Brief on various initiatives of RICS in India
RICS offers the preeminent qualification for professionals, who are subject to our quality assurance. Our royal charter requires us to work in public interest and we are committed to setting and upholding the highest standards of excellence and integrity – providing impartial, authoritative advice affecting business and society. With a 150 year history; 118,000 qualified members; presence across 146 countries; and with offices covering the major political and financial centres of the world, RICS’ market presence means we are ideally placed to influence policy and embed professional standards. We work at a cross-governmental level, delivering international standards that will benefit all.
Increasing property professionals and realty firms across the globe, as well as in India are becoming aware of the importance of the RICS qualification. With unrivalled credibility and status added to professionals through this qualification, more professionals are seeking to be qualified by the RICS in an attempt to gain a competitive edge, status and recognition over other candidates in the field. The RICS qualification is prestigious and internationally recognized offering wider career opportunities, greater international experience and assuring the highest professional standards and quality assurance through a mechanism of continuous learning.
We also createconfidence through professional standards. Internationally, we are working with international coalitions to promote and enforce standards that will bring about transparency and consistency of practice across borders. These standards relate to valuation (IVS), ethics (IES), land (ICMS), property (IPMS) and land measurement (ILMS). RICS has committed to form Registered Value Organisation (RVO) under IBBI (Ministry of Corporate Affairs) to take the profession to global benchmarks. This shall be a separate legal entity formed under Section 8 to train, qualify and regulate valuation professionals. We are also working with IBBI to promote International Ethical Standards and train all Insolvency Resolution Professionals and Values.
Given our high focus on the profession, the RICS also provides training that powers the industry. There are different training modules available to professionals, as well as organizations, that enable them to upskill themselves and stay updated and competitive, while building on their technical knowledge and competencies. Also, through the RICS School of Built Environment, Amity University we have created a feeder to the industry of young talent that can finally consider ‘real estate and construction as careers of choice’. The School provides education that creates entry level talent and is India’s first school of built environment and an industry led academic institution supported by the Ministry of Urban Development, leading real estate, and construction and infrastructure firms.
One of our main agenda is alsoinfluencing governments, organisations and key stakeholder organisations around the world, including India with the aim of developing and embedding international standards. In India some of the works we have done in this area include:
With the Ministry of Housing
Consultation on the Real Estate (Regulation & Development) Act 2016
Assisting state governments in defining roadmap for regulatory act
Part of technology sub-mission of the ‘Housing for All’ mission
Supported committee for Streamlining building approvals for real estate projects (SAPREP)
With the Ministry of Urban Development
Development of a National framework for facilitating transit oriented development in India
Developing capacity to implement Public Private Partnership projects for various urban services
Guidance documents and bid documents for implementing PPP projects.
Usage of International Valuation Standards across all asset classes to streamline the current valuation practices and thereby bringing efficiency in the finance sector. We led a committee to establish valuation standards set up SEBI as part of their work on the REITs and INVITs frameworkResearch and economic analysis
We are progressing well with our dialogues with various RERA bodies to ensure that they adopt International Standards to bring robustness to their assurance regime and work towards accreditating professionals working in the sector.
Additionally, given the focus of the Government on Anti Money Laundering, RICS is running a global campaign to bring out a Professional Statement around this and resultant actions. There is a huge focus to eliminate black money and terror financing (happening through Hawala or other roundtripping mechanisms).
Views on recent policy reforms and their impact on the Indian real estate sector.
The Indian real estate market for the longest time has been fragmented and unorganized. Over the years, we often debated on whether we needed further regulation in an industry which already has a long approval process. But today the question is non-existent, as RERA has been implemented across states.
In order to facilitate growth and promote a healthy, transparent, efficient and competitive real estate sector, state and central government agencies along with industry bodies, including developer and customer associations have worked together to establish a regulatory mechanism that will help address and curb fraudulent malpractices and safeguard consumer interests.
