Real estate transparency and its legal aspects in India

Submitted by asandil on Tue, 05/13/2014 - 18:14

Real estate transparency helps an investor to take an appropriate decision while making real estate investment. Global Real Estate Transparency Index of a country’s real estate scenario that indicates the positive and negative factors of real estate investment. Of late, the regulatory officials have been working on the real estate issues to attract more investors which will improve transparency rate of the Indian real estate market.

Some of the measures such as relaxation of FDI norms, improvement in availability of data and strengthening of regulations in the real estate sector are aimed at improving the transparency index. The recently released Jones Lang LaSalle 2012 Global Real Estate Transparency Index has revealed that the transparency rate of Indian real estate sector terribly needs to be overhauled. The improved real estate transparency will help to attract more domestic and international level investors.

The Global Real Estate Transparency Index shows that India’s tier I cities such as Delhi NCR, Mumbai and Bangalore were ranked lower at 48 in 2012, whereas it was 41 in 2010. While India’s tier II cities such as Hyderabad, Kolkata and Pune has shown stable transparency level this is ranked 49 globally. Tier III cities like Ahmedabad, Coimbatore, Kochi, Bhubaneswar and Visakhapatnam have improved their ranking to 50 in 2012 compared to 55 in 2010, the index revealed. When compared to India’s Tier I and II cities, other emerging countries such as China and Philippines are moving ahead, which is a cause of concern.

The availability of exact market information such as demand, supply and prices for the residential sectors, office and retail will also improve the index. For industrial and hotel sectors, as the data availability is opaque, it is expected to improve marginally over the next few years. With the increase of multinational companies, the ‘clarity’ of contracts in occupier services is expected to improve.

The presence of international property consultants and their better client services are improving the professional and ethical standards of property agents in India. Therefore, transparency scores in this sub-index are also expected to increase. The introduction of General Anti-Avoidance Rule (GAAR) and Computerization of Land Records (CLR) have further strengthened real estate regulations which improve transparency in the application of building codes, tax and the availability of title records. The Real Estate Regulatory Bill is a key policy that is expected to improve India’s real estate transparency rate. The Bill is likely to be tabled in the upcoming session of Parliament.

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