Tag Archives: indian real estate news

Mahindra Lifespaces launches its industrial clusters brand ORIGINS

Posted on by Track2Realty

News Point: First two projects in North Chennai and Ahmedabad, with an estimated investment of INR 600 crores.

Mahindra Lifespaces, Corporate Real Estate Developers, TERI, India real estate news, Sustainable Urban Development, India property market, Track2Realty, Green BuildingsMahindra Lifespace Developers has introduced, its new brand of industrial clusters located across India.  ‘ORIGINS by Mahindra World City’ envisions accelerated economic growth via world-class industrial ecosystems that will attract investment in manufacturing, and promote ‘Make in India’.

These developments will address the growing need for sustainable industrial infrastructure to provide impetus to India’s rising prowess as a global manufacturing and investment destination.

The first project is coming up in North Chennai with a Phase 1 development of 264 acres, a joint venture between Mahindra World City Developers Limited and Sumitomo Corporation of Japan.

The second project is located near Ahmedabad, with a Phase 1 development of 268 acres, and is being developed along with International Finance Corporation (IFC) as a strategic partner.

Together, these industrial clusters are expected to create direct employment for around 20000 persons and will target companies across the engineering, medical equipment, food processing and logistics sectors, amongst others.

Arun Nanda, Chairman, Mahindra Lifespace Developers Ltd., said, “With India expected to emerge among the top five manufacturing countries globally, sustainable and future-ready business ecosystems will act as a gamechanger for inclusive growth, job creation and productivity enhancement. ORIGINS by Mahindra World City embodies the Mahindra Group’s vision to create world-class urban infrastructure in India.” 

ORIGINS by Mahindra World City comprises industrial clusters of international standards, spanning 250 – 600 acres, and located in high growth corridors across India.

These industrial clusters will enable faster go-to-market for both domestic and global companies by way of clear land titles; plug-and-play infrastructure; in-house expertise in operations and security; and a range of business support services such as warehousing, logistics, banks, food courts, etc.  Customers will benefit from a hassle-free environment and value-added services such as fulfilment centres, industrial kitchens and industrial waste management.

Moreover, the presence of world-class companies, co-located with supporting commercial and residential developments, and skill development centres will serve to attract talent.

In line with Mahindra Lifespaces’ focus on sustainable urban development, they will also incorporate environment-friendly, smart elements; these encompass solutions in the areas of water and waste management, energy efficiency, security, etc.

Anita Arjundas, Managing Director, Mahindra Lifespace Developers Ltd., added, “ORIGINS by Mahindra World City is born out of our vision to develop a pan-India network of robust manufacturing ecosystems, where businesses can thrive.  These industrial clusters will support the shift towards development beyond current urban centres, while making available a holistic environment conducive to accelerated business growth.” 

These industrial clusters take forward the Mahindra World City vision in India.  Built on the ethos of ‘Livelihood, Living and Life’, the pioneering Mahindra World City developments in Chennai and Jaipur together span nearly 4500 acres; house 150 global and domestic companies that have created direct employment for over 45,000 persons; have generated exports exceeding USD 1.75 billion annually; and boost the economic and social development of neighbouring towns and villages.

Indian homebuyers struggling for basic consumer rights

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: While the matured property markets are adopting evolving best practices, the Indian market is not offering even the basic consumer rights to the homebuyers. 

Homebuyer Confusion, Confused homebuyer, Homebuyers grievances, Homebuyers' legal options, India real estate news, Indian property market news, Track2RealtySome discussions about best practices in the Indian real estate has started because today the investors also do not want their money to be locked in an asset that is neither growing nor is likely to get delivered. Worse even, there is no authority or court in India that has been successful in getting a stalled project restarted or in forcing a bankrupt builder into selling his assets to compensate his allottees.

AS Sivaramakrishnan, Head – Residential Services, CBRE South Asia maintains that product quality and product delivery, along with pace of construction, are becoming the current key words in customer satisfaction for home purchases. Especially with the implementation of the Real Estate (Regulation and Development) Bill, these practices will become even more important for development firms to keep in mind.

“A key area of differentiation between mature global markets and the housing market in India lies in the fact that all aspects of developing and maintaining a residential project are handled by professional firms, unlike the case in India. Developers should increasingly focus on their product rather than on marketing paraphernalia, which will help in controlling market perceptions,” says Sivaramakrishnan.