In India, RERA will take on the role of a facilitator, regulator and promoter for orderly growth within the sector. One of the key objectives and the basis of establishing the regulatory framework is protection of stakeholder interests. More often than not, consumers have been at the receiving end of market irregularities, arising as a consequence of property transactions, governed typically by perception rather than sound business principles. Given the number of disputes that arise due to existing practices, consumers now have a recourse mechanism in place, with the regulator adjudicating and resolving any disputes that may arise between parties involved.
Regulation has further been substantiated by reforms such as Demonetization and GST. Demonetization may have had the sector reeling under its affects in the short run, but in the long run, the benefits are likely to outweigh any of the challenges that stakeholders have experienced thus far. Cleaning up the sector and changing the image of Real Estate has been long overdue and bold moves by the Government have already seen many ‘fly by night’ operators fall by the way side. GST has been another revolutionary and commendable step by the Government to improve the ‘ease of doing businesses in India.
With regulatory, tax and business environment changing – Indian Real Estate is already witnessing a rise in investment inflow from institutional investors, both local and international. With REITs also being listed, the market is hopeful of seeing assets with the right mix of security, liquidity and tax optimization, which will help monetize assets.
Your opinion on the standards and benchmarking being followed in Indian real estate and areas of improvement.
‘Change’ is never easy, more so for a vast, densely populated and culturally diverse country like India, which continues to deal with increased urbanisation and infrastructure woes.Real estate professional services have not quite matched the expectations of clients, as projects remain plagued by several uncertainties and suffer on account of economic cycles, inflation and increased input costs, contractual bottlenecks and archaic laws and policies. All of these continue to affect project commencement and delivery, along with the lackadaisical attitude and poor coordination between various authorities and agencies.
Today, the industry is in a constant state of evolution and subject to ‘change’ with the advent of new technology, regulatory reforms, and economic challenges. Some of these aspects have seldom been experienced by practitioners during their tenures, resulting in some resistance to adopting these new facets of real estate business. However, in order for the sector to compete in an increasingly global marketplace where real estate markets are to a large extent intrinsically linked and interrelated, there is little choice but to embrace such changes.
Greater emphasis needs to be awarded to project delivery in light of the human, physical and monetary resources that are lost as a consequence of such delays. Even in the most robust economy, the challenges involved in construction and delivery of projects are enormous. There are common worries focused on timeliness, costs, performance and delivery. Stakeholders involved across the development process are often insufficiently coordinated to deliver a finished product within budget and on time. Safety is also a growing concern. Therefore, newer and innovative construction technologies, materials and equipments need to be leverage in order to build speed and efficiency into the project delivery mechanism, giving boost to a higher quality product.
Efficiency, innovation and cutting-edge technology are the keys to success in addition to professionalism, transparency and regulation.Also, with the growing international significance and realty markets being so intrinsically linked, there is a need to ensure that qualified professionals enter the industry, to elevate the level of expertise on offer. This can further be substantiated by the increasing number of clients across the world looking at hiring qualified people that demonstrate a high level of commitment to project excellence.
Therefore regulatory bodies like the RICS, will not only help improve the supply of qualified professionals and talent within the realty sector for developers/stakeholders to achieve their desired vision of projects, but also arm them with the requisite knowledge and lifelong learning and development through regular monitoring and training. Such form of regulation will also help ensure that all qualified professionals adhere to a prescribed code of conduct and ethics that help bring some level of accountability into the market.
In addition to professionalism, enacting laws to enforce high standards of disclosure, transparency and corporate governance within the realty sector are also needed in order to minimize investor risk.Transparency is also a major factor that helps attract foreign investments in real estate. This requires the presence and enforcement of clear guidelines and rules for both local and overseas investors in order to build confidence and strengthen the sector, as most individuals are usually drawn to destinations that are relatively stable.
In India, considerable improvement has definitely taken place over the years with respect to the legal framework which encourages inflow of foreign capital. But, despite significant progress, issues such as liquidity and title ownership continue to act as constraints to cross-border investor activity, along with high transaction costs which have resulted in keeping direct investments at bay.
