PRESENTER’S DETAILS

 NAME: MR. MALHAR R SHAH

 COURSE PURSUING: CA FINAL

 COURSE REGISTRATION NUMBER :

WRO0596373

 ADDRESS: B/H JASWANTSINHJI

DISPENSARY, KHAIWALI STREET,
HIGH COURT ROAD, GHOGHA
GATE, BHAVNAGAR
364001.GUJARAT.

 MOBILE NUMBER: 7041836371

REAL ESTATE:FINALLY
 E-MAIL ID:
OUT OF WOODS? MALHARSHAH7199@GMAIL.COM
 1.INTRODUCTION
When we think about Journey to Dubai What Scenario will initially flash in our mind?
“Burj Khalifa”. Isn’t it? When we seek to join any corporate office or any of the big
fours as a chartered accountant what will our eyes catch at the first site? its office, its
building commonly known as infrastructure facilities. When we plan to pursue further
study at IIM or top institution of India, we look for good campus facilities. Even while
entering in this International conference hall, what thing impresses us at first glance??
Outlook of the venue. In these examples, which thing is common?? it is the
infrastructure. All such good impressions on our mind is due to the infrastructure of
all such things. The backbone of all these infrastructure facilities is the Real Estate
Sector. If there was no real estate sector, we would not be able to build infrastructure
for any sector. If we are going to successful industry, we witness the most optimized
factory structure. Even if we pick any other sector, we will realize that success of any
such sector is influenced by its infrastructure. And the building up of the infrastructure
facilities begins with the growth of real estate Sector.

2.Meaning of Real Estate:

Real estate is the Property, Land, Buildings, air right above the land and
underground rights below the land. The term real estate means real or physical
property. “Real” comes from the Latin root res, or things. Others say it’s from the Latin
word rex, meaning “royal,” since kings used to own all land in their kingdoms. The U.S.
Constitution initially restricted voting rights to only owners of real estate.

 What Real Estate comprises for?

There are four types of real estate:

1. Residential real estate includes both new construction and resale homes. The
most common category is single-family homes. There are also condominiums,
 co-ops, townhouses, duplexes, triple-deckers, quadplexes, high-value homes,
multi-generational and vacation homes.
2. Commercial real estate includes shopping centers and strip malls, medical and
educational buildings, hotels and offices. Apartment buildings are often
considered commercial, even though they are used for residences. That's
because they are owned to produce income.
3. Industrial real estate includes manufacturing buildings and property, as well as
warehouses. The buildings can be used for research, production, storage, and
distribution of goods. Some buildings that distribute goods are considered
commercial real estate. The classification is important because the zoning,
construction, and sales are handled differently.
4. Land includes vacant land, working farms, and ranches. The subcategories
within vacant land include undeveloped, early development or reuse,
subdivision and site assembly. Here's more at Land Broker Transactions.

3.Factors hindering growth of Real Estate Sector in India:

(A).Issues faced by customers

 Delay in Projects: The major problem consumer facing is delay of projects

which may happen due to various reasons like court intervention in land
issues, finance, approval etc. The consumer had to suffer because customer is
paying rent where resides and paying EMI for home loan at same time due to
delay of projects.

 Builders take advances from customers but once advances are received, they
are making delay in giving possession of Properties and thus exploiting
customers

 Fraudulent advertisement to sell product is quite popular and frequent in

real estate.

 Further builders pays only 2 to 3% interest in case of default from their side
but when customers default (like refuses to buy) then they have to pay
around 16 to 18% which is unfair.
 (B) Issues faced by Real Estate Industry

The key challenges that the Indian real estate industry is facing today are:

 Approvals and Procedural difficulties: There are almost 50 approvals or more

need to be taken for starting a real estate project and further these approvals
are required form different govt departments or authorities. Too much of the
corruption has been involved in taking these regulatory approvals.
Consequently corruption and delay cause inconvenience to customers only.

 Lack of clear land titles: The land titles are not clear because of poor record
keeping and division of land in many parts till independence. The slow pace of
modernization of land records is further aggravating the problem.

 Speculation in Land and Real Estate Prices: The prices of land and real estate
in India has increased exponentially in last decade and causes overpricing of
commercial or residential property. In recent times, the real estate is the one
of the most favourable destinations for investment in India and far ahead than
equity or gold. Further real estate agents or brokers buy or sell property
frequently with their own investments and cause of surging prices in
property.

 Sources of Finance: Finance is the key for development of any industry. Due to
poor image of Real Estate sector, banks are becoming reluctant to provide
loans and making regulation tougher to avoid the bad loans. Uncertainty
involved in sale of real estate product results in high cost of borrowing which
ultimately affects prices.

 High Input Cost: The real estate is a capital and labour intensive industry; thus
rise in cost of labour and construction material due to inflation poses many
problems to real estate industry.

 High Taxation : There are so many taxes and regulatory fees are involved in
real estate sector. For paying lower stamp duty, Buyer asked builder to make
sale deed of lower amount than original sale price and excess of sale price over
consideration specified in sale deed are settled in black money i.e.cash. This
malpractice helps both builders and Customers as builders have to pay lower
income tax and GST by making sale deed of lower amount While customer has
to pay lower stamp duty. So Real estate is the most famous sector for soaking
the black money without any ambit.

