How India's Real Estate Developers Work
Approvals and Red Tape
How developers need dozens of approvals for a project, how delays add costs, and efforts to create single-window clearances.
Developers need many approvals before building.
Examples
- Land use and zoning.
- Building plan sanction.
- Environmental clearance for large projects.
- Fire, airport height and heritage clearances.
- Occupancy certificate at completion.
Delays
Approvals can take months or years, adding interest costs and raising prices.
Corruption risk
Many approvals create opportunities for bribes.
Reforms
- Single-window systems and online approvals in several states.
- Deemed approval if authorities don’t respond in time, in some places.
Economics
Delays are transaction costs that make housing more expensive.
The height clearance
A tower near an airport must wait for an aviation height clearance before its upper floors can be built.
Thinking developers can build as soon as they own land
They need many approvals first.
Key takeaways
- Projects need many approvals.
- Delays add interest costs.
- Approvals create bribery risk.
- Single-window systems aim to speed things up.
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