The Real Estate (Regulation and Development) Bill passed by both the houses of parliament is expected to facilitate more foreign direct investments in the sector, developers say.
According to them, one overweening factor which prevented more foreign investment from coming to the Indian real estate sector was its opaqueness.
Foreign direct investment (FDI) equity inflows in construction development fell by a staggering 84 percent during the first nine months of the current fiscal, as compared to the same period last year.
"The bill will facilitate in injecting FDI into the Indian real estate. It essentially works towards strengthening transparency, information in the public domain, accountability and responsibility for developers, " Anuj Puri, chairman and country head of global real estate services firm JLL India, told IANS.
"It will bring overall financial discipline. The bill also provides comprehensive consumer protection which was hardly existed before, " he added.
According to the latest data by the central government's Department of Industrial Policy and Promotion (DIPP), during the first nine months of the current fiscal, India attracted only Rs. 673 crore of FDI in construction development, including townships, housing and built - up infrastructure. The sector, however, attracted Rs. 4, 264 crore of FDI inflows in the same period of 2014 - 15.
"The bill will help boost the overall image of Indian real estate as an attractive investment avenue from all over, including foreign investors, " industry chamber Ficci's president Harshavardhan Neotia told IANS.
Neotia, who is also chairman of the Ambuja Neotia Group that has interest in real estate, said the legislation aimed to do away with improper business practices of the unorganised real estate sector, and bring builders within the ambit of regulations pertaining to timely delivery of projects.
"The bill also aims to put in place a seamless framework for resolving disputes between builders and home buyers. All this is likely to improve credibility of the sector and make it more attractive for investment, " he said.
Another developer, Kishor Pate, felt investment funds, so far, have not been able to perceive the comfort levels they require to invest confidently.
"This state of affairs is now set to change drastically, " Pate, chairman and managing director of Amit Enterprises Housing, told IANS.
Industry body Credai's Bengal president Sushil Mohta said the bill will bring more transparency to the sector.
"It was necessary, but not sufficient, to route more foreign investments in the country. Unless the process of project sanctions, approval and clearances get simplified, foreign investment would not come in a big way, " he said.
Pate also said with the bill bringing in high levels of transparency into the Indian real estate sector, it will become very attractive for foreign funds.
Puri, however, pointed out: "So far, a private equity fund that wished to invest in Indian real estate had to go through a very lengthy, and often painful, partner search, as the only kind of partners acceptable to foreign funds would have to demonstrate the right kind of qualities and capabilities. "
The bill provides setting up of Real Estate Regulatory Authorities(RERAs).
Puri said it could now set transparency as a fundamental basis for developers, and private equity players could save the time they would usually have spent on such due diligence so as to focus on the actual opportunity.
The bill pending before parliament since 2013 was passed by the Lok Sabha last Tuesday. The Rajya Sabha had cleared it on March 10.
(The writer can be reached at bappaditya. c@ians. in)