Challenge that real estate sector is facing because of lack of skilled labor.
One of the most prevalent hurdles for the real estate and construction sector is that of the ‘human resource’ challenge. The sector has a lack of quality talent which stems from the absence of specialized real estate, construction and infrastructure related education, resulting in the absence of much needed fresh skilled manpower entering the sector.
Also the lack of adequately trained professionals in the real estate and construction sector is compounding the existing skills shortage. Even as the demand for real estate and construction has gone up in recent years, the supply of graduates passing out of related educational courses such as engineering, architecture and planning has not kept pace. These aspects have also affected the capability of the sector to keep pace with the evolving quality and complexity of real estate and infrastructure which has been advancing at a fairly rapid rate. Therefore, it is absolutely imperative that the education set up for professionals specializing in different facets of building and real estate be given due attention.
RICS is sensitive to the huge skills shortage in Indian real estate and construction, which puts enormous pressure on existing professionals to gear up and deliver their services to this fast growing sector. Recognising the unique challenges of the Indian market including a vacuum of higher education for real estate and related fields, RICS in 2010 launched specialized learning programmesin India which focus on skills development for professionals who will be employed in the sector and who are looking at real estate as a ‘career of choice’ and bring them at par with international counterparts.
We also established India’s first school of built environment, as an industry led academic institution, supported by the Ministry of Urban Development, GoI. The school creates entry level talent that the industry is most in need of, by making real estate and construction as ‘careers of choice’ for young individuals.
What are the factors giving impetus to real estate growth in India?
We are enthused with the current set of reforms undertaken by the GoI to bring much needed transparency in the Financial Sector of the country. The effect of these reforms has also had a cascading effect on the real estate and construction sector.
The sector which didn’t enjoy a clean reputation in the past due to multiple reasons including those related to opacity in financial transactions and inappropriate cash dealings – is finally accepting the changes it has to make to bring accountability, ethics, transparency and assurance to its customers.
The slew of reforms which began with demonetization bringing down cash transactions heavily in the sector; followed with introduction of GST which brought about significant reduction in tax evasion have made quite an impact on the market. Additionally, the benami transaction law relating to money laundering; introduction of Insolvency and Bankruptcy Code to induct accountability in the financial sector and bringing about exposure of NPAs across the sector; along with the initiation of creating a Registered Valuer Organisation (RVO) to regulate the valuation profession have all created quite a stir in the market – and all for the better. Of course, the biggest impact has come from the introduction of RERA which has made developers directly accountable to customers to stand by their commitments.
There are a host of other policy and procedural reforms that have boosted demand and investment back into the market. The GoI’s role in framing rules around “Affordable Housing” has brought about standardization in the sector and given an impetus to housing, supported by the Smart City agenda, DMIC, focus on development of North Eastern States and PMAY.
Having said that, we would be keen to see a similar set of reforms to bring Construction and Infrastructure sectors under a Regulatory Framework, which help them move towards Professionalism and Transparency.
RICS future growth plans in India.
RICS is committed to the betterment and development of the built environment sector and profession. As an organisation focused on thought leadership, our endeavour will always be on ensuring that there is greater standardisation and professionalism in practice. We will continue to focus on influencing government, organisations and key stakeholderorganisationswith the aim of developing and embedding international standards that will help bring in standardization of practice and transparency. We will also further our agenda as a ‘thought leader’ focused on enhancing the technical skills and knowledge of professionals either currently employed, or looking to be employed in the sector.
There are various aspects that we are currently undertaking which include: working with one of the state’s RERA to bring out RERA Scorecards for projects in the state. The scorecard shall be developed on the merit/ demerit of the project around Project Salient Parameters; Project Performance Parameters around Time, Costs, Quality and EH&S; Ethics & Transparency Parameters; Compliance with Standards and Serving Consumer Interests. This shall help consumers make informed decision.
We are also working on studying the impact of RERA in various states identifying the efficacy of implementation, vantage and demerit points of the current schemes and possible improvements in the scheme.