Vineet Relia, Managing Director, SARE Homes feels transparency, fair norms and delivering on promises made either verbally or in the builder-buyer agreements are imperative to change negative perceptions. Moreover, instead of a commodity-selling approach, developers should adopt a value-based, professional approach that keeps customers fully informed about all the benefits of investing in a particular project. A professional approach can ensure all unique project propositions – location, amenities, pricing, after-sales service and other salient points – are made crystal clear to customers. Transparency in all dealings and practices is required to transform perceptions about the Indian real estate industry.

“Best practices in Indian real estate were majorly non-existent, until recently. Moreover, each market has its own drivers and challenges, which differ from other markets. Comparisons can therefore be odious and misplaced. But the best practices used by a few professional developers compare favourably with the best globally, including that in emerging markets. But consistent performance, proper pricing of products and excellent service at all times – before, during and after sales – can play a pivotal role in the success of any developer and such practices are bound to gain ground in the days ahead,” says Relia.

The need of the hour is to take lessons from streamlined markets abroad and introduce comprehensive disclosure norms. For instance, US home buyers are entitled to receive a number of disclosures during the course of the house purchase.

These disclosures give a homebuyer a somewhat transparent and fair picture of what he is getting into. On the other hand, Indian home buyers sign agreements that are one sided. They even get unpleasant surprises in terms of hidden costs.

Analysts believe bulk of the challenges or the evils can be addressed if the RERA is implemented sincerely and effectively. The judiciary is getting more and more conscious and discharging consumer related cases quickly and in most cases with a consumer protection mindset.

While the homebuyers in mature markets may be having a level playing field, the Indian buyers are struggling for the most basic consumer rights. The demands of the buyers in this part of the world are not very unrealistic.

Some of the common issues are: 

Title assurance and right to see all approvals in place

Rates based on carpet area

Right to a full refund within 30 days of booking

Equal penalty for delay in completion

No change in area bought

No hidden charges or escalation charges

Separate escrow account mechanism

Free first transfer

Fair agreements with indemnities for delays, poor workmanship etc.

Open and transparent communication throughout the project period

These are not very unreasonable expectations and can be achieved without any extra burden, if only the developer is committed to adopt best practices. However, that is easier said than done and Indian real estate has a long way to go before we claim to be at par with the developed countries.

There is a lot that needs to be done at government level as well to instill confidence in homebuyers. Land titling, title insurance, quick judicial remedies, standardisation of numerous norms etc are areas yet to be addressed.

By: Ravi Sinha

 

NRI investment pattern changing in real estate

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: NRI homebuyers are getting more and more realistic in the housing market of India.

NRI, Non Resident Indians, Indian Diaspora, PIO,  Persons of Indian Origin, NRI investment in India, NRI investment in real estate, NRI investment in property market, NRI investment pattern, Where are NRIs investing, India real estate news, Real estate news India, Indian realty news, Indian property market, Track2Realty, Track2Media Research When Alka Rajpurohit, an NRI from Dubai told the local property agent in Delhi-NCR that she would like to sell their luxury apartment in Gurgaon and instead wants to buy a premium apartment in Noida, the broker was surprised. However, this has not been first such request and the broker soon realized that the market dynamics of NRI investment into the Indian property is changing.

From NRI investors and speculators to future end user buyers, the NRI investment pattern has taken a tectonic shift. Moreover, no one is nowadays investing into ultra luxury property or saturated locations. Mid-segment apartment in relatively affordable markets are very much in demand.

Take the case of Arjun Parihar, an NRI from Boston who is now returning to India and has already invested in a mid-segment apartment in Ghaziabad. Though a native of Ghaziabad, his choice is governed by the economic fundamentals than nostalgia of home city.

“People think we make lots of disposable money, but life is not that easy for us in foreign countries. And if I invest in a plush luxurious apartment, then my finances will not allow me to start my business here. What will I do with luxury apartment but no source of livelihood,” says Parihar.

NRI realities

95% NRIs are employees & wage earners and can’t afford luxury property in India

Rich NRIs have burnt their fingers or learnt with experience of peer group to avoid luxury

Small ticket investment gives better exit option & rental returns

Job insecurity globally forcing NRIs to be realistic in housing investment back home

As per the data available with Track2Realty, the Malayalese and other South Indian NRIs are nowadays investing into Kochi and Coimbatore than Bangalore or Chennai. Gujarati NRIs are investing into Ahmedabad and Vadodara than Mumbai. Mumbai-born NRIs are investing into Pune and Nashik than Mumbai. North Indian NRIs are investing into Noida and Ghaziabad than Gurgaon. One common thread into all these investments is scaling down of property segment – from ultra luxury to mid-segment and premium housing.

