Land registration + approvals - Reforms

Real estate developers in India spend on average 1.5-2 years in obtaining all necessary approvals. In contrast, developers in Thailand and Malaysia receive all their approvals in 6 and 9 months respectively. Thus, by the time a developer in Thailand obtains all the relevant permits/approvals, its Indian counterpart would still be awaiting its building plan approval. An Indian developer interacts with more than 30 agencies to receive the required (50-70) approvals.

A developer in India needs 12-18 months from the time it commences work on a new launch to open the project for bookings. If the approval process is rationalized, many more projects could get approved within that time frame, increasing supply manifold, leading to a drop in real estate prices. The labyrinthine approval process ensures that supply lags demand during up-cycles, keeping prices elevated.

A developer needs to finance land cost for 18-24 months before it can launch the project. This financing cost is passed on to the consumer. Developers take longer to bring in enough supply in the up-cycle and cannot cut back supply quickly in a down-cycle. This leads to sharp run-ups in prices during up-cycles, followed by sharp falls during down-cycles. Forecasting quarterly revenues is also tricky, as revenue recognition from pre-sold projects could get delayed for want of approvals.