Dubai: The passage of India’s real estate regulatory law — after years of seemingly endless debates about it — was supposed to be a decisive gamechanger.
It was the law that gave teeth to investor protection rights, whereby buyers could not get endlessly fobbed off by developers with project delays or some of their other whims.
But, has the law started to make its presence felt? Not necessarily, according to Jitu Virwani, Chairman and Managing Director of Embassy Group.
He reckons there needs to be some lead time before the full weight of its impact seeps through the industry.
But, even in the roll-out phase, it will instill some sort of discipline on developers. “It will be a good thing too for some of my colleagues in the industry, who do sometimes knowingly cut the branch they are sitting on by moving money from one project to the other,” said Virwani.
“All our sales proceeds from a particular project are used for that, same with the debt raised for a particular project.
“Until now, there has not been much of regulation as far as real estate is concerned. Going forward, for companies of our size, it will differentiate the men and the boys in the game. And, of course, regulations will protect the apartment owners (and) investors ... make them more vocal.”
Testing the waters
Until now an out and out commercial property developer (80 per cent of its portfolio are offices), the Embassy Group is testing the waters on the residential side.
With a 300-acre spread available, space is not a constraint for its Embassy Springs project, located in northern Bengaluru. And as opposed to building all of the residential offerings on its own, it is offering a mix of plots and properties.
It is a strategy, which Virwani says, will give it the time and space to get on with creating the infrastructure needs while investors do their bit on the plots they buy.
But Embassy will still maintain an overdrive developing its commercial portfolio. Being Bengaluru based does work in its favour. The city has seen take-up of 10 million square feet of office space a year in the recent past. Nothing suggests this sort of demand is likely to subsidise any time soon.
And just to spread its bets geographically, it has launched an IT park in Chennai, got interests in Hyderabad and Pune. But that is about the further reach of where Virwani is prepared to go.
“We are a company that don’t want to get into anything that is controlled or governed by politics,” he said. “That means we are not going to get into northern India.”
