Realty sector pillar of economic growth: Munjal

Sunil Kant Munjal
Chairman, Hero Realty talks to Geetu Vaid

Besides battling a stubborn slowdown, the real estate sector in the country has also been grappling with trust deficit precipitated by fly-by-night developers, delays, debts and litigations. Building on trust, offering quality habitations and creating room for creativity and innovation in the realty landscape has been the mantra for real estate ventures of established business conglomerates like the $5-billion Hero Group. Currently, the group has two projects coming up in Ludhiana and Mohali. Sunil Kant Munjal, Chairman, Hero Corporate Services and Hero Realty, talks about the realty ecosystem in the country and how the group is moving ahead with a vision to carve a niche.

Q. Are the Real Estate Regulation law, thrust to smart cities, Housing for All and AMRUT sufficient steps to resurrect real estate in India?

A. Real estate is one of the major pillars of economic growth of our country. Growing at 20% per annum, it has been contributing around 5-6% to India’s GDP. The sector has a huge multiplier effect on the economy and is the second largest employment generator. So going by these figures, the government should go all out to encourage this sector for the growth of overall economy. If we look at the US model of growth then the three sectors on which the maximum focus is are: automotive industry, steel production and housing. These are the most important sectors for the growth of any economy. In India, too, we need to shortlist 3-4 sectors to ensure sustainable growth if the country has to become a major economic force. And housing is one sector that can’t be ignored if economy has to grow. The recent policy decisions and the setting up of a regulator for this sector are welcome steps as these will address a number of concerns of the stakeholders be it the consumers or the developers.

Q. How is the business environment in the country set to change post the GST Bill?

A. The passage of the GST Amendment Bill in Parliament is the biggest reform in India since 1991. I see three main benefits. First, it will boost economic growth by streamlining domestic supply chains and removing the compliance burden of contradictory state tax regimes. Second, it will contribute significantly to India’s ongoing efforts to improve India’s standing as a business-friendly destination. Third, it will usher in greater compliance, increase the number of taxpayers and therefore, widen the tax base.

Q. Will the Smart City initiative impact our urban living standards?

A. There is no standard definition of a smart city, so India will have to evolve its own. To me, a smart city must inherently address the challenges of livability, scalability and sustainability. Making a city smart doesn’t just mean investing heavily in IT. IT is just one of the many tools required into making the quality of life better, along with smarter planning, deeper resourcing and better devolution of power. There is also a very important social and behavioral aspect to smart cities that is often ignored — residents of a city, cutting across income levels and standing in society, must feel a sense of pride and empathy with their city — and there must be an incentive for each resident to do his or her bit.

Q. So does the answer lie in smart habitations and intelligently designed homes?

A. There has to be realisation that the future generations are going to live in high rises and gated communities and this is the time to explore, evolve and create new design ethos for such communities to enrich the lives of people moving in there. And the real estate players have a huge role in designing such spaces that not only offer quality construction but create quality lifestyle standards that can then be complemented with the IT-powered smart cities.

Q. What is the business model that your group is applying in the real estate space?

A. It is a different and multi-pronged business model wherein we are committed to enriching the lives of customers in a number of ways. The projects at Mohali and Ludhiana are based on the themes of fitness, sustainability, community and creativity that will be reflected in the design and facilities made available to the homebuyers. 

Q. Real estate projects and delay seem to have become synonymous in India. Do you agree with this?

A. Going by the recent spurt in consumer complaints and protests at different places this seems to be true. There are three main reasons for this. Firstly, it is the complicated and lengthy regulatory system which all builders have to follow. Getting the required clearances before commencing construction can take up to 18 months. Then there is the financial condition and indiscipline of the developers. Siphoning of funds from one project to another due to high cost of borrowing leads to unfinished projects and missed deadlines. Third reason is the overall slowdown in the sector.