India Budget 2010-11, a mixed bag for real estate sector: NIREM

Release by Chief Economist, IDS NIREM*

28 February 2010

IDS National Institute of Real Estate Management (IDS NIREM) believes that contrary to the popular demand of and expectation for huge impetus to the housing and real estate sector, the India budget 2010-11 has brought a mixed bag for this sector. Though, some benefits have been extended to housing and real estate sector, the burden imposed will definitely undermine the benefits. The burdens and benefits for the real estate sector are as follows:

The burden:

·   Widening of Service Tax net:

Real Estate Developers will have to pay service tax on transactions where consideration is collected from prospective buyers prior to completion of construction. However, it seems service tax will not be applicable if the full payment is made after completion of the construction.

In addition, other services provided by the builders to prospective buyers such as providing preferential location or external or internal development charges (excluding vehicle-parking space) etc. shall also be covered.

Renting of immovable properties is also under service tax net and the definition of ‘renting of immovable property service’ has been clarified as well as widened to cover rent of vacant land under contract for undertaking construction of buildings or structures for business purposes. This may have negative effect on to the properties bought or to be bought solely for investment purpose.

Excise Duty on Cement:

Excise duty ion cement has been increased which will increase the cost of construction and it is expected that per unit cost for prospective buyers will also increase.

The benefits:

Some emphasis has been given to promote housing in general such as:

·   Extension of Interest subvention scheme upto March 31, 2011,

·   Extension of deadline for completion of pending housing projects by one year without losing tax holiday u/s 80-IB. However, MAT may affect the companies executing such projects.

·   Extension of 1% interest subsidy on housing loans upto Rs. 10 lakhs and where the cost of the property is under Rs. 20 Lakhs. This along with along with increase in the tax slab rates for individuals should provide the necessary demand boost for low-cost housing. 

·   Relaxation in norms for built-up area of shops and other commercial establishments in such eligible housing projects and

·   Increased budgetary allocations for urban development and housing schemes.

·   extension of investment linked deduction benefit to convention centres located in the NCR of Delhi extended from the present 31st March, 2010 to 31st July, 2010 (for purposes of deduction u/s Section 80-ID of the Income-tax Act).

Overall, this budget will have mixed affect on the Indian real estate sector. However, looking at the overall economic scenario, we also need to consider that the budget was presented against mutually conflicting objectives, where-in it is not possible to meet the demands of each individual sector. Another important aspect is that very clearly the Finance Minister took pragmatic approach instead of populist measures, which is a good sign of a growth orientated government. 

The status of real estate management education in India

With the dynamic growth in the Indian real estate business during last few years, the sector attracted attention of fresh graduates and MBA who wanted to start their career. But in the absence of any system of real estate education in India and total absence of any facility for real estate management training, these fresh graduates had no option to get a real estate job at a good level except starting from low end jobs in real estate. This is because real estate is a bit technical and one can't survive unless he has good grasp of the general and legal aspects. Such background can be provided only in academic environment by specialised real estate management institutes or by institutes that offer real estate courses, which are not available in India.

In addition, there is no real estate education or real estate management training facility for working real estate professionals. The working property professionals do not have any facility to enhance their professional knowledge and skill except on the job learning. But we all know the importance of refresher courses such as executive and real estate management development programs for experienced professionals.

Therefore, the absence of real estate education in Indian in general and lack of facility of any type of real estate course in particular is affecting the quality of human resource available for this market.

In addition, absence of real estate education and real estate courses are also worsening the situation of manpower crisis in real estate sector in India.

Considering the above facts, IDS National Institute of Real Estate Management (IDS NIREM), www.nirem.org, has chalked out a long term strategy to develop real estate dedicated human resource. NIREM, set up by the industry development society for real estate, has also launched PG Diploma, Diploma and Certificate courses in commercial real estate, real estate management, real estate sales & agency management, real estate finance, real estate investment, real estate appraisal, facility management etc. These courses are of upto one year duration and are also delivered through distance learning mode.

However, the system of real estate education in India or the facility for real estate management training can't be established alone by one or two institutes. In order to establish this system and to encourage academic institutions to provide real estate courses, we need industry-wide and collaborative efforts of all stakeholders including real estate developers, real estate consultants and brokers, housing finance institutions, public sector organisations in real estate, non-governmental organisations, government agencies etc.  

Career and Job Specialisations in Real Estate Sector

There is a continuous need for employees in private firms and government agencies concerned with developing, appraising, financing and merchandising residential, commercial and industrial real estate.

