INDIA REAL ESTATE Make hay while the sun shines!

When confronted with danger the Ostrich digs its head in the sand, with a belief that if it can ignore the impending danger, the danger will also ignore it. I had slowly started to believe in the Ostrich theory but my sane side cautioned me to take a more rationale approach. In India everyone is so carried away with the real estate boom that safety is being ignored and compromised. The players in the business of real estate are the bankers, financial institutes, insurance companies, developers/builders and not to forget the end user. The bankers are busy pumping funds in housing loans, which are of course considered low risk - high return investment, real estate funds and financial institutions are making a uick buck while they can, keeping an keen eye on the e!it strategy in case of a crash, builders and developers are busy racking in millions with no responsibility or accountability and finally the common man is content with the "feel good factor# that his investment is going to continue rising by a whooping $%-&%' annually at least as per the hundreds of articles on the real estate outlook for India. (eason enough for all with a little e!tra cash to make an investment. )very one is happy and every one is making money, so why this fuss about safety* +et me start by asking, how much time does it take for a ,ank or for that matter Insurance -ompany to go bankrupt* ......you guessed wrong. &% seconds is all it takes. That/s what it took during the 0orthridge )arth uake of 122& in 3nited 4tates and the story repeated the following year when an )arth uake struck 5obe, 6apan. The estimated loss was so many ,illion 7ollars that the ,lue -hips had no option but to declare themselves bankrupt and eventually the 8overnment had to step in to partially bail them out. The (eserve ,ank of India has thrown some caution to the industry, but the magic of "(eal ,ucks# have blurred these warnings. +et us hypothetically speak of a scenario where an earth uake strikes say $%% 59 from 9umbai or for that matter 7elhi :don/t be surprised there are many fault lines running within that distance;. The immediate effect would be that hundreds of buildings would come crashing down, and thousands more would have sustained un-repairable damage, something similar to what happened in <hmedabad in 6anuary =%%1. >ow will the ,ankers recover the disbursed loans when the very property they have financed does not e!ist* Would the insurance companies be able to foot the bill for the damage claims* )ven large banks like I-I-I and >7?- would find it ne!t to impossible to absorb this loss. The salvation for smaller banks and insurance companies would be in getting declared ,ankrupt. ?or those who are not so familiar with the seismic @argon, ma@ority of the buildings in 9umbai or 7elhi are not even )arth uake (esistant - +ife 4afety implying that these would definitely collapse in a seismic event. The buildings that are )arth uake (esistant A +ife 4afety would have to be demolished and re-built as these are primarily designed for saving lives of its occupants by preventing total collapse. +ife 4afety buildings absorb the Buake 4hock by inflicting structural damage upon itself. )arth uake Crotection is classified into three categories, )arth uake (esistant A ?ully Operational, )arth uake (esistant A Immediate Occupancy and )arth uake (esistant A +ife 4afety. 4imply stating that a building is )arth uake (esistant has no meaning as it does not imply anything as to its performance, survival ability or post uake use. There e!ist well documented literature like ?)9<-$D2 :available free online;, which elaborates on the different levels of earth uake protection and the e!pected performance of such structures. This information has been kept out-of-bounds for the Indian Cublic. Till date no Indian document speaks about the different levels of protection possible. ,ureau of Indian 4tandards periodically publishes and reviews I4-1D2$ A The Indian 4eismic -ode. >owever no attempt has been made to include information for sensitiEing the engineers and the public on various levels of protection possible. This is in total contrast to the policy being adopted in countries like 6apan and 3nited

4tates. < direct conse uence is that even those who can afford and would desire a higher level of protection are unable to do so due to lack of awareness. 0ot many are aware, that even in our ma@or cities and that includes the 0ational -apital, not a single hospital will be functional incase of an earth uake. >ospitals the world over in seismically active regions are constructed to )arth uake (esistant A ?ully Operational standards. In India the authorities have not yet recogniEed the various categories of protection. Who would treat the in@ured and the sick at a time most re uired remains unanswered. Interestingly enough as per the information from Crime 9inister/s Office, (s. 11$.&2 -rores has been spent on a ,ase-Isolated hospital at ,hu@ from the Crime 9inisters 0ational (elief ?und. This hospital should be as per )arth uake (esistant A ?ully Operational standard. <dding to the woes of the common man, till date the real estate sector of our country remains unregulated. In 6uly =%%F there were positive reports that the 9inistry of 3rban 7evelopment would be tabling the G(eal )state 9anagement :(egulation and -ontrol; ,illG in the Carliament during the monsoon session. >owever for reasons best known to the offices of power it never saw the light of the day. 4uch media frenEy has again gained momentum recently. Only time will tell if the bill finally gets tabled in the current budget session or certain sections have been once again successful in subverting its implementation. There are three key issues in the G(eal )state 9anagement :(egulation and -ontrol; ,illG that can make a significant impact on the industry and the common man. ?irstly, all built apartments would have to be sold on carpet area and not super built-up area like being done now. -arpet area is easily verifiable and can be calculated after taking a few room measurements. This would ensure that the buyer is not cheated and he gets what he is paying for. 4econdly the transparency in the sale area would also make the land area calculations simpler. It would no longer be possible for the not so honest builders to siphon off society land in connivance with corrupt 9unicipality officials. ?or e!ample incase the built-up area of a multistory apartment block is 1,H%,%%% s uare foot and ?4I/?<( is 1.H :1H%';, it would imply that the society land area should be 1,%%,%%% s uare foot, incase its less the regulator could be approached for necessary action. ?or ensuring safety the bill proposes )arth uake (esistant to be made mandatory and legally enforceable. The ,uilders/7evelopers would also have to stand guarantee. 9inistry of 3rban 7evelopment would have to decide as to what level of safety should be made mandatory, )arth uake (esistant A +ife 4afety or )arth uake (esistant A Immediate Occupancy. One thought process is that as the collapse of a >ighrises would have far grater collateral damage as compared to a low-rise so the protection standard should also be a notch higher. With the opposition :read + 5 <dvani, (a@nath 4ingh and <mar 4ingh; raising the ante especially on the Buattrocchi issue and the ?inance 9inister C -hidanbaram coming in for some serious criticism for tabling a budget without a vision and sensitivity to the issues of the common man the 8overnment is going to remain on the back-foot for some time. 3nder such pressure whether the 3C< 8overnment has the will to take on the ,uilder lobby remains to be seen. G(eal )state 9anagement :(egulation and -ontrol; ,illG is seen by many to "rein in the builders# and "ending the days of the Wild West#. India is not averse to the effects of 0atural 7isasters. We have had far too many for the memory to erode so easily, be it the earth uakes of ,hu@, 5ashmir or the Tsunami in the <ndaman/s in the recent past. ?or this reason did the 0ational 7isaster 9anagement <uthority came into being in the year =%%H. 7isaster awareness is all that the 8overnment has to ensure and the masses :at least the educated ones; will take the necessary precautionary measures. +et/s start by listing out the various levels of safety. 4ensitiEing a population of 1%% -rores is sure a >erculean task.

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