transition from being USD 2.8 trillion to USD 5 trillion economy by 2024 and USD 10 trillion by 2029- 30, the private sector has to play a crucial and a very important role," Puri said.
He said "corporate governance" is becoming crucial with each passing day.
While the pre-RERA period was largely characterised by most of the transactions in the sector taking place in informal economy, the post-RERA period has led to a completely new paradigm, the minister said.
"We have slowly but surely, there is going to be blood on the floor and there is already some. There will be pain that some fly-by-night operators are already going out of the business. There will be consolidation," Puri said.
On overall liquidity issue in the industry, he said when something goes wrong in in a major sector, the industry expects a bail out.
However, "the government can help to the extent that it can by taking steps which constitutes the eco-system but the government cannot be held responsible for omission and commission in the corporate sector which results in business failure".
Citing example of airlines, he said aircraft manufacturers are making lot of money and the people who run airports make money.
"But some of the people who run airline...., and this is not Indian phenomenon, this is global. Is it a business model problem or corporate governance problem? It could be both," he said.
He said corporate governance should ensure that right decisions are taken.
Talking about Housing for All, Puri said the government has sanctioned 8.5 million units under Prime Minister Aawas Yojana out of a total demand of 10 million units.
"We have grounded 5.5 million units and handed over 2.5 million units," he added.
There is a huge demand for housing and this will increase because of urbanisation, the minister said.
"If you go about in a right manner, there will be a win-a-win situation," Puri said, and added that developers could make money in this business if they go for products which are right sized and rightly priced.
On demand for priority sector lending in real estate, Puri said his ministry has held discussions with the finance ministry and the RBI in this regard.
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