Saturday, November 17, 2007

High stakes but low transparency

Friday, 16 November , 2007, 11:08

Real estate investment is probably the most important purchase any individual would make in his or her lifetime. However, the whole process is quite time consuming and tedious.

Considering the high stakes involved, it is an absolute surprise that this sector still does not have a regulator in place.

While all other investment options like bonds, stocks or bank fixed deposits have a regulator in place, the real estate sector is unfortunately still waiting for one.

Needless to say that a regulator being in place would have been a boon to both investors and genuine buyers in the prevailing skyrocketing property price scenario.

The irony is that a fixed deposit transaction of just Rs 5000 is overseen by a regulator whereas a realty investment deal of Rs. 50 lakh is not. The real estate sector in India is predominantly unorganized. Even though the industry has slowly started to turn professional, there is a long way to go before it can catch up with other sectors in terms of professionalism.

The lack of a regulator has given rise to 'opaque' transactions in quite a few respects.

Today most developers price their products (flats) on a built up or super built up area basis. Very seldom will you see a developer quoting the carpet area pricing, even though that is the actual area, which the consumer uses.

Another common complaint from buyers is that many times developers and builders do not deliver what is promised when selling the projects. While their booklets, brochures and advertisements show buildings and landscaping to match international quality, the ground reality is far different leaving buyers feeling disappointed.

Similarly, the quality of construction has also led to a lot of disputes.

Since civil litigation is expensive and time consuming, it is essential to appoint a regulator who can deal and sort out real estate related issues and make life easier for the common man.

Sporadic talks about appointing a regulator have been echoing for a long time, but the need is extremely urgent to bring in friendly policies which in turn would help the industry to grow and blossom.

The introduction of a regulator in sunrise industries like telecom and insurance has given the industry uniformity and policy direction.

The appointment of a regulator for the real estate sector should not be taken as watch dog by the industry professionals but as a step towards co-creating value for the end consumer.


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