Eased FDI norms mere sentiment positive: Knight Frank

“Also the government should make a mechanism that can check whether the FDI inflows go into high-end realty or into affordable housing,” he adds.

Below is the verbatim transcript of the interview to CNBC-TV18.

Ekta: First I just wanted to ask you about what the Kolte Patil Management told us they are not present in affordable housing but when they spoke to us sometimes back they said that there are too many other bottlenecks so this is just a sentiment positive at this point in time but there are lots of other issues to solve such as environment clearance etc. Do you share the same thought?

A: Even I do share the same thoughts, first of all the biggest obstacle about real estate and housing is that it is a state subject and central government can actually do very well in terms of advisory or just showing some right directions. Having said that ultimately state governments decide or fine tuned the ultimate clauses or laws that they have to be followed on the ground realities.

Having said that still the first foreign direct investment (FDI) opening that happened sometime in 2005 that really gave a huge impact to real estate. We saw the swanky new buildings coming up in last ten years. It was obviously on the back of huge amount of capital inflow that happened in real estate. This easing of norms while it will have a good impact on real estate but lot many things are yet to be finalised before we can really go upbeat and gung ho that yes it is going to work for real estate.

Reema: What are the bottlenecks from this policy FDI and real estate being a game changer? List out the three biggest bottlenecks and do you see them getting erased in the next few years at least?

A: I will qualify these in two categories, one is generic issues which I have always been there and will have to be sorted out. One is about land acquisition, second is about title insurance etc. and third is about real estate regulator. These are three very generic things which have been plaguing anything in real estate and which have to be first put in order before we call FDI or foreign investors to come to India. So that is actually about putting your house in order number one.

Number two there are lot many of these permissions that we speak which are different in different states. Even centrally say the environment issues etc that have to be taken care of are really something which takes time. We have to really work towards making a single window system work in real estate. Having said all that what we are talking about currently is affordable housing. Whatever housing that we are aware of for historic time perspective is something which caters to hardly 5 percent of consumer base remaining 95 percent is into affordable housing category or perhaps social housing category where they can’t even buy a house.

That is where the effect of all these policies is not yet felt. Going forward we will have to really work out some incentives, some schemes to ensure that the money that has coming from aboard is not once again sucked in to the normal high and real estate alone and not diverted for a affordable housing.

Reema: Tell us about the listed player, which ones do you think will immediately benefit or could see where FDI could immediately come in?

A: The biggest one is obviously for Puravankara because they have been one of the earliest entrances into affordable housing scenario. But even otherwise not talking only on affordable housing or not just focusing on affordable housing this whole FDI is going to impact the overall real estate. So it is not just that those who are focusing on affordable but otherwise who are doing other real estate works. So all those listed players that we have on our list are the people who will be definitely benefited.