International Real Estate Summit
December 3-4, 2004, New Delhi

Address by Mr Satpal Khattar, Khattar Wong & Partner, Singapore

It would be imprudent and ungracious for a foreigner to give advice to Indians on what needs to be done in India on this very important matter. Indeed I am firmly convinced from my past experiences that you in India know and understand all the issues and more importantly also know all the answers.

Nevertheless, based on my Singapore experience I offer the following views :

Real estate development especially housing for both the rural community and the urban community should be treated as "infrastructure" and all the incentives available to infrastructure development in India should be made available to this sector. Where Governments are elected on the basis of providing "Roti, Kapada aur makan", why should it be otherwise? One of Singapore's long term social anchors is the fact that nearly 90% of our population live in their own houses. People who live in owned accommodation are more likely to be the stabilizers in any society.

There is too much non optimization (and even waste) of land resources based on my observations. Vast tracts of land are held by different ministries which in modern day usage is completely under-used or not used. New modern and more efficient facilities could be built in place of these existing facilities in return for their giving up existing under-utilised land and facilities.The new developments in Indian metres will change the face of India. A lot of extremely good urban prime land is used by the armed forces and other agencies (or not used) with single storey structures which is a pity. New modern facilities could be built for them which I venture to suggest would serve them much better. The land freed up would more than pay for these newer better facilities. Railways, bus depots, old and dilapidated fire stations and other public buildings need to be re-appraised to free up excess or unutilized land. The cost would be substantial but would be borne by the private sector to which the excess land could be sold on an open and transparent basis e.g. by tender. Government would not have to spend the money but would still receive new modern facilities and new developments on which substantial taxes would be paid on a current basis.

Governments should become the intermediary to tender out land with full planning approval guaranteed in say 6/12 months. It needs to become positive and pro-active. The Hong Kong and Singapore Governments earn huge amounts from tendering out such public lands on 99 year leases which have more than paid for vast infrastructures like the MRT, airports and new public buildings and facilities from this activity. But planning and building plan approvals must be promised in a timely manner so that the private sector's resources are not tied up for indefinite periods whilst the huge numbers of permissions (80 odd at last count) are sought from a somewhat negative and dilatory approval processes which can take too long even decades. Many archaic laws and processes and regulations need to be changed and/or overhauled substantially.

Financing for development has to be facilitated and controlled at the same time. Controls are necessary to ensure that the buyer gets his product within a timely manner and the developer meets his obligations. It has to be facilitated so that financing is available and units are financeable off plan. Quality financiers like HDFC and ICICI are already financing off plan developments but have to resort to their own means and ingenuity to ensure security and timeliness. The laws need to be amended and strengthened to put these on a surer and legal footing.

Although the Indian labour is cheap and because of that, prefabricated development is rarely seen in India. It will not remain cheap forever. There is also a lot of scope and need for pre-fabrication. Buildability and quality are much better facilitated if prefabricated off site processes are used. Over time quality products are always going to be at a premium and this can be ensured by pre-fabrication. Labour costs and will not always remain low and more importantly quality would vastly improve. If you give even the weaker sections of society good well designed housing, they will be more willing to leave their shanty towns which will free up vast pieces of land and resources for further development. This virtuous circle can create its own multiplier growth patterns and become an important area of growth for India's GDP.

I could really go on but there is nothing that would be new. There are many in the foreign world who would be happy to offer their views if needed. But such views and expertise is I suggest already known to those in India. The will power to get over some of these road blocks appears another issue. Yes, India is a vibrant democracy and must work within the confines of all negatives implied in the working of such a system. But making housing development an important infrastructure that needs priority attention does not conflict with the aims of any good Government committed to providing and enhancing this vital "brick" its India's development. The road blocks must be removed and proactive support given to this important sector.

I wish you all the best in your deliberations.