High cost of construction a major deterrent for real estate projects: Dutt
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Dutt is also the head of Tata Housing. He said that the government and judiciary should hold accountable all the stakeholders who are involved in real estate project approval and development work to make things easier.
The development of real estate projects in India is no longer economically viable due to the high cost of land, capital and construction, as well as other economic uncertainties. Sanjay Dutt, Managing Director (MD) and Chief Executive Officer (CEO) of Tata Realty & Infrastructure Limited has said this. Dutt is also the head of Tata Housing. He said that the government and judiciary should hold accountable all the stakeholders who are involved in real estate project approval and development work to make things easier.
He said that real estate projects are on the verge of becoming non-profitable. When asked about the factors making the projects unviable, Dutt said, “Real estate in India requires a lot of capital, firstly to acquire the land. In major cities like NCR, Mumbai and Bengaluru, it (land cost) accounts for about 50 per cent to 80-85 per cent of the project cost.
He informed that it takes two-three years to get all the regulatory approvals to design the project and start construction and marketing activities. He said that developers start projects on the basis of current cost, but this cost can increase significantly during the construction period of 5-6 years. He said that the builders are forced to bear the burden of increase in the cost of construction material and cost of other things. He added that builders also have to deal with frequent changes in regulations from time to time.
He added that builders also have to deal with “some global crisis, some economic crisis, some political crisis which happens in 5-6 years of construction cycle of any real estate project”. Dutt said there are “significant risks and uncertainties” in developing real estate projects and the onus is on the developers to ensure timely completion of the project. He believes that the government can consider making all stakeholders accountable. This can improve things a lot.
Disclaimer:IndiaTheNews has not edited this news. This news has been published from PTI-language feed.
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