Tag Archives: homebuyers

Builders must involve the homebuyers

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: If only the builders involve homebuyers many grey areas borne out of lack of trust can be ironed out.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Track2Media, Track2Realty“Whenever I wished to visit my apartment in the under-construction project, I was not allowed by the security guards in the name of safety issues. The builder does not respond to my e-mails, not even to confirm the construction status of the project. On calling up the sales guys who booked the flat, all that they say is that only when my apartment is ready for fit-out period they will allow me access to the flat. Why can’t these builders involve the home buyers in the whole process?” questions a dejected home buyer, Rajneesh Pant in Mumbai.

This is an issue that is so irritating for most of the home buyers across the country. After having invested their lifetime savings, all that they are supposed to do is to wait. This was alright till the time the market was appreciating and most of the initial buyers were investors. But not anymore! Today’s end user buyers, who are any way conscious of the not-so-appreciating market, demand more involvement during the construction lifecycle of the project.

Buyers today wish to be part of the construction process. The question is to what extent it is feasible to bridge the trust deficit in the sector by involving the buyer. For example, a developer with plans of multi-city villa project has asked the home buyers to customize their requirements themselves on the developer’s website. The idea is to get the feedback of the end users’ needs and aspirations.

Buyers’ feeling of left out 

Indian homebuyers demand involvement during the construction lifecycle of housing project

Buyers are not allowed to often visit the construction site and lack of update make them feel left out

There is no law/mandatory provision that can force the developers to involve homebuyers in housing projects

Developers fear opening up to buyers might lead to arm-twisting by the vested interests

But the developers in their collective consciousness are mostly living in denial. They maintain that already there are many ways through which buyers are made a part of the construction process. The developers are therefore linking up with construction-linked demand plan for the buyers.

According to them, Construction Link Plan (CLP) is the best way to make buyers aware of progress. After booking, remaining amount is linked with the plan where buyers have to pay as per slab completion. For example, one has to pay 10 per cent for plinth level construction, 5 per cent for 3rd slab, 5 per cent for 6th slab and so on.

There are other developers who maintain that by updating customers about the progress of the project with the images of the building, live videos that are shared with the buyers on regular intervals, specially with NRI customers, involvement is already there.

The fact remains that the Indian developers are not only living in denial but also way short of what is happening globally. An ideal eco system where the home buyers have a voice is a mirage in the Indian housing market.

Devang Trivedi, Managing Director of Progressive Group categorically rejects the theory of Indian developers taking a leaf out of what is happening worldwide. According to him, the Indian eco-system, including the approvals and other confidential issues do not allow the developers to come upfront. The idea is not to allow the element of arm-twisting or blackmailing in future.

“This is also the reason why the Indian developers prefer to have more of investors than end users as their first set of buyers. The developers anytime prefer an investor, as he will not bother you with as many questions as the end users. Moreover, his horizon is pretty clear with only the ROI (Return on Investment) and not with nitty-gritty detailing of an apartment,” says Trivedi.

JC Sharma, MD & VC of Sobha Ltd says they are making serious efforts towards deepening their customer relationships and creating urban living spaces. This goes a long way towards nation building and meeting the demand for homes.

“By engaging constantly with our customers, we try to understand change in customer requirements and act accordingly. We also provide a ‘Privilege Kit’ – to all our existing customers. This is an interesting referral program which accrues points that can be redeemed at branded stores like Amazon.com, Tanishq, Flipkart etc,” says Sharma.

Beyond the defence of the sector in its collective consciousness, the fact lies that the Indian home buyers by and large carry a feeling of being left out in the housing market. They feel that in a sellers’ market they have limited options. Involving the buyers can change their outlook towards the housing market and the developers.

A handful of developers who have taken the lead to involve the buyers, though only for the limited purposes, do understand the benefits of the relationship management with the buyers. In the age of consumer activism, often to the extent of blackmailing, involving the buyers might appear to be fraught with danger, it nevertheless helps more than hurts the cause of the sector.

Ravi Sinha

Banks flush with funds but no rate cut

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: After no reduction in repo rate, the homebuyers are questioning the theory of policy makers that demonetization has led to banks flush with funds.

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2Realty“Ever since the demonetization we have been told that the move would be beneficial for the hard-to-manage homebuyers like us. Everyone within the policy corridors and experts were talking that banks would now be flush with funds and it would lead to lower interest rates for the homebuyers. But the quo status on the interest rate has not been in sync with the general perception of the market,” rues Swati Chopra, a prospective homebuyer in Gurgaon.

Like Swati, millions of prospective homebuyers across the country are today wondering why the Reserve bank of India (RBI) has kept the repo rate unchanged. The news of unchanged rate has come as a dampener for the homebuyers who were expecting some substantial sops after the symbolic gesture with the Union Budget that promised more affordable houses.