Kaizad Hateria, Brand Custodian & Chief Customer Delight Officer, Rustomjee Group agrees that nowadays in majority of the cases the clients who buy luxury and super luxury properties are end users. Every end user does not have budget to invest in luxury or super luxury property developments.

“Self employed segment of NRIs are more focused to have investment portfolio of different projects instead of putting money in large size developments. They plan to divide their money among various small ticket size projects where they can sell easily if they want to or they can fetch good amount of rentals from various investments done,” says Hateria.

Manju Yagnik, Vice Chairperson, Nahar Group points out that there has been a trend among the NRI community to invest in the Rs. 60 lakh to Rs. 2 crore in properties depending on their social strata, as this looks to be an attractive and safer option to invest. Most of the affordable luxury housing projects are found in this price bracket in metro cities like Mumbai with high appreciation in long run. Currently the NRIs prefer not to take a risk by investing in super high-ticket size projects, as market is not as buoyant in this segment.

“NRIs also like to keep the option of exiting open based on the movement of the global economy. A project with large ticket size comparatively takes longer time to liquidate, if required in future. NRIs over the years have been investing in property, but mainly across metro cities of the country as it ensure them the lifestyle they are used to and appreciation value and healthy returns,” says Yagnik.

Does it mean that the luxury and ultra luxury properties will no longer attract the NRIs? The opinion is divided among the analysts but everyone would like to agree that the days of speculation driven investment is over. Many of the NRIs who had invested into some of the most luxurious properties in Gurgaon, Mumbai or Bangalore are today stuck up.

Contrary to the myth, all the NRIs are not necessarily rolling into big money. The fact of the matter is that 95 per cent of the NRIs are employees and wage earners.

A survey conducted by Pravasi Bandhu Welfare Trust, a Dubai-based non-governmental organisation working for bettering the lives of Indian workers in GCC countries, finds that a whopping 95 per cent of NRIs in the Gulf do not save anything and return empty handed to India even after working for a decade. Only 5 per cent of the Indian labour force including the white collared manages to have some decent saving.

The study finds that only 10 per cent of Indian workers in GCC nations live with families, a majority of them fail to save sufficient money due to low wages and high cost of living.

Obviously, all NRIs are not super rich, and those who are have either burnt their fingers with ultra luxury or have learnt from the mistakes of their peer group. And hence, the NRI housing demand nowadays reflect the grounded realism; something that augurs well for the housing market as well since the speculative NRI buying is over and end-user market is fast evolving. 

By: Ravi Sinha

Transparency & institutional teeth needed for crowdfunding

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: A loose alliance of pre-launch investors in the Indian real estate operates on the lines of crowdfunding but it needs transparency & institutional teeth to make it an alternative fuding model.

Home Buyers Crowd, Public Perception, Public Opinion, Home Buyers' Survey, India real estate news, Indian realty market, India property market, Track2RealtyAfter reading in newspapers some of the successful global case studies about crowdfunding in the real estate, Rajeev Minocha is wondering why his investment was never labelled as crowdfunding. After all, he along with some of his school friends has been loosely funding this Pune-based builder even to buy the land and all of them have made money in the process. The developer has been product of the same school from where his crowd of financers belong to. The friendship goes years back and so does the level of trust.

In terms of the crowdfunding in the realty business, beyond the mutual trust the ROI has been much better than any other investment in his portfolio and in a span of nearly two decades now it has also helped the developer grow with his national footprint.

A closer look at the prevailing funding options of various developers suggests that some loose alliances of the nature of crowdfunding are always there in the Indian realty market. However, crowdfunding as a practice has not gained ground in this market primarily due to lack of transparency and institutional teeth.

Crowdfunding is the financial modelling of funding a project or venture by raising monetary contributions from a large number of people. However, this model needs three parties to take shape as a business model– the developer who proposes his project/idea to the crowd, people who support the idea with financial contribution and a moderating organisation that brings the parties together to take it on ground.

In the context of Indian real estate, this third crucial element of moderating agency is missing and often it is the mutual trust, like in the case of this Pune-based builder, that acts as the moderating agency.