Real estate agents and brokers will experience massive employment growth in the coming years due to the increasing housing needs of a growing population, as well as the perception that real estate is a good investment. Low interest rates will continue to stimulate sales of real estate, resulting in the need for more Indian Professionals in the national & international market.

Career Opportunities

Real estate majors has opportunities for employment with commercial banks, saving associations, insurance companies, mortgage bankers, consulting firms, real estate developers, property management firms, and residential or commercial and industrial brokerage offices also offer employment.

Types of Careers in Real Estate 

Careers in Residential Brokerage

These Real estate professionals help people buy and sell homes (one of the most important and basic services a real estate agent performs). They need to have thorough knowledge of areas as real estate law, local economics, fair housing laws, types of financing, mortgages and government programs.

Careers in Commercial Brokerage 

Commercial brokers specialize in income-producing properties, such as apartment and office buildings, retail stores and warehouses, shopping centers and industrial parks. Commercial brokers may also have to arrange financing.

Careers in Industrial and Office Brokerage 

Industrial and office brokers specialize in the developing, selling or leasing property used for industry or manufacturing.

Careers in Real Estate Advisory:

Institutional investors are purchasing real estate more and more. But real estate is not like a stock or bond that you can buy and put in a vault. Real estate advisors help investors care for property and, more importantly, select property in the first place by suggesting areas and property types that are likely to experience price appreciation in the future.

Careers in Property Management 

The property manager's primary function is to maintain the property in order to produce the highest possible financial return over the longest period of time.

Careers in Land Development

Land development is one of the most important and challenging specialties in real estate today. Developers turn land into profitable, marketable developments - residential, commercial or industrial.

Careers in Real Estate Appraising 

Real estate appraisers determine the value of properties, like, assessed value for tax purposes, investment value or present value for a potential investor, "book" value for accounting purposes, rental value for income projections and insurable value.

Careers in Urban Planning 

Urban planners work with local governments and other civic groups to anticipate their city's future growth. They propose physical changes to accommodate this growth.

Careers in Real Estate Counseling 

Real estate counselors are in the business of giving advice about property. They are the experts others seek when they want answers to real estate questions.

Careers in Real Estate Research 

Real estate researchers contribute to the decisions of many other real estate specialists. Brokers, property managers, appraisers, financing experts and counselors all depend on data provided by research.

Real Estate Entrepreneur

Real estate is one of the last bastions of the free-enterprising entrepreneur who buys properties in hope that they will rise in value because of improvement in market conditions or renovations. To make it in this career you need to be savvy, hard-working, willing to take risks and fortunate. 

Eligibility

The real estate profession has expanded and offers one of the widest career selections in the business world today. The employers look for candidates with good academic background and prefer those with a professional degree/diploma in the field, excellent communication skills & interpersonal skills. Source: ManpowerIndia.Net

Career in Real Estate Development

Soucre: indianedu.com

Real estate industry is one of the flourishing and dynamic sectors in India. This sector has witnessed several new developments in India. Activities in real estate business cover various categories such as development, appraising and selling of buildings. Real estate brokers and agents have prominent employment growth in India because of increasing housing needs. Career in real estate development covers various areas such as residential brokerage, commercial brokerage, industrial and office brokerage, property management, land development, real estate appraising, urban planning, real estate counseling and real estate research.

Land development is one of the most significant specialties in real estate industry. The developers use the empty land to build government buildings, industrial buildings, commercial offices, residential townships, multiplexes, factories, hotels and restaurants, entertainment centers and shopping malls. The residential and commercial brokers help the people to sell and buy homes and income-producing properties. The property managers maintain the property so that to produce the highest possible financial return over the lone period of time.

Real estate appraisers evaluate the property for tax purposes, book value for accounting purposes, investment value for potential investor and rental value for income projections. The urban planners work with local government to anticipate the future growth of the city. The main task of real estate counselors is to give advice about property. 

There is a constant need for the employees in government agencies and private firms related to appraising, developing, merchandising and financing residential, industrial and commercial real estate. The real estate sector is the second biggest employment generator in India.

Real Estate Job Opportunities

Several subsidiary industries are dependant upon the real estate operations. Numerous jobs are available in related services such as landscaping, electrical installations and plumbing. Job opportunities in real estate development can be obtained in the commercial banks, insurance companies, saving associations, consulting firms, mortgage bankers, property management firms, real estate developers and residential and industrial brokerage offices. 

To get good jobs in real estate development, the candidate should have good academic background. The candidate with professional diploma or degree in real estate field, good interpersonal and communication skills is preferred by the employers. 

