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

Welcome Address by Mr Yogendra Kr. Modi, President, FICCI

Mr Jagdish Tytler, Hon'ble Minister of State for Overseas Indian Affairs

Mr Anil Baijal, Secretary, Ministry of Urban Development & Poverty Allevation

Mr Deepak Parekh, Chairman, HDFC Ltd.

Mr Satpal Khattar, Khattar Wong & Partner, Singapore

Mr Sushil Ansal, Chairman, Housing Committee, FICCI and Chairman, Ansal Properties & Industries Ltd.

Mr Akshaya Kumar, Co- Chairman, Housing Committee, FICCI

Friends,

I take great pleasure in welcoming Mr Jagdish Tytler, Mr Anil Baijal, Mr Deepak Parekh, Mr Satpal Khattar.

I thank all the speakers, specially the international who have come from far and away.

The real estate sector has to be at the forefront of India's development agenda on account of its obvious potential to propel economic growth. The importance of this sector as an engine of the nation's growth can be gauged from the fact that it is the second largest employer next only to agriculture and supports more than 200 ancillary industries such as cement, steel, brick, supporting services etc. Real estate development market in India is around $12 billion, growing at 30 per cent annually.

The sector has off late witnessed a spurt in the demand of not just residential property but also commercial property. Indian cities have found a place for themselves on the world map as attractive investment destinations for international real estate players. Growth in retail, entertainment and information technology (IT)-enabled service sectors have increased the demand for shopping malls, multiplexes, food outlets, office spaces, convention and business centers and this demand has been met to a large extent by increased private sector participation in this sector.

India is poised for rapid urbanisation, which will lead to major developments in the real estate sector. Development of new towns and cities, which are on the anvil, requires huge amount of investments for which not just private domestic investment but also foreign investment are required.

We see the role of the government primarily as a facilitator with the private sector participation bringing in capital, technical and managerial expertise in formulating and delivering good quality mass housing and commercial projects, improving operating efficiencies to prevent time and cost overruns to meet consumer needs.

Globally, the public private partnership (PPP) model is being driven by demand for better quality services and government budget constraints. Public/private partnerships can greatly increase not only the number of affordable homes, but the quality of housing through fiscal, regulatory and other incentives for builders and partners alike.

The Indian government has allowed 100% FDI for development of townships including housing and associated urban infrastructure. However, not many investment proposals have come. The Govt. must allow 100% FDI in all sectors of real estate development without restriction as this is the most employment intensive activity. We would like the international speakers to throw some light on this and tell us how does India measure up as an investment destination.

Despite the boom in the real estate sector, a number of reforms are required to realize the full potential of this sector.

High transaction costs, relatively non-transparent markets, archaic laws, high and varied rates of stamp duty still make investors uncomfortable to undertake real estate transactions in India.

Master Plans and Development Plans of all the districts and towns should be prepared within a specified time frame so that the private developers and builders are able to get quick approval for their plans and are motivated to invest in real estate.

A single window clearance system should be introduced and the clearances should be done within a time limit otherwise it will be deemed to be approved. In some states City Authorities have empowered chartered architects to sanction the plans of housing schemes of a particular size and area. Only random checks of such schemes/sanctions are done by the City Authorities.

To improve the quality of life in the cities, civic amenities like potable water, good sanitation, sewage treatment and disposal, adequate electric supply and good roads need to be developed. It is here that the public-private participation can play an active role just like in power sector.

The issue of proliferating slums is a very serious problem faced by most cities in India. More civic amenities, alternative low cost housing needs to be provided to control further growth of slums. Private sector is willing to partner with the Government in providing low cost housing.

We do have many encouraging examples of States taking lead in this direction like Haryana and Uttar Pradesh.

Though Housing and Urban Development is a State subject, the Center can push the States to undertake reforms in this area by formulating model Acts for States to adopt. For eg, model acts on repeal of ULCRA and Rent Control are in place.

Similarly, model Acts on private sector participation in urban infrastructure, civic amenities and EWS housing may also be formulated.

I hope some of these issues will be deliberated in detail in these two days and we shall expect the foreign participants to share their experiences of real estate development in their countries so that we can imbibe good practices. We aim to summarize the discussions at this Summit and forward our recommendations to the government.

Thank you