Not all the developers in the Indian market have that kind of goodwill or resources. The developers themselves admit that this is a double-edged sword of funding in the Indian market and needs to be handled carefully. David Walker, MD, SARE Homes feels if properly regulated, the potential for crowdfunding could be tremendous. Without regulations, however, such a revenue-generation avenue could end up giving the real estate industry more of a bad name, since it may be misused by unscrupulous elements.

“With proper regulations, crowdfunding could be an answer to developers’ liquidity woes, attracting end-users and others into the market as investors. But regulation through SEBI or a new regulatory authority is imperative to ensure it is not misused by any stakeholder. Else, it will be the realty industry that ends up with more negative coverage due to the misdemeanours of a few,” says Walker.

Sandeep Ahuja, CEO of Richa Realty also does not sound very optimistic about crowdfunding in the present framework. He says it won’t be feasible in the immediate future. It will take some time for the concept to develop. Besides, the lack of regulator will dissuade the investors to invest in projects or developers not known to them personally.

“I don’t see much prospect of crowdfunding in Indian real estate. The reasons are high investment in real estate projects, low transparency levels, long gestation period of projects, low liquidity, project delays and lack of regulation in the industry. It is very difficult for an investor to evaluate an investment opportunity on a crowdfunding platform with limited details,” says Ahuja.

In a nutshell, while a loose alliance of initial investors might be behind some of the developers, often giving impression of crowdfunding to be a viable model of funding in the Indian real estate market, the concept itself is very confusing in the Indian context.

If only there is transparency with organised framework that acts as a moderating and regulating agency to monitor the funds being channelized for the given projects exclusively, crowdfunding can be one of the viable options of Indian real estate. That framework is nevertheless missing in the current market.

By: Ravi Sinha

NH 47 home to property boom

Posted on by Track2Realty
Track2Realty Exclusive

News Point: A stretch with immense potential yet not fully exploited in terms of real estate developments along it, National Highway 47 (NH47) is seen as the next growth corridor by the developers in Coimbatore.

NH 47, National Highway 47, NHAI, National Highway Authority of India, India real estate news, Indian property marketAt a time when a section of analysts are talking about saturation of property market in the established locations, the stretch of NH 47 assumes even greater significance as there are land parcels available in the region. This 620 kilometer (390 miles) highway that connects Salem and Kanyakumari in South India passes through major cities of Coimbatore, Kochi and Trivandrum has been included in the North-South Corridor of the Indian highway system due to its strategic positioning.

The potential of the region is such that developers are eyeing this as a potential goldmine. However, this anticipation of fast forward growth has its own share of waiting game before developers are putting their bet behind. Many believe the slow pace of development in the widening of NH 47 has been the reason why investors have so far not acquired land in this belt. There are others who believe the kind of opportunity cost that lies in this region, this is the time to enter the market for hitting the jack pot.

NH 47 is currently undergoing conversion from two lane to four lane, with some sections being converted to six lane. The stretch between Coimbatore and Trivandrum via Kochi is one of the busiest among the Indian highways, with most of the traffic in this stretch comprising of trucks carrying consumer goods, construction material, container lorries and passenger vehicles. A large number of industries and textile parks are located on the highway between Coimbatore, Erode and Tiruppur districts. This highway is often referred as the lifeline for the industries in the region.

Analysts believe the real estate market will get a major boost once the widening of NH 47 will be over. Widening of National Highways (NH) 47 from Chengapalli to Neelambur and from Madukkarai to Walayar is expected to be completed by July 2014. The NHAI started the works to six lane the road from Chengapalli to Neelambur and four lane it from Madukkarai to Walayar in 2010 at a total outlay of Rs. 850 crore. Though the work on the highway has been in the news for slow pace of developments, yet analysts have always put their bet on the markets along the stretch of NH 47.

It is believed that once widening of the stretch will be over, it will give a major boost to the industries, thus helping the economic activity of the region in general and real estate market in particular. This will also catalyse many small and medium enterprises (SMEs) in the area and export driven businesses will grow along NH 47. This highway has in recent times seen a large number of educational institutions, SMEs, factories, hotels & hospitals. Moreover, it is the main link connecting Coimbatore to main cities of neighbourhood state, Kerala

R.S. Krishnan, Head-Operations-Site, Rakindo Developers agrees that efforts are needed to ensure the fast track growth of property market along NH 47 in Coimbatore. He believes infrastructure facilities like drinking water, pipelines, proper roads, electricity needs to be provided to fast track growth. He though has a word of caution when he says that pollution along NH 47 should be monitored and kept under check so that the property market in the region becomes liveable.