4.Actions to Remove such Obstacles

(A).Implementation of RERA-Real Estate Regulatory Authority Act.:
To overcome Exploitation of Customers by some builders and to Enhance
transparency in real estate sector, RERA have been come into the picture.
Almost all Promotor of real estate projects have to register itself with Real
estate regulatory authority before Starting any new project. After registering
with RERA, Promotors have to file quarterly returns in which quantum of
expenditure incurred, Completion of Project, Available amount of withdrawal
from the Advances received from customers have been specified. Further, in
every return, Certificate of chartered accountant regarding truthfulness of
expenditure incurred and amount withdrawn, Certificate of engineers
regarding Progress of project on estimated basis ,Certificate of Architect
regarding Progress of project based on physical progress have to be furnished.
Engineer is also required to certify the quality of materials used in the
Construction. Most importantly, based on the information and characteristics
of the project, authority determines the time period in which project must have
been completed by the builder. Thus, this promotes timely possession of
property to the customers. Most of the information of project is made publicly
available by the authority. Role of Chartered accountant is increased in the real
estate sector after implementation of RERA. Thus, RERA is the drastic measure
to make real estate out of the woods.

(B).Relaxation in GST:
In Goods and Service Tax, Lower Tax rates for housing project and
affordable housing projects have been specified which results in lowering the
cost to the some extent to the final customer. While in commercial Projects,
Input tax credit of inputs, Input Services and capital goods are available which
results in lower cost to the final consumer.
(C).Real estate investment trust (REIT) : Weapon to finance
Huge projects

A Real Estate Investment trust (REIT) is a form of investing in real estate,

where the operator, REIT owns and operates real estate asset. REITs may own
commercial real estate. REITs are regulated by Securities and Exchange board
of India.
Before introduction of REIT in Indian market, it is almost impossible for
any small investor to invest in real estate asset and generate income from such
investment with liquidity. Because amount of investment for acquiring real
estate property is high. Investment in property is kind of illiquid investment
leads to blockage of money for longer duration. However after introduction of
REIT, this obstacles have been nullified as Minimum amount of investment in
REIT is Rs.1,00,000 so that Small investor can also indirectly purchase Real
estate asset by purchasing the units of REIT. Further, after collection of amount
from unit holders, REIT owns and operates real estate asset from such amount
collected from so many small investors. REIT is like “SABKA SATH, SABKA VIKAS”

In brief, Real estate asset are owned and managed by REIT either directly
or through SPV (Special Purpose Vehicle) from finance obtained from
promoters as well as unit holders. Income generated from such real estate asset
have been distributed to unit holders in the form of dividend. As a regulation
REITs must pay out at least 90% of their income to unit holders. REITs enjoy
favourable tax treatment, including exemption from tax on dividend, Rental
income from asset owned by SPV and Interest income. Trustees are appointed
to hold asset for the benefit of unit holders, oversee activities and ensure
compliance with respect to reporting and disclosure requirement. A full
valuation of All real estate asset shall be conducted by an independent valuer
not less than once in every financial year; a half yearly calculation of the asset
shall be conducted by the valuer for the half year ending on September 30 for
incorporating any key changes in previous six months to prevent any window
 dressing in financial statement. Thus, REIT act as a Sea of funds and liquidity for
real estate sector in India.

Progress of REITs in India :

Units of REITs can be listed on one or more recognized stock exchanges like shares and
they also can be traded resulting in fully liquid investment. Fund can be raised from
public via Initial Public offer (IPO). The sponsor shall contribute about at least 25% of
the asset in the first three years. Assets size of REITs shall be at least 500 Crores and
IPO size shall be at least 250 Crores.

 First IPO of REITs was announced by Embassy office park REIT backed by
blackstone group. Size of IPO is Rs.4,750 Crores. This IPO have opened a
fundraising avenue for India’s cash-starved property companies. Asset portfolio
of this trust comprises about 33 million square feet of office space across four
Indian cities such as Bengaluru, Pune, Mumbai and Noida.
 After Embassy office park REIT IPO, Mindspace Business park REIT IPO backed
by Black stone and Developer K Raheja group having IPO size of Rs.4,500 crores
was launched.
 Recently Brookfield asset management has filled a draft offer document with
SEBI to launch IPO in early 2021. IPO size is about having range between Rs.
4000 to Rs.4500 crores.
 After this long discussion on REIT, it can be concluded that REIT have
provided great fundraising opportunity with liquidity and this format will
override almost financial difficulties to real estate sector hopefully.

(D).Governmental Measures
The Indian government aims to create a more equitable and fair
transaction between buyers and sellers of properties. Along with this, a Benami
transaction act in real estate was introduced to stop the illegal transactions in
real estate. Aadhar Linkage was compulsory for all property transactions in
order to curb malpractices and inflow of black money. The economic scenario
got to slow down to change the climate of real estate and it compelled
developers to focus more on affordable housing. The concept of ‘housing for
all’ was introduced by the government of India in the 12th five-year plan when
the shortage of housing was estimated at 19 million units. It gave so much
relaxation to developers such as a 1% subsidy on loans up to 1.5 million for
home purchases. PPP model is also one of the attractive model in the Indian
housing market. It is basically a collaboration between the public and private
sectors to create a huge pool of resources.

5.Conclusion:
Even though there are so many difficulties and obstacles in the growth of
Real estate sectors, Various steps being taken by government and Private
sector are constantly contributing in overcoming obstacles in real estate
sector which have been enumerated above. Based on the above
discussion it can be concluded that Real Estate sector in India is

finally out of woods.

THANKING YOU