Real Estate International Development Summit 2005
November 11, 2005, New Delhi, India

Welcome Speech by Mr. Onkar S Kanwar, President, FICCI

Mr Bhupinder Singh Hooda, Hon'ble Chief Minister of Haryana
Mr Anil Baijal, Secretary, Ministry of Urban Development
Mr Sushil Ansal, Chairman, Housing Committee, FICCI and Chairman,
Ansal Properties & Industries Ltd.
Dr Amit Mitra, Secretary-General, FICCI,
Leaders of the Real Estate sector in India and abroad, and

Friends,

I take great pleasure in welcoming all of you to the International Real Estate Development Summit. I am deeply encouraged by the presence of Mr Hooda whose integrity and leadership is deeply appreciated in his State and the rest of the country. I also thank Mr Baijal for not only being with us today but also for supporting our initiatives in this sector.

Mr Chief Minister, it is our deep desire to see Gurgaon as the model township of the world. You would be happy to know that the Deputy Prime Minister of Singapore, who was hosted by FICCI during his visit to India, had a singular intent -visit to what you call the Singapore of India -Gurgaon. FICCI would lend a strong shoulder to you to create this beacon of a township and then help you to replicate it in select parts of your State.

Recent developments in the Real Estate sector symbolize the changing face of India. The rapid growth in this sector is a reflection of the structural changes in the Indian economy brought about by high rates of GDP growth and also by India's integration into the global economy. The structural changes in the economy, particularly the strong growth of the services sector are creating rapid urbanization, burgeoning middle class with higher purchasing power, and changes in the consumption basket and spending habits. Secondly, financial sector reform and rising savings rate has brought about falling interest rates and a surge in consumer credit etc. Thirdly, the ongoing demographic transition and rising proportion of young Indians are all contributing to a huge growth in demand for all segments of the real estate market.

Not surprisingly, real estate is fast emerging as a key sector that has the potential of accelerating India's growth and creating millions of new jobs. It is currently estimated at $12 billion, growing at 30 per cent annually. India is one of the few markets in the world, which offers high prospects for growth and earning potential in practically all areas of the real estate business.

Let me turn straight to a few recommendation for the consideration of the Government:

1. Land transactions remain cumbersome and time consuming and procurement of land for real estate projects continuous to be lengthy and arduous affair. This process remains complicated even though most of the States have repealed Urban Land Ceiling Act.
   Please address this major issue.
2. Land costs in most urban centers are high and make the cost of projects uncompetitive in the global context, particularly for sectors such as retailing, hospitality, healthcare and even low-cost housing. For example, the share of land cost in the total cost of real estate projects in India tend to be twice as much as what obtains in the US, where income and purchasing power levels are much higher. One reason for this outcome is the absence of well-developed land markets in India. Often land titles are not clear, transactions take a long time and tedious regulatory processes reduce the speed of transactions and raise their costs. We need more efficient land markets and reforms in this area should benchmark global best practices.
3. Getting clearance and approval of housing and real estate projects is a lengthy process as there are several agencies involved in giving clearances. Further, every state has its own set of clearance procedures. The foreign investors would find it difficult to make a commitment on the funds unless they are clear on the legal requisites and the time required for all the clearances. May I suggest that Central Government should prepare guidelines or model legislation for all states to harmonise rules and reduce transaction costs for developers. Of course minor variations to suit specific requirements of some states or regions can be provided for.
4. E-governance should be adopted by all state governments for all land transactions and clearances for real estate projects.
5. Stamp duty rates are very high and uneven across all States. India has the highest stamp duty rates in the Asia-pacific region. Stamp duty rates need to be reduced and made uniform across all states.
6. Sir, this summit is aimed at making a holistic assessment of India as an investment destination in real estate.

We hope that the Government will quickly look into the recommendations highlighted at this Summit so that domestic and foreign developers and investors pool their energies to bring about a real estate boom in the country, raise India's growth rate and create millions of new jobs.

I thank all the speakers at this summit, particularly those who have come from abroad, for agreeing to share their experiences and expertise at this Summit. I also thank governments of all our partner States at this Summit, namely Haryana, Rajasthan, Punjab and Uttar Pradesh. These states are going to showcase initiatives taken by them in real estate and the opportunities they have created for developers in this sector. I thank all the sponsors for making this event viable and wish this Summit a great success.

Thank you.