“Completion of the new upcoming bridge across Noyyal River near Sundakkamuthur and Kuniyamuthur will benefit road users from Kerala to reach Ukkadam junction to head towards the city which will reduce considerable travel time. Widening of NH 47 from Chengapalli to Walayar passing by Neelambur and Madukkarai should be done at a fast pace. Early completion of the Proposed 26 km Western by-pass road connecting Kuniyamuthur with Thudiyalur announced in 2012 will ease congestion,” says Krishnan.

A section of market watchers in this part of the world though blame that there are not enough big ticket corporate presence along NH 47 in Coimbatore for the growth of realty market. They maintain that the lack of economic opportunities can be attributed to improper & slow progress on road expansions and infrastructure development. Due to improper connectivity to the heart of the city, roads face heavy traffic especially during peak hours.

However, nearly all agree to the fact that there are boundless potential of economic activities along the stretch and if tapped well this will transform the region as one of the most thriving real estate market. Just the ongoing widening of the highway itself has led to renewed interest level of investors and the land cost along the stretch has appreciated in the range of 10-20 per cent depending upon the location. Moreover, some of the corporate sector are gradually shifting to this part of the region due to cheap rental values of the commercial property.

In terms of traditional strength of the local economy, since SMEs have always been one of the prime drivers of economy of the region analysts are confident that the prospects of SMEs along NH 47 in Coimbatore are pretty bright. With 85 per cent of SMEs functioning in the town and city, there is a growing demand and possibilities for Industrial estates along NH 47. Connectivity to the neighbouring state Kerala had encouraged NH 47 in developing many SMEs. There is also a considerable growth of frequent travellers from Kerala who are associated with SMEs across NH 47.

In a nutshell, everyone within the built environment agrees that the real estate along the stretch of NH 47 is poised for fast forward growth. It may have been delayed for long, but then the potential of the region can be assessed by the fact that all developers have either acquired the land in the region or are in the process of acquisition. Analysts believe in terms of pipeline visibility very few locations in South India can match NH 47. They feel a few big ticket projects and some public private partnership projects can completely change the urban landscape in this region.

 

Peninsula Land’s Celestia Spaces clocks sale of INR 300 crores in 48 hours

Posted on by Track2Realty

News Point: Peninsula Land Limited showcased their innovative sales strategy campaign with their property Celestia Spaces in Sewri, Mumbai.

Peninsula Land Celestia Space, Mumbai real estate, India real estate news, Record sale in Indian property, Track2RealtyThe sales strategy was targeted at the existing home buyer leads.  A soft launch of their show apartments and SOSF was announced and the buyers were invited for an experiential tour around the flat.

This tour was conducted over two weeks, post the visit an exclusive offer was presented to the buyers wherein they could book the apartment by presenting a cheque of Rs. 11 Lakhs. The final price of the apartment would only be disclosed on the 18th and 19th of February 2017.

Peninsula saw a presence of 250 families show interest in purchase, out of which over 75 families finalized their purchase decision. After disclosure of the price, the total sales during the two days amounted to approximately Rs. 300 crores. This is the first instance of such high conversion rates in the real-estate industry.

Nandan Piramal, Director of Marketing & Sales, Peninsula Land Limited said, “Our sales strategy was focused on not only showcasing our state of the art actual show flat but also rewarding those buyers who have shown keen interest in the property. Sewri has been developing rapidly and we are proud to have an exceptional offering for our customers. The high success rate just goes to show the confidence our consumers have in Peninsula Land Limited.”

Rajeev Piramal, Chairman & Managing Director, Peninsula Land Ltd added, “This is a huge accomplishment for Peninsula Land. Our main thought behind this offer was buyer convenience. We wanted them to feel rewarded for making one of the most important decisions of their life. With the show flat, the buyers not only experienced what will be offered but they also witnessed some of the features which will be a part of Celestia Spaces.”

Why developers prefer investors as project riders?

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: Developers prefer investors as project riders because the investors are least interested about timelines and quality.