The RBI on Wednesday, Feb 8, surprised the market as it has kept the repo rate unchanged at 6.25% in its monetary policy review. The disappointed market in general and the homebuyers in particular are not impressed with the arguments of the apex bank about inflation concerns.

The expectations of the homebuyers across the nation have been about the lower repo rate leading to cheaper home loans. After all, they have only recently taken the demonetization hit with the promise that the banks would now be flush with funds.

Homebuyers question financial rationality

  • Homebuyers have taken the demonetization hit with the promise of banks to flush with funds
  • Buyers question what is benefit of banks being flush with funds if cost of borrowing does not reduce
  • Union budget 2017-18 promised affordable housing but the buyers have not been incentivized with lower interest rates
  • A lower interest rate would also fuel demand in consumption and revitalize the economy 

The industry reaction has also been that of concern, even though the leading players preferred caution to not overtly criticize the move. Anshuman Magazine, Chairman, India and South East Asia, CBRE admits that the decision to keep the repo rate unchanged has come as a surprise.

“While the recent demonetization drive has brought in the necessary liquidity into the banks, lowering the repo rate would have helped ease borrowing costs. This would have provided an added thrust to the government’s initiatives for affordable housing and fuelled demand. A low inflation rate amidst slowdown in projected economic growth provided a conducive environment to reduce rates,” says Magazine.

Nikhil Hawelia, Managing Director of Hawelia Group admits that after the budget that promised affordable housing the quo status on repo rate defies the direction of the economy being promised. According to him, if the government is really serious about affordable housing then along with incentivizing the developers to create the housing stock they should also incentivize the homebuyers with lower cost of borrowing.

“The quo status on repo rate means that the market will remain standstill for one more quarter. As developers of affordable housing, we were expecting a sharp cut to fuel the positivity of the Union Budget for this segment of housing. There are reasons for all the stakeholders to feel disappointed,” says Hawelia.

Vineet Relia, Managing Director, SARE Homes feels the RBI’s decision to keep the repo rate unchanged at 6.25% is disappointing, though not unexpected. The fact that credit growth has slipped to multi-year lows, despite lending rates falling by nearly 150 basis points since early 2015, is proof that other factors are at play.

“Demonetisation has accelerated the transmission of rate cuts over the past two months. While it has benefited select borrowers, it has squeezed incomes for most savers, with deposit rates plummeting over two percentage points over the past two years. A cut in policy rate may do more harm than good if inflation creeps up with the rise in global commodity prices,” says Relia.

Experts also believe India needs positive interest rates to induce savings and push up investments. Nonetheless, since demand in real estate and allied industries remains sluggish, a rate cut could have improved liquidity and created renewed interest in property purchase. However, the quo status has sent a warning bell that all is not that well with the state of Indian economy. 

The homebuyers are also asking today whether the rate was kept on hold to assess demonetization impact on inflation. If that is the case, then the theory of demonetization making banks flush with funds does not hold ground. It is generally believed that a rate cut at this stage would have helped in lowering the home loan interest rates further after most banks cut down their interest rates on loan in past couple of months. 

By: Ravi Sinha

An open letter to CMD, Paras Buildtech

Posted on by Track2Realty
Track2Realty Exclusive

Can a builder rebrand his portfolio or corporate identity when his existing homebuyers are taking to streets and are silenced with threatening and criminal cases? Paras Buildtech seems to think so. Instead of addressing the grievances of the homebuyers the developer goes on an expensive rebranding spree. Ravi Sinha writes an open letter.  

Paras Advertising, Paras BuidtechDear Mr Harindra Nagar

I was amusingly surprised to see your cover jacket advertisement with the national editions of two leading newspapers, Times of India and Hindustan Times. It was also displayed on the billboards all around the city. However, the journalist in me could neither figure out the objective of this flaunt nor could I make out the benefits of this costly overdrive.

The ad spend might have been peanuts to you but I feel had the amount been spent on addressing the legitimate grievances of your existing customers it would have earned you much better image makeover.

Any way! It is your choice where to spend the money, for reasons fair or foul. But being a resident of one of your projects, Paras Tierea, Sector 137, Noida Expressway, I can vouchsafe after my interactions with the fellow residents that the rebranding has not gone down well with the sulking homebuyers. There is a general feeling that the builder is spending a fortune at the cost of the buyers but not spending anything to address the concerns of poor construction and poor upkeep of the society.

As a journalist who speacialises in brand management, including the brand rating & ranking of Indian real estate companies, I do agree with most of the objections been raised by your customers. While the residents of Paras Tierea were venting out their frustration & anger in the WhatsApp Group created by the society residents, I was rather trying to understand the very objective of the advertising campaign.

