‘Focussed On Affordable Housing In A Big Way’

Laxmi Narayan Goel, vice-chairman, Essel Group, is one of the key architects of the Essel Group of Industries. He is also the Chairman of Suncity Projects, a leading real estate firm. Under his leadership, Suncity has put under construction over 50 million sq. ft of real estate development. Goel talks to Ashish Sinha about the implementation of RERA and issues facing the sector.

Edited Excerpts:

How do you see the RERA or the Real Estate (Regulation and Development) Act 2016?
Till it is implemented, a lot will depend on the State governments on how they interpret the model law passed by the Central government. As a developer, I have already suggested to Haryana government that RERA norms for the state should not, in any manner, be used to make money by any stakeholder. Some state governments have levied exorbitant charges on the implementation of the RERA norms. This should not be the case, in my view. That is one. Two, in the central laws, the word used for including projects under the RERA norms is ‘Completion Certificate’ but in several states, the operating word has been changed to ‘Occupation Certificate’ or OC.

In my view, there is not much difference between the two. Unless a building in complete, it cannot be occupied. So, the projects that have managed to obtain OC till date, they should be outside the purview of the RERA norms. Because they are past projects. Also, consumer safeguard should be always maintained. But if a developer is suffering due to non-payment from customers, the developer gets stuck due to lack of funds. This is a very big problem.

Can the RERA norms solve this aspect of the problem?
The central laws are clear to an extent but what the state government actually ends up formulating, remains to be seen. Any developer has to take 40-50 kind of permissions till completion of projects. That is a time consuming process. But none of the RERA provisions have any solutions for this issue. Those who are drafting the laws have omitted their own responsibilities of giving clearances in a time bound manner, I feel.

In reality, if government wants to help the real estate sector, it should take some accountability on time-bound clearances to developers too.

How do you see the affordable housing projects getting so much attention?
As Suncity, we are developing an affordable housing project in Sector 102 of Gurgaon. It is 100 per cent sold. It is in line with the state government norms. It has been allotted to customers. There are around 700 flats. It will get completed by 2019. We are also focussing on affordable housing segment in a big way. Also, on commercial segment. We have some land parcel across Haryana for that.

Will the RERA help solve some fundamental issues of the sector like growing debt, higher unsold/unfinished projects, etc.?
All developers will have to fight the sectoral issues on their own. The real estate sector, traditionally, has been a mix of organised and unorganised players. Some years ago, unfortunately, the unorganised players managed to dominate the organised players, thanks to some backing by certain state policies too. The bottomline is that organised developers are committed to customers more than the unorganised ones. But the sector gets a bad name because of those that are unorganised.

What is the long-term vision of Suncity?
We, as a company, are also looking at international destinations. At this moment we are evaluating our next move abroad but the plans are under considerations on the locations or destinations for our business overseas.

What is your take on the RERA provision for escrow acount for projects?
It is a good move. But the organised players have been doing it for a number of years. However, we feel that the money parked in the escrow account should not become dead. The current norms do not specify if the money can be invested somewhere to get returns etc. which can then be ploughed back to the same project. I believe, 70 per cent of the money parked in an escrow account should be made to work and not kept locked and dead.

What is your take on the ‘ease of doing business’ plank of the government?
The idea and intent is positive. But a lot depends on the bureaucracy and the state machinery to implement ease of business at the ground level. In my view, it will take some more time. All local governments are trying their best to make it easier for businesses but a lot more is required. Take Gurgaon, for example. So much construction and development is happening here for a good number of years, yet it is an ‘under developed’ city in my view. A lot more is required to see that Gurgaon develops in the right manner. For example take Greater Noida. The infrastructure was developed first. Construction happened first then people came to work and live. In Gurgaon it is the opposite. People started living and working and then construction happened and continues to happen. Why?

What are the differences or similarities between news business and the real estate business since you have been part of both?
For any entrepreneur there is no difference between areas of business. An entrepreneur can go anywhere, adopt any sector, operate and thrive. It may take some initial time but broadly there is no special challenge for an enterprising entrepreneur to operate in any line of business.