Homebuyer, Home Finance, Indian property market, Indian housing reforms, Property market regulations, Real estate understanding, Real Estate tips, Real estate guide, Track2Media Research Pvt Ltd, Track2Realty, Homebuyers Knowledge, NRI Investors, NRI investment pattern“Today approvals can take anything but not less than one year. During that phase nobody is going to stand by you except the investor. Even the banks are not going to fund you. All the organized funding starts once you have something ready to offer to them. But you cannot keep waiting that once the project gets approved then only you will launch it; you need some quasi investment at each every level,” says a candid Sunny Bijlani, Director of Supreme Universal on the advantages of having an investor as project rider.

Not many developers would publicly admit it but the fact of the matter is that there are many advantages for the developers to have investors as project anchors. They are the one who bring to the table initial investment, often even without any collateral or receivable. The developers need investors to provide cash, to give them money even for land, and only the investor will give them money at that early stage.

There are two models that work in the real estate investment. Mostly it is a pure investors’ pre-launch with minimum amount of understanding as to what kind of a project it would be in future. The second kind of pre-launch is crowdfunding where there is little higher understanding.

In this case the developer has the plans of what would be the shape of the project but he does not have sanctions. He has the layouts ready, even floor plans and unit plans ready and he would go for crowdfunding. So, it is a mass pre-launch and not depending only for the select set of investors.

Though the law of the land does not allow this kind of opaque transactions but it is an open secret in the Indian property market today. It is often done in an IPO model when the entire city knows about it. The advantage of this IPO style pre-launch for the developers is that the price point here is higher than the price point at which they offer it to the select set of investors.

However, the developers have their own reasons to hail investors. Devang Trivedi, Managing Director of Progressive Group goes to the extent of calling the investor as more or less a gentleman. According to him, unlike end users the investors are not problematic to ask so many questions. Even if there are some escalation charges, it is easy to deal with one such gentleman than 15 or 20 other people who will keep fighting. He will understand it. So he is an easier person to deal with once he comes in.

“Whatever I am saying is unfortunate reality and you must give credit to the developers to weather so many variables and still he is delivering despite of all the odds. Everything is against him – court, ministry, municipality, local factors, environment and market forces. The fact is that investor remains an asset for the developer. It is not just about his entry that brings money to the table. But even when he exits in many cases he does not sell it to the end users but sells it back to the developer, who buys it at thousand odd rupees cheaper than the price at which developer will sell to the end user,” says Trivedi.

So, other than the fact that the investor brings first flush of money to the cash starved sector, what also suits the developers is the fact that the investor is not going to ask them so many questions, like whether the apartment is vastu friendly or where is the wind blowing.

They just want a certain number of flats; not even bothered about the floors etc. He is not questioning the carpet and built up area. He is an easy guy to deal with as opposed to an actual user who will ask uncomfortable questions and make their life miserable.

Moreover, once the investor has given in his money he is non-interfering. Whereas an actual user wants to visit the site every month and then he will seek explanation about the pace of construction and every other thing. But for the investors all that matters is that his money keeps growing and hence he has a win-win relationship with the developer.

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

Budget to touch upon benami property

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: Will the Union Budget 2017-18 touch upon the benami property, as expected?

Benami PropertyEver since the Prime Minister Narendra Modi announced the demonetisation, the buzz word vis-à-vis the real estate market has been the Benami Transactions. The government has time and again reiterated its commitment to hit out at the benami properties after the demonetisation. It is hence epxected that the Union Budget 2017-18 would have some more concrete road map and suggest financial curbs on the benami transactions.

The larger question within the built environment of Indian real estate is as to what extent it will affect the business of Indian real estate. The stakeholders within the organised segment of property market do welcome the expected move on the face value, but the grey areas are too deep rooted in the system.

Moreover, the unorganised real estate in this part of the world is larger than the organised property market. With land records and transactions not digitised and up to date, it is a challenging job to assess the extent of beanmi properties in the country. The developers within the organised segment of Indian real estate nevertheless welcome the expected budget announcement to curb it.

Benami check & budget

  • After demonetization, curb on benami property is next big goal of the government
  • There are more benami transactions in the unorganized property markets and hence concealed from the law
  • With land records & transactions not digitized benami property a challenging zone for the government
  • Union Budget 2017-18 expected to give some answers as to how to curb benami transactions in property market
  • There is no clarity over what is ideal fiscal deterrence to stop benami property 

Kaizad Hateria, Brand Custodian and Chief Customer Delight Officer, Rustomjee Group asserts that if there is any concrete step on benami property in the Union Budget the serious developers will be the first one to cheer. According to him, crackdown on benami properties can help clean up real estate sector. If the new law is implemented properly, there will be greater transparency in the real estate sector; there will be less corruption; and we may see a correction in prices.