Was it meant to sell your unsold inventory? I don’t think so. Had this been the case the project that you would have liked to sell must have been highlighted. Was it meant to address the investors for future funding? It seems to be highly unlikely as the financial credentials of the company was glaringly missing in the ad campaign. Was it meant to rebrand the corporate ethos? Unfortunately, the ad raised more questions than it could answer any about the corporate identity or any strategic shift in corporate ethos.

To me it looked more like a confused and desperate act of a builder who simple does not know how to deal with the growing number of dissatisfied customers. After all, false and fraudulent cases have also failed to silence the dissatisfied homebuyers. Threatening to the residents by the facility management and the security guards has backfired time and again.

With more and more residents coming out in the open, as now residents of Paras Seasons are also meeting the residents of Paras Tierea to join hands for a common fight, the ad in a way only says ‘Paras too has financial clout to flaunt as a company’.

In my understanding of the brand and corporate branding, the message with your advertising campaign was vague and esoteric. The two-page advertising did nowhere spelt out the USP or the market differentiation of a developer who has delivered a few projects and is going to add up significantly to the portfolio.

At a time when some of the responsible developers are roping in the buyers as their brand ambassadors and leveraging with the desirable element of trust quotient, the ad campaign of yours was glaringly missing with the most important element of ‘Happy Homebuyers’.

Your advertising focus on ‘Tomorrow’ with this new brand campaign only made the residents of Paras Tierea ridicule with slogans like ‘No hope of improvement today’ and ‘Tomorrow never comes’.

Though I may not agree with all the humour that the campaign could generate among the existing buyers, this much I would say that the campaign did not make any sense to me. It could neither impress as a corporate rebranding nor as a developer who needs to re-strategise in order to deal with the ever growing number of dissatisfied buyers.

I would like to remind you Mr Nagar that the brands are not built on billboards but in the minds and hearts of the target audience, both existing customers as well as the potential customers. Do you even understand the power of word-of-mouth publicity sir? It can make a brand, elevate its positioning and earn you scores of referral customers.

For your kind information, let me share with you that as per our market study with Track2Realty no less than one-third buyers in most of the projects today are referral buyers. Another one-third buy the project after so much of due diligence and cross checking with the past customers through friends & relatives that they can also be conveniently termed as the referral buyers.

Sadly, for you this double-edged sword of word-of-mouth publicity has only earned you negativity and future potential turn offs. And you just can not blame the victims as the villains for highlighting their plight and agony in the public domain gentleman.

The homebuyers approached your office time and again for reconciliation and course correction. Please understand that it is not just about the poor construction quality of your project but even more problematic is the attitude of the facility staff. A one-time fraud, even with construction quality, does not affect the brand equity as much as the constant deception.

My personal feeling is that you are surrounded by the kind of ‘Yes Men’ who do not wish the issues to be sorted out. May be their survival depends on the ‘politics of confusion’ around you that empowers them by organizational default in hierarchy.

Had you spent the money that you spend on self-glorifying advertising, you would have made a brand differentiation in a market like Noida that is notorious for the lack of best practices. But then I personally feel it is the deadly combination of ignorance coupled with arrogance that failed you as a responsible developer. You could not create a market disruption despite of having the resources, both financial and otherwise, to emerge as a credible brand.

These are anyway my personal opinion and I write this open letter to you with the right intention of reminding you that it is never too late to make a fresh beginning. You can still win over your existing buyers.

Trust me! Based on my interaction with them, I must tell you that a large majority of these gullible buyers have bare minimum expectations. Even after having bought a house with their lifetime savings, and being harassed & humiliated due to poor construction and even more pathetic maintenance, they can still be won over in due course of time if you come forward with an open mind to listen and address their legitimate concerns.

The big question Mr Nagar today is whether you sincerely want to rebrand Paras Buildtech as a responsible developer or a seasoned corporate entity. You can yet again conveniently ignore my open letter or the grey issues been raised here. After all, living in denial is a pretty convenient option sir. But then the easy way out is not really the best way out.  It is definitely not the way forward for a builder who has weathered the unprecedented consumer grievances and aspires to be elevated as a serious corporate entity.

Yours 

A journalist been forced to be critic

Slowing economy & challenges of budget largesse

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: The government is in a fix to offer middle class Indians budget incentives in general and to the homebuyers in particular to send across the message that it is indeed committed to its oft-repeated objective of ‘Housing for All’.

Union Budget, Money, Rupees, Budget for home, track2Realty, India real estate news, Indian property market, Union Budget for real estate sector, Track2RealtyTo say the eco-political compulsions are asking the government to dole out largesse in the upcoming Union Budget 2017-18 would be stating the obvious. The government is in a fix to offer middle class Indians budget incentives in general and to the homebuyers in particular to send across the message that it is indeed committed to its oft-repeated objective of ‘Housing for All’.

