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The Lede
Union Home Minister Amit Shah has set a new vision for India's housing sector, urging real estate developers to adopt green building norms as the "new normal." Speaking at a conclave organized by CREDAI, the apex body of realtors, in New Delhi, Shah emphasized the importance of building not only low-cost homes but also focusing on sustainable practices and skill development for laborers.
The minister's address underscored a multi-pronged approach to revolutionize housing, combining environmental responsibility with economic viability and operational transparency. He also pointed towards the significant benefits brought about by RERA and recent GST reforms in streamlining the sector.
Call for Green Housing
Shah strongly advocated for sustainable development, encouraging real estate developers to work towards achieving net zero emissions in the sector. He stressed that green building norms, encompassing energy-efficient designs, water recycling, rainwater harvesting systems, and scientific waste management, should become standard practice.
Developers were urged to integrate these green elements into their project designs without substantially increasing costs. Shah assured that incorporating green features and maintaining green areas or plantations would not negatively impact profitability, highlighting a shift towards environmentally conscious construction.
RERA and Transparency
The Union Home Minister also focused on the need for a transparent land market, urging cities to move away from practices like land banking and speculative holding of properties. He called for industry self-regulation to foster credibility and minimize the need for government intervention.
Reflecting on the Real Estate (Regulation and Development) Act (RERA), Shah noted the initial apprehensions from the industry when it was passed in 2016. However, he affirmed that RERA has since played a crucial role in ensuring the smooth functioning of developers and has brought structural reforms.
Passed in 2016 and fully effective from May 2017, RERA has been instrumental in protecting homebuyers' interests, bringing transparency to property deals, and improving construction quality across 35 states and Union Territories, with 1.55 lakh projects currently registered.
GST Benefits and Cost Reduction
Amit Shah highlighted the substantial benefits the real estate sector has received through GST reforms. Specifically, he mentioned the recent reduction in GST on cement from 28% to 18%, along with cuts on many other building materials.
These reforms, he estimated, could lead to an overall reduction in construction costs by 5-7%. This cost saving is expected to empower builders to offer more facilities and better value to customers.
Future Vision
Looking ahead, Shah pointed to rapid urbanization as a key driver of immense opportunities for the real estate sector. He stated that the government's vision for urban development includes the active participation of responsible developers.
Union Minister for Environment, Forest and Climate Change, Bhupender Yadav, also present at the event, echoed the call for green projects and achieving net zero emission goals. He noted the government's efficiency in environmental clearances, now taking 90-110 days compared to the previous 650 days, and urged builders to focus on electronic and solid waste recycling.
Impact
This initiative is expected to significantly influence the Indian real estate sector by promoting sustainable construction practices, potentially leading to more affordable housing options, and enhancing investor confidence through increased transparency and regulatory compliance. The focus on green building could spur innovation and create new market segments.
Impact Rating: 8
Difficult Terms Explained
- Green Building Norms: Guidelines and standards for designing and constructing buildings in an environmentally responsible and resource-efficient manner throughout their life-cycle.
- Net Zero: Achieving a balance between the greenhouse gases produced and the greenhouse gases removed from the atmosphere, often by reducing emissions and using renewable energy.
- RERA (Real Estate Regulation and Development Act): A law passed in India to regulate the real estate sector and protect the interests of home buyers.
- Land Banking: The practice of acquiring large parcels of land with the expectation that their value will increase over time, without immediate plans for development.
- Speculative Holding: Holding onto assets, such as land or property, with the primary intention of profiting from an anticipated rise in their market value, rather than for their intended use.
- GST (Goods and Services Tax): A consumption tax levied on the supply of goods and services.
- CREDAI (Confederation of Real Estate Developers' Associations of India): The apex body of private real estate developers in India.