Interview: Job opportunities in Indian real estate and construction sectors

The real estate and construction sector in India plays a significant role in terms of employment offered

Yasmin Taj, Ascent (TOI)

Posted On Thursday, January 21, 2010 at 01:20:59 PM

 

1) Please give us an overview of the real estate industry and how it is doing presently. 

The real estate and construction sector in India plays a significant role in terms of value contribution to the country’s economy and in terms of employment offered and this role is expected to grow even further. Growing at an approximate 35 per cent per annum, the Indian real estate and construction industry is expected to reach US$ 180 billion sector by 2020.

India is on the verge of witnessing a sustained investment in infrastructure build up with the Planning Commission having proposed an investment of around US$ 500 billion in the eleventh five-year-plan period (FY 2007- 2012), which is nearly 2.3 times more than the previous five-year-plan. The construction industry will thus witness a strong growth wave powered by large spends in housing, road, ports, water supply and airports development. Larger investments in infrastructure will result in an increased demand for construction and real estate professionals. The residential segment is projected to drive real estate demand in the country, accounting for nearly 63 per cent of the total space demand (amounting to 687 million square feet) during the period 2008-12.

With several growth drivers such as increased investment in infrastructure, demand for residential and commercial property, and favourable government initiatives, the ability of the real estate and construction sector to generate employment is huge, resulting in the increased demand for skilled and trained professionals.

3) Can you describe the current employment trends in the real estate industry? 

While accurate estimates for total employment in the real estate sector are not available, Construction Industry Development Council (CIDC) suggests that the construction industry engages approximately 33 million people, having grown from 14.6 million in 1995. However, only 20 per cent of this population is skilled as most professionals do not have any formal education in the field.

There is a huge shortage of trained and skilled resources across levels. As per CIDC figures, shortage of specialised workforce in the construction industry is approximately 33 per cent. Separate industry estimates indicate that shortage of senior level manpower is more acute at 60 per cent. Civil engineers and architects which form the backbone of the built environment are estimated to be in short supply by ~200 per cent and 50 per cent respectively.

In the recent past, shortage of skilled resources has been responsible for slowing down the construction activity by an average of six months to a year. As a result of this shortage, development firms have been compelled to import architects, designers and planners from countries such as Singapore, Thailand, Australia and New Zealand on handsome salaries thereby pushing up the project costs and impacting profitability.  

4) What kind of career opportunities are available in the real estate industry? 

While there are numerous avenues available within the entire gamut of land, real estate, construction and associated environment fields, the awareness levels of the kind of opportunities available are much lower in India, as compared to the developed economies.

Across the property lifecycle there are several choices available to pursue a career in real estate. The property lifecycle initiates with land surveying, where professionals can have a wide array of experience in geomatics, environment, rural land surveying. There are town and country planning institutes that help bring in trained town planners. At the moment there are about 7,000 vacancies in Government departments in town planning which reflects the immense potential. The built environment engages architects and designers, structural engineers, civil engineers, construction project and quality control managers, building and quantity surveyors.  

5) What are some of the challenges HR professionals face in the real estate industry? 

The most prevalent challenge human resource professionals continue to face in realty firms is the lack of quality talent which stems from the absence of specialised real estate education, bringing in fresh skilled manpower. Compared to the demand of personnel that the sector requires, existing educational institutions and professional bodies have not been able to scale up the delivery of qualified professionals.  

6) Do you think there is adequate education for a career in the real estate sector in India? 

Despite the enormous size and the potential of the real estate and construction sector in India, apart from civil engineering, town planning and architecture, the current education set-up in India does not adequately provide for specific curriculum requirements and specialised courses for the construction and real estate sector. Barring a few institutions, which cater to a very small percentage of the people employed in the sector, no professional training and certifications are available for the professionals in this sector. As a result, most people currently employed in the sector learn fundamentals of the business on the job and hence, the quality of professionals employed and the quality of work delivered, leaves a lot to be desired. This is not an ideal scenario for an industry looking to expand rapidly in the coming years. 

7) What are some of the traits and qualifications employers in the real estate sector look for in the people they hire? 

The basic qualifications that realty firms seek in their candidates include degrees/diplomas in civil engineering, architecture and design, construction management and finance. In relation to the non technical skills that realty firms look at in prospective employees, these are no different than in other service industries. Typically, people with a combination of strong deal-making and interpersonal skills with the ability of analysing, negotiating, researching and planning ahead are sought. Source Times Ascent