“About a third of the country’s 1.25 billion population lives in cities, with numbers rising as tens of thousands of people leave villages to seek better prospects. A government plan to provide housing for all by 2022 is meant to create 20 million new urban housing units and 30 million rural homes. Going after benami properties can help accelerate the pace of implementing the government’s plan,” says Hateria.

Parth Mehta, Managing Director, Paradigm Realty also advocates that there has to be some stringent measures in the upcoming budget to check benami transactions. Benami Tool was introduced to control black money in real estate sector.

“The registration of property will be flawless in the name of the actual owner; also control on the maximum number of property registration would be under one name. Land inventory can also be managed,” says Mehta.

Vivek Mohanani, Joint Managing Director, Ekta World believes that the realty sector has lately witnessed a series of corrective measures by the government, Benami Transaction Act being one of them aiming at making the sector more transparent and professionalized.

“The institutional framework of the realty sector has already been strengthened by the government by amending the Benami Transactions Act, to make the law more stringent,” says Mohanani.

There is no denying that when the titles are clear and transactions are transparent, the confidence of lenders increases. The Indian real estate will be witness to a pickup in lending to buyers. This will increase the supply of residential real estate. However, it is not as easy a road map as it sounds. The government will have to come up with a well defined road map for the same.

The Union Budget may address it in terms of financial penalties for the benami transactions and the benami property holders, yet the problem is so deep rooted in the system that only a fiscal road map is not enough. With most of the land records not digitized what it needs to put a curb on benami transactions is the structural reforms in the administration than mere policy announcements of budget.

The government has made changes to strengthen some institutional framework by amending the original Benami Transactions Act 1988 to make the existing law more stringent. Under the Benami Transactions (Prohibition) Amendment Act 2016 that recently came into force on 1st November, 2016, a transaction is named ‘benami’ if property is held by one person, but has been provided or paid for by another person. The Act prohibits recovery of the property held benami from benamidar by the real owner. Also, benami properties are liable for confiscation by the government.

However, the impact of such measures can only control such holding and transactions in the organized property markets. The big challenge for the government is to create a mechanism where the fiscal transaction is not possible in property market for benami property deals. Can the Union Budget 2017-18 come out with some concrete answers?

By: Ravi Sinha

Serviced residences short supplied despite multiple demand drivers

Posted on by Track2Realty
Track2Realty Exclusive

News Point: At a time when the need-based housing is a brand differentiator, makes better business viability and is perceived to be among the best practices, serviced residences could not scale up to its potential.

Serviced Residences on India, Serviced apartments in India, Hospitality business in India, Indian real estate news, India property market news, India best real estate news magazine, NRI investment, Track2RealtyWhile the Indian real estate is increasingly exploring the new avenues to identify and cater to short supplied segment in order to stand out as a brand and beat the slowdown, the quest has by and large been confined to senior housing and child-centric housing. Serviced residences that have been a hit in the US and many other European countries since 1950s have not been as successful in India as in many other countries having corporate dominance in the major cities.

Prima facie, it seems the initial taste of failure due to poor conceptualization and operation with the serviced apartments has made the developers quite wary with this space. The potential nevertheless is huge and serviced residences are not only short supplied in this part of the world. Also, there are multiple demand drivers to ensure its success and viability as a business.

Facts speak for themselves. As per the Report of the “Working Group on Tourism” for the 12th Five year Plan (2012-17) set up by the Planning Commission, for a projected annual growth of 12 per cent in Foreign Tourist Arrivals, the requirement of additional hotel rooms under classified category in 2016 over 2010 is estimated to be 1,90,108. Hospitality industry estimates there is a shortfall of 150,000 rooms in the 5-star category only.

Quick bytes

  • Serviced apartments could not translate potential into performance due to poor conceptualisation & operations
  • Long gestation period a big deterrent in a market where sales model is prevalent
  • Global hospitality chains eyeing Indian market with asset-light model where developers provide the infrastructure
  • In absence of organized serviced apartments some large corporate groups creating their own infrastructure

Some companies, such as Infosys at its Bangalore campus, have therefore invested in their own hotel style multi-room serviced residences, considering the acute shortfall of hotel rooms in the city. In their cost & benefit analysis, serviced apartments in the major Indian cities (either owned or hired) offer accommodation at less than half of rates with sprawling spaces.