However, the state of the Indian economy suggests the government will have to walk a tight rope with the Union Budget 2017-18 amidst the forecast of a slowing economy. Though the banks are now flush with funds due to the government’s demonetisation and limiting the extent of cash withdrawal, the overall effect of the measure has not gone down well with the health of overall economy.

Already, the data released by the Indian Central Statistics Office has estimated that the economic growth would be slow to 7.1 per cent in the current fiscal year ending March 31. This is not only slower than the government’s own estimation but also slow compared to 7.6 per cent last year. Among the economic experts the slow growth forecast is seen as the first indicator of the impact of the demonetisation drive.

The estimates have been reduced in all the sectors, except agriculture, which has improved due to the positive monsoon season. The analysts believe this forecast is very toned down since the real impact would be seen in the upcoming fiscal year. Moreover, the impact on agriculture would also be visible as the demonetisation immediately prior to the crop season will take its toll.

Challenges galore with budget

  • The emerging eco-political compulsions suggest Finance Minister to read a home buyer budget for the middle class Indians
  • The state of economy leaves little room for any budget bonanza
  • Feelers with the rate cut ahead of budget indicate more sops but the economic forecast a dampener
  • Growth in real estate can help GDP growth but excess liquidity could also derail the economy with artificial growth

The real estate fraternity is nevertheless upbeat and believes that the state of economy definitely allows the government to provide major relief to the real estate sector in general and the home buyers in particular. 

They cite the Morgan Stanley Research Report dated 6th December 2016, which suggests the Indian annual property sales in expected to propel from 2015′s USD 105 billion to USD 462 billion in 2025.  Research estimates a 14% CAGR for property sector demand growth, 2015-20 (8% volume, 6% pricing), and an 18% CAGR in the five years after that, versus the 12% CAGR (5% volume, 7% price) of the past six years. 

India in 2015 appears similar to China in 2000-03 on key macro parameters – GDP (US$1.8trn), per capita income (US$1,500), urbanization (33%), demographics (27-year median age, with comparable population size), and improvements in the regulatory environment. In the past 15 years, China’s economy and per capita income have quadrupled, urbanization has doubled, and the property segment has grown 10x, to US$1.3 trillion in annual sales. In the longer term, this implies a structural uplift to India’s property sector.

“It is a peculiar situation and the impact of the state of economy is market ot market reality. This is because while the cash driven markets like Dehi-NCR are witness to slowdown, the service class markets are not that much affected. Of course, the slow moving job market is challenging but on a macro level one-size-fits-all statement cannot be made about the economic situation,” says Nikhil Hawelia, Managing Director of Hawelia Group.

Kaizad Hateria, Brand Custodian and Chief Customer Delight Officer, Rustomjee Group asserts that it is not that any sops are being taken away from the economy; it is in fact adding to the economy. The budgetary relief will not cost the economy. In fact, it will be a boost to the economy. It is high time that the real estate should be taken seriously. For instance, opening of PE should be done in a speedy manner.

“Based on proprietary regression analysis and in-depth China case study, research estimate a 14% CAGR for property sector demand growth, 2015-20 (8% volume, 6% pricing), and an 18% CAGR in the five years after that, versus the 12% CAGR (5% volume, 7% price) of the past six years. Inadequate urban planning and low infrastructure spending are key risks to our outlook,” says Hateria.

Parth Mehta, Managing Director, Paradigm Realty believes that due to demonetization there are expectations of benefits for the common man in the upcoming budget. Realty sector will be benefited indirectly by exemption in tax rates, thus increase in buyers purchase power for budget housing. The budget needs to work on holistic model where the developers are incentivized for budget housing.

“The budget should cover the entire value chain right from materials procurement, government premiums, lower turnaround time for approvals to developers and as well stamp duty payments, lower home loans rate for the buyers. This would ensure that complete value chain is perfected for the delivery of the affordable housing,” says Mehta.

Vivek Mohanani, Joint Managing Director, Ekta World adds that in the previous two Union Budget sessions, the government offered various incentives to businesses in a bid to boost investments and economic growth. The year 2016 has laid a strong future foundation for the real estate sector with the policies like Smart Cities concept, Housing for All by 2022, GST, RERA Act implementation, Demonetization and Benami Transaction act, which will further sanitise the real estate sector in the coming years.

“The real estate market is expected to gain positive sentiments post the announcement of the budget. The upcoming Union Budget 2017-18 is believed to be heading towards the right direction looking at the steps and initiatives taken by the government in the current financial year,” says Mohanani.

Hopes apart, it is challenging for the Finance Minister to ensure that the Indian real estate remains a predominantly end-user market, driven by urban immigrants, upgrades & family nuclearisation, and the average Indian moving towards home buying age (projected to be 31 years, by 2025). Proposed regulatory changes (e.g., RERA, REITs, demonetisation) should improve sector practices and benefit quality developers but the state of the Indian economy leaves little room for any largesse.

By: Ravi Sinha