Tag Archives: Consumer grievances in real estate

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

Next: Baggage of trust deficit & best practices

Misleading terms used by builders

Posted on by Track2Realty
Track2Realty Exclusive

News Point: There are many misleading terms used by the real estate developers to tempt the gullible homebuyers and an escape from the builders’ hook is not easy.

Professional Stress, Real estate professionals, Client demand, brokers pressure, NRI investment, real estate salary, real estate depression, unprofessional real estate, Track2Media Research, Track2RealtyFaced with budget constraints to pay additional PLC (Preferential Location Charges) Gaurav Chaudhary, a homebuyer in Noida Extension, asked the developer to show him an apartment that does not have location-view advantage. To the best of his surprise, he was told that none of the apartments for sale are without the mandatory PLCs. He called off the deal with the apprehension that the builder is playing a mischief.

“I believed it is one of the unfair trade practices in the housing market by this developer. But on my home search later, I learnt that most of the developers in this market were only offering the apartments that had extra loading of PLC. In fact, I was told that there are three kinds of PLCs – park facing, road facing and corner flats. Now by this definition all the apartment will fall into one or the other PLC,” says Chaudhary.

A closer look at the housing market suggests that this is not just a case of Noida Extension. It is a pan-India phenomenon. As a matter of fact, there are certain industry accepted and adopted misleads that are quite prevalent in the housing market. These common exaggerations are part of marketing brochure of all the developers.

We try to list some of the most commonly used and abused exaggerations here:

Strategically located: The project is said to be strategically located with 10 minutes distance to airport or 20 minutes distance to railway station. However, what the brochure does not tell you is that this distance is subject to your over-speeding drive with no traffic at all on the road. In the absence of this luxury, the distance of 20 minutes can also be one hour and 20 minutes.

Social Infra: There are very many good quality schools, hospitals and restaurants coming up near the project. This sounds tempting on the paper where there may be plots available for these social infrastructure projects but hardly any takers for the locality.

Façade of area: The green zone around the project, that looks so very beautiful in the brochure, can also be drainage area with green bushes around. The artistically create project elevation or the sample flat pictures on the brochure are more often than not misleading to the homebuyers.

Free area ratio: 80% green area with landscaping is what is an ideal answer to urban living. It definitely acts as a traction point when the developer offers it. However, even with the permissible FAR of 2 that is allowed in most of the cities, this seems highly improbable. Moreover, the marketing brochure simultaneously also says that the developer will apply for more structures subject to permission. There have been cases of the developer later converting the green zone to raise another tower.

Amenities: State-of-the-art amenities are probably the most over-used and abused claim in the marketing brochure of respective developers. Yes, there would be a gym, a swimming pool and a tennis court etc. But the question that is not answered is that will it be sufficient to serve the entire housing project. In most cases it is not.

The above listed exaggerations are quite common with the marketing brochure of nearly all the developers. Industry seems to know it and have accepted it as a practice; the homebuyers in this country have hardly challenged the builder on misleading claims.

Surabhi Arora- Associate Director, Research at Colliers India agrees that the marketing brochure of any housing project is full of exaggerations nowadays. Few of them are concept marketing like ‘Green Living concept’, ‘Ultra-Luxury’, ‘Super-Luxury’, ‘Smart Homes’, ‘Lifestyle Homes’ etc. The definition of these terms can vary a lot as they are not defined anywhere, but it seems to be attractive from the buyers perspective.

“Another exaggeration used in marketing brochures is the mention of BSP only. Generally, the overall prices come 15 to 25% above the BSP due to various inclusions like car parking, club charges, EDC, IDC, Electricity, PNG and PLCs. For example, now a days almost all the apartments have preferential location charges of 100 to 300 per square feet (PSF) for corner PLC, garden view PLC, swimming pool facing, club facing, road facing PLC, floor PLC, etc.” says Arora.

Amidst all the misleading claims and marketing exaggerations, location mapping is the most glaring one. Generally maps are not to scale and give the wrong perception of the location of the project. For example, the brochure will say 10 minutes from the airport or commercial district; it does not state distance in kilometres.

By: Ravi Sinha