Doesn’t it sound like a big business opportunity? Some of the market analysts maintain that the housing market in India has been about quick turnaround with sales model. The question is whether there is enough incentive for developers to get into serviced residences and wait for long gestation period. JNB Group and Bridgestreet Global Hospitality, the leading solution for international serviced apartments, which has recently tied up with three Indian developers to bring 300 serviced residences maintain that there is no gestation period as serviced apartment concept has been in India for few years now and is a well known concept in the corporate world.

Taran Kaur, Director, JNB Management believes it is a win-win situation for developers as well as the buyer. The Developer gets the price he is aiming for and the buyer is happy buying such a profitable property since they get returns much higher than the non-branded serviced apartment.

“The market segmentation for this sector is almost entirely corporate, who utilise serviced apartments for their managerial staff and long-stay expatriates. Key demand drivers for serviced apartments are IT/ITeS, biotechnology, services sector, BFSI and medical tourism. Even while the concept of serviced apartments is well understood, the actual number of serviced apartments is fewer than the actual market potential in India,” says Taran.

The global hospitality chains are nevertheless making a beeline to tie-up with the Indian developers despite of slowdown. Is it because the global hospitality chains have lesser risks in India with asset-light model, as against the developers who have major stakes with creating the infrastructure? Industry analysts point out that asset-light model can deliver a better return on assets, lower profit volatility, greater flexibility, and higher scale-driven cost savings than asset-heavy models.

T J Barring, President, JNB Group believes the infrastructure projects also involve a large number of different stakeholders entering the project life cycle at different stages with different roles, responsibilities, risk-management capabilities and risk-bearing capacities, and often conflicting interests. While the complexity of these projects requires division of roles and responsibilities among highly specialized players (such as contractors and operators), this leads to significant interface risks among the various stakeholders that materialize throughout the life cycle of the project, and these must be anticipated and managed from the outset.

“Because infrastructure projects have become and will continue to become significantly larger and more complex, losses due to the cost of undermanaged risks will continue to increase. This will be exacerbated by an ongoing shortage of talent and experience — not only are projects more complex, but there are also more of them, which will create demand for more effective and more systematic approaches and solutions,” says Barring.

Arvind Jain, Managing Director, Pride Group admits that the serviced apartments concept has found a lot of acceptance and success in the metros and larger Tier II cities, where normal hotel accommodation may be unfavourably priced for longer stays. If a corporate’s executive movement is too erratic for a company guesthouse to make sense, serviced apartments are the obvious solution. The concept is going to see a lot of growth in India’s business-oriented cities, particularly in and around the CBD and SBD areas. Cities like Pune, Bangalore, Mumbai, Delhi, Hyderabad and Chennai already have a very entrenched serviced apartment culture.

“The business model of acquiring normal residential flats, fitting them out as serviced apartments and engaging the services of professional agencies to operate them is also on the rise. However, developers using the serviced apartments route as an alternative to the residential sales model is not at all common due to the considerable complexities involved,” says Jain.

Kishor Pate, CMD, Amit Enterprises Housing says when it comes to selling residential flats versus operating serviced apartments, we are not talking about a simple change of business orientation. In the first place, a building in a city, like say Mumbai, developed for serviced apartments usually gets a FSI of 4 while a building for purely residential use is allotted a FSI of 1.33. The entire building is then charged for water, electricity and maintenance on a commercial rather than residential basis.

“Generally, residential property investment in India is done for capital appreciation rather than rental income, since capital appreciation can be to the tune of 10-12 per cent per annum and rental yield is typically in the range 3-4 per cent per annum. If one invests in a unit in a serviced apartment building, the annual returns can be to the tune of 10-15 per cent. However, this needs to be set off against the outgoings for commercial usage of utilities as well as the applicable taxation for running a business,” says Pate.

In nutshell, getting into serviced apartments as opposed to selling normal apartments calls for a major course correction in one’s business model. Not all developers would be willing to consider it or indeed are equipped for it. The demand nevertheless far exceeds the supply and since the business falls into need-based segment of real estate, its co-relation with best practices is a subject of academic debate in a market notorious for deliberate demand & supply mismatch.

By: Ravi Snha 

1 2 11