RERA infusing confidence among LPs to back realty funds: VCCircle Summit

Real Estate Regulation and Development Act has proven to be a boon for the real estate ecosystem including consumers, developers and investors, said panellists at VCCircle LP Summit 2018.

The panel, which was themed on RERA – A bane or boon for real estate, saw participation from industry stalwarts such as Anuj Puri, chairman, ANAROCK Property Consultants; Amit Bhagat, chief executive and managing director, ASK Property Investment Advisors; Sharad Mittal, director and real estate head, Motilal Oswal Real Estate; Puneet Bhatia, director and real estate head, Mirae Asset Management; Arpito Arpito Mukerji, principal, Apollo Global Management; and Vishal Kumar, managing director, Xander Investment Management. Amit Goenka, managing director and CEO at NiFCO, was the moderator of the session.

The recently implemented regulatory regime has helped and pushed developers to fall in line and have greater transparency in corporate governance. “Developers have taken the move very positively and are doing everything to stick to the guidelines set out by RERA. However, a lot of developers, especially from tier II and III segments, will have to exit the market on account of pressure to stick to RERA. It will lead to a strong wave of consolidation and it has already started,” said Anuj Puri of Anarock.

He said while developers have acknowledged the implementation of the act, it will take some time before its benefits reach customers. “It will take some more quarters before consumers actually begin to feel how a regulator helps in cleaning up the system,” he said.

Panellists said that tightening of norms as a result of RERA has put a check on the supply of housing units which will go a long way in bringing down the level of unsold inventory across markets. Puneet Bhatia of Mirea said that RERA is trying to bridge the trust deficit between developers and consumers. “While consumers might not come to the market immediately, it is going to help end users immensely in the medium to long run,” he said.

Developers across markets have been in trouble lately on account of delayed projects, fraud and cheating cases. “Such cases have been more in North, especially in Noida and therefore RERA is a gift to the real estate ecosystem,” said Puri of Anarock.

Talking about the interest of investors in the sector post the implementation of RERA, Sharad Mittal of Motilal Oswal Real Estate said limited partners, be it from the domestic or international market, have started showing interest in backing equity funds.

“Because the risk associated with the sector goes down with RERA and there is more transparency, we have seen HNIs talking about taking equity positions in funds. There is growing appetite and interest among investors which will not take much time to translate into real action,” he said.

Amit Bhagat of ASK supported Mittal and said he has noticed interest flowing in from offshore markets for equity deals in the country. “Earlier it was difficult to convince them but now risk perception associated with the sector has gone down considerably. RERA is basic business rules. It was long due and should have come much earlier,” he said.

Panellists also said that the implementation of RERA will help the ecosystem have more clarity on real estate data. “We will know for sure how many projects are being launched, what investment is going where and how many have been completed. We will have greater transparency at data level with time, helping the ecosystem to take better calls,” said Vishal of Xander.

The panel summed up that the timing of RERA implementation is apt and it is going to reap benefits for all the stakeholders though there might be some pain in the short run.

“We have set up our new firm – ANAROCK – because there is a regulator in place now. It is difficult to do business in the sector otherwise,” Puri said.

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