Tag Archives: Buyers protest against builders

Buyers demand best practice in Indian real estate

Posted on by Track2Realty
Track2Realty pan-India Survey

Track2Realty best practices survey portrays poor track record of Indian real estate that is currently struggling to adapt to new business paradigms and patterns – both imposed by regulations and those forced by emerging market paradigms.

Home Buyers Crowd, Public Perception, Public Opinion, Home Buyers' Survey, India real estate news, Indian realty market, India property market, Track2RealtyThe prevailing sentiment among the home buyers is quite negative. The developers have definitely failed to identify the strategic and operational challenges that can goad the sector to adopt the best practices. There is no specified industry standard that can be widely accepted as best practice and the industry bodies are seen as builders’ lobbies.

More than seven out of ten, 74 per cent, feel the prevailing practices in the real estate market has only worsened in recent times. Only 14 per cent believe it has improved a bit, while the rest 12 per cent are not sure about it.

Nearly as many, 68 per cent, are not happy with disclisure norms and builder-buyer agreements. As a matter of fact, the developers even deny them to show any documents before the booking. Only 12 per cent could see the builder-buyer agreements beforehand, and the rest 20 per cent did neither ask for it nor the developer offered it to showcase.

These are the findings of Track2Realty pan-India survey. The survey was aimed at understanding the prevailing practices in the housing market and its critical linkages with the home buying decision. The survey has been conducted in 20 cities – Delhi, Noida, Gurgaon, Mumbai, Kolkata, Bangalore, Hyderabad, Kochi, Ahmedabad, Chennai, Jaipur, Lucknow, Surat, Bhopal, Indore, Patna, Bhuvneshwar, Vijaywad, Pune and Chandigarh – between October 25 and November 10.

A structured set of questions that was based on the home buyers’ understanding of the professional practices and trust & goodwill factor leading to their purchase decision in the housing market was given to the respondents. They belonged to a mix of the luxury, mid-segment and affordable buyers. The survey tried to capture the mind of the home buyers as to which professional practices are apprecited by them and why.

Mind it, the responents are not novices but by and large quite educated home buyers. The study finds that consumer awareness of key industry practices and regulations has been pretty high with buyers being aware of eight out of 10 key industry practices and regulations. Consumers were asked to rate the developers and the prevailing market practices on 25 action points.

These statements are grouped into five professional attributes:

Execution Capabilities

Fiscal Management

Knowledge/Expertise

Ethics/Conduct

Service Excellence

The survey found that consumer awareness of these practices and regulations remained as high as 80 per cent, or 20 out of 25 areas.

When it comes to the delivery timelines, nearly all, 92 per cent, blame it as worst practice on part of the developers. Rest of the 8 per cent feel the developers are also helpless in today’s environment.

In terms of the quality of the house, 72 per cent are not satisfied. Only 15 per cent are quite happy with the house, and 13 per cent feel there has not been major difference between the promise & performance.

Two-third of the respondents, 66 per cent, feel they did not get the amenities and overall livability what was actually promised. 18 per cent are happy with the lifestyle and 16 per cent maintain that livability is quite subjective to deliver a judgment.

The home buyers have to face many kinds of arm twisting by the developers. 48 per cent have been forced to pay escalation charges, 42 per cent feel penalty clause was unjustified and 10 per cent had to face other hidden charges

Is bigger developer actually better? The opinion is divided but nearly half of the respondents, 48 per cent, maintain bigger developers pose bigger problems for the buyers. Only 30 per cent feel bigger developers are better in terms of professional practices, while the rest 22 per cent are not sure about it.

One grudge that three-fourth of the buyers carry against the developer is with the cheating in space. 74 per cent feel loading is unjustified, while 26 per cent crib about change in layout without consent

Project construction status is something that is a subject matter of concern for all the buyers. A vast majority, 82 per cent find the monologue of the developer very unprofessional. 18 per cent complain the developer did not allow them to visit the construction site.

Lack of honest deal in the sector is another worst practice and no less than 60 per cent feel they were taken for a ride with the marketing gimmicks. 22 per cent feel over-promise is a reality in any other industry and the rest 18 per cent could negotiate it on their terms.

In the wake of loss of consumer confidence, have the developers learnt their lessons to initiate partnership with the home buyers? A majority of the buyers maintain that the developers are least bothered to consider their wish list. Only 11 per cent have experience of their feedback being taken seriously, while 7 per cent were asked by the builder to give referrals for some incentives. Rest 82 per cent had no interaction or partnership initiatives on part of the developer.

Even the direct interface between the builder and the buyer is a casualty in the sector. A vast majority, as many as 52 per cent feel there should be no broker or under-writer and the builder should deal with them directly. 34 per cent wish to have regular builder-buyer meeting and the rest 14 per cent complain about the lack of professional staff around the developer.

Arbitration is another critical area for the buyers where the track record of the developers has been pretty poor. Nearly half of the respondents, 46 per cent, want a well defined cancellation policy & exit option for the buyers, while 30 per cent demand uniformity in refund process & interest. Rest 24 per cent demand a buy back process with balanced terms & conditions.

Last, but not the least, an issue that plagues the sector is post purchase and post-delivery, that is facility management. It is one of the most critical areas of concern and buyers’ grievances. While 42 per cent crib about the service quality, 38 per cent have issues with the cost of service and they feel the developers continue to cheat the buyers through facility management. 20 per cent feel most of the issues crop up due to missing consumer connect.

