Even as the domestic economy is showing clear signs of a pickup, the Indian real estate sector is not out of the woods yet as oversupply of residential and commercial projects will continue to haunt realtors for the next 12-18 months, DLF Limited chairman KP Singh said. In an interview Mr Singh said that the real estate sector will witness consolidation and some players (fly-by-night-operators) may go down under as part of a normal business cycle. “I feel overwhelmed by a deep sense of gratitude and humility. I would like to express my heartfelt thanks to the Government of India for this great honour and for recognising my lifetime work. I consider it a tribute to all those who have supported us in the mission of building a new India. This is recognition for the entire housing and construction industry”, he said on receiving the honour.

While appreciating the government for not allowing the liberal flow of funds in the real estate sector, Mr Singh said that the government needs to give importance to this sector as it is one of the largest employment generators and is considered a major engine of growth. “For growth of India, realty is an important sector as it contributes substantially to the GDP and is also one of the biggest employment generators,” he said. Mr Singh said that although the award is recognition to the industry as a whole, the government needs to take significant steps towards reforms to boost the sector. So far, enough attention has not been paid to the industry, now it is time to change in that behaviour at the ground level, he said.

“There is a need for massive reforms in the real estate sector and change the archaic law that prevents growth. Realty has so far been a laggard area,” he added. Reform will also prevent the mushrooming of entry of unauthorised and unscrupulous developers. Currently 60% of development in India is through unauthorised. The Reserve Bank of India (RBI) had relaxed the provisioning norms for the banks last year for the real estate sector, allowing them to restructure the real estate loan beyond one year. As a result, those entire loan which were restructured in 2009 are coming for payment later this year. Experts feel that some of the mid-sized companies are unlikely to meet their commitment, which in turn will affect the entire sector.

On the issue of need of regulator, the largest developer said given the legal structure of the country, it is not required as it would create a multi-layers system for every state government. Because real estate is a state-subject, it would be difficult for a central regulating authority to operate, he added. Mr Singh said that the government needs to bring in changes in its thinking process. India should ‘think big and create surplus’ as against the current mindset of ‘think small and manage shortage’. Because of socialistic approach, the country has adopted the philosophy of optimising usage for every one. India of 21st century can now afford to think big and create surplus, he added.

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