Rating for Real Estate
Developers and Projects
 
 
Formation of State REDCO
 
 

Overview

Investment in housing and property is beset by many uncertainties in the prevailing real estate scenario. The investment and transaction decisions in this sector are characterised by uncertainties due to low level of information.

NAREDCO's mission is to improve the confidence level of both investors and consumers by bringing in fair practices through self- regulation. The rating of Real Estate developer and project would enhance the comfort levels of the consumers while making investment decisions, and also help developer to mobilise funds for their projects. A number of rating mechanisms are available in the market, but their acceptance and adherence by the consumers and developers is hindering the progress of real estate industry. The rating parameters developed by NAREDCO on the basis of Haryana Model need to be widely discussed and debated to bring quality products in the market, which can qualify for the top most grades. A unique aspect of NAREDCO rating is the introduction of real estate industry experts in the process of rating prior to assigning the grades by the rating agencies.

NAREDCO rating is not restricted to only one rating agency (presently only with CRISIL). NAREDCO looks forward to interaction with all such agency in India & abroad. Shortly, NAREDCO would be signing a memorandum of Understanding with ICRA (another premier rating agency in India) for rating of real estate developer and projects.



CRISIL - NAREDCO Rating Rating of Real Estate Projects and Developers

National Real Estate Development Council (NAREDCO) is the apex national body for Real Estate Development, with Hon'ble Minister of Urban Development and Food & Consumer Affairs, Public Sector organisations and all practitioners of real estate sector, for self regulation of industry and bringing ethics and code of conduct in this profession. NAREDCO's mission is to improve the confidence level of lenders, investors and consumers by bringing in professional practices. One of the highly professional methods is to develop a system of rating developers and real estate projects to enhance the confidence levels of lenders, investors and consumers while making lending and / or investment decisions.

Credit Rating Information Services of India Ltd., established in 1987, has come a long way in pioneering the concept of credit rating in India. Today, it is the market leader with dominant share in the rating business in India and is instrumental in developing the framework and methodology for rating rupee denominated debt obligations of Indian corporates and financial institutions along with the debt issues of large infrastructure projects. Individuals, institutional investors and lenders use CRISIL ratings as a benchmark for framing investment and lending policies.

CRISIL as part of their rating service has developed rating methodology for the Real Estate Sector and has completed a large number of projects rating across the country. NAREDCO, being the apex body representing real estate sector, concern has been invited by government to be the agency for rating the developers/ real estate projects, Based on this, NAREDCO entered in a Memorandum of Association with CRISIL for carrying out rating of Real Estate Projects and Developers. The methodology and symbols for the same have been developed by CRISIL, in consultation with NAREDCO and National Housing Bank (NHB).