Do buyers have any suggestion that could iron out the differences once the developer has delivered the project? 72 per cent of the buyers assert that defect liability clause itself can make them trust the builder, his professional practices and his intent. 28 per cent suggest the developers should charge one-time cost, included in the apartment cost, for lifetime service.

METHODOLOGY

The survey demography belonged to a mix of society; predominantly educated professionals and nearly equal number of respondents were selected from luxury, mid segment and affordable houses. The buyers had a mix of first time and second time home buyers. Nearly two third of the respondents, 62 per cent, were double-income families. While the buyer awareness was pretty high on real estate and its professional practices, they could easily compare the Indian realities with the best practices of other matured inustries.

A large sample size of 10,000 respondents (500 samples in each city) was targeted. Out of these 8557 samples were finally zeroed down and considered for analysis. Rest 1443 respondents were not considered for evaluation since they either gave incomplete answers, contradicted their responses or were rejected for non-seriousness of their choices & concerns. The total sample size had 60 per cent males and 40 per cent females as a representative set.

The surveying method was one-on-one interviews, in which the researchers explained the theme and purpose of the survey and then handed over the questionnaire to the respondents to be filled and returned the next day. All the researchers being the local residents of the city, they managed to assure the respondents complete anonymity.

The results were based on 10 key industry practices that were linked to 25 action points. These queries were grouped into 5 key concerns of Execution Capabilities, Fiscal Management, Knowledge/Expertise, Ethics/Conduct and Service Excellence.

Miles to go for best practices in Indian real estate

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: The understanding of best practices is very archaic in the Indian real estate. The intent is even more conservative and hence Track2Realty observes that the sector has miles to go before they can look forward to adopt some of the globally accepted best practices.

Best practices, Best practices in Indian real estate, Professional practices in Indian real estate, Cheating in real estate, Builders cheating buyers, Consumer complaints in Indian real estate, India real estate news, Indian realty news, Real estate news India, Indian property market news, Track2Realty, Track2Media Research“Once the customers become captive, the builders start fleecing them. I have already held in the case of DLF that this conduct is called ‘after market abuse’. This is a fit case of abuse of dominance by the opposite parties,” said CCI member R R Prasad in a dissenting order 

FIR against Vatika Group MD, three others on fraud, cheating charges 

Orbit Corp MD Pujit Aggarwal arrested by EOW in Rs 52 crore cheating case 

Manesar land scam blew lid off government nexus with private builders 

Mumbai’s ‘One Avighna Park’ builder Nish Developers booked in INR 2,000-crore fraud case 

ATS, Unitech, Amrapali among the biggest land defaulters to Noida Authority 

Supreme Court snubs Supertech asking the builder to “sink or die but pay back the buyers” 

Unitech mired in litigation in at least five forums—Company Law Board, NCDRC, Supreme Court, High Court and also state consumer forums 

CCI orders probe against Jaypee Group through majority orders in two separate cases involving real estate projects in the national capital region for alleged abuse of dominant market position and imposition of “unfair” conditions on buyers 

Noida builders flout norms, ‘use ground water for construction’ 

What would you make out of a business where the above headlines continue to haunt the home buyers on a routine basis? While the overt consumer activism, social media outcry, media trial and judicial intervention forced the sector to change its tune to Best Practices on the face value, there is a chasm between the lip service and the practices on ground. It seems the developers’ comfort zone lies in to operating in the dark age.

The developers are by and large living in denial. The deep rooted psyche is that once the market conditions improve the buyers have no choice but to run for an asset class that is not only need-based but also a business where the demand far exceeds the supply. This medieval thought process is in fact the biggest roadblock in the way of best practices gaining ground in the Indian real estate.

Best practice is something that the sector never bothered to adopt. But the slowdown and nose diving sales graph are clearly indicating that the developers have no choice but to stop sulking and blaming market conditions for poor sales and start accepting the hard truth.

The buyer today has lost all confidence in developers. The only way this can change is by simple changes the developers make in their business practices that will bring that confidence back. Before they expect market conditions to change, they have to change their own outlook first.

Privately some of the developers admit there is neither any incentive for developers to adopt best practices nor are there penalties for those who do not follow such practices.

A section of analysts also point to developers’ facing challenges in adopting the best practice in the sector. Issues like multi-partner projects; inability of the developer to execute large projects because of their organizational limitations; leverage on finance – personal equity versus project cost; delivering large projects without competent team of vendors; and huge finance cost are some of the issues that force the developers to compromise the professional integrity. 

Devina Ghildial, former MD, South Asia – RICS points out that the success or failure of any real estate and construction project can largely be attributed to money, material, manpower, machinery and management. The collaboration of these factors along with effective project management that encapsulates planning, scheduling and budgeting are critical to project delivery. However, the real estate and construction sector in India for long has been fraught with several long-standing issues such as adequate reforms, coupled with changing market dynamics that pose as bottlenecks in project execution. Liquidity concerns, rising costs and lack of specialized manpower are just some of the challenges that developers have continued to grapple with.

“With the evolution of a global marketplace, international property markets have become intrinsically linked and there are international consequences to consider. Then there are also local factors that affect the performance of the sector. The future success of the Indian real estate and construction sector lies in its ability to regulate its operations and professionals. It is also widely felt that awareness and introduction of internationally recognised and locally relevant best practices such as common area measurement and valuation standards can contribute towards uniform practices and lend quality assurance and credibility to the sector,” says Ghildial. 

By: Ravi Sinha

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