Tag Archives: Media and real estate

An open letter to builders

Posted on by Track2Realty
Track2Realty Exclusive

Talking Point: In an open letter Ravi Sinha reminds the builders that they have no one but themselves to blame for the prolonged slowdown. Poor perception & projection is a result of poor brand management and false promises of developers where understanding and vision has been limited to sales channel through investors. 

Dear builders

Ravi Sinha, Real estate journalist, Real estate blogger, Real estate analyst, Real estate brand rating, Diary of a real estate journalist, Property journalist diary, Open letter to builders, Buyer writes to builders, Journalist writes to builders, Property journalists credibility, Credibility of real estate journalists, Media and real estate, Media and property market, Journalists in the property market  I know my customary address to your community with ‘Dear’ would invite sharp reactions by the homebuyers at large. Many of them might label this greeting as my change of stance to turn ‘Pro Builder’ overnight. But never mind! More brickbats than bouquets are part of my job.

Today, I write this open letter to your collective consciousness with all the noble intentions. After all, I would personally like this business to grow for the mutual benefit of all – the builders, homebuyers, lending institutions, investors and, of course, the media which is a key stakeholder for survival through your glossy advertisements.

Trust me! My critical assessment of the business of real estate apart, I would still like the sector to be dynamic industry. And hence, I am taking this liberty to write an open letter to you all to point out the grey zones that you so conveniently try to sweep down the carpet.

I understand that the business of real estate is challenging to the extent that even the established corporate conglomerates have struggled to maintain the same level of trust & transparency that they otherwise command in their businesses of expertise.  I would yet suggest you to introspect as to why the market has come to such a point where it is extremely challenging for the best of economists and analysts to predict its revival. 

Let me tell you gentlemen that the real estate market for long had been only delaying this inevitable backlash on part of the buyers. The slowdown and poor sales is more due to your own conduct than the macro-economic hiccups.

I am also conscious of the fact that a large number of developers are hoping against the hope that once the tide is over and investors return to the market their ordeal would be over. I may sound to be disappointing gentlemen but the era of investor driven real estate business is over.

The investors are known to be fair weather friends and till the time they were making unreasonably high returns with this business they made the killing. Now that the era of quick appreciation is over, they have left behind a legacy of higher expectations and lower trustworthiness.

The latest Economic Survey by the Government of India clearly states that the share of bank lending to real estate sector has fallen sharply to 17% in 2016 from over 68% in 2013, as banks are reluctant to provide credit to this industry due to rising NPAs. So, you have no choice but to look up to the buyers and buyers alone for future survival.

You developers are today left with no choice but to return to a business model that has been tried, tested and trusted across the industries and across the markets – that is customer centric and service oriented business process.

In a demand driven business where the demand far exceeds the supply, I am not ready to believe that there are no buyers in the market. Yes! The buyers are skeptical and not getting what they are looking for. The disappointments are many ranging from artificially inflated prices to demand-supply mismatch and poor customer engagement to false promises.  

I know you may argue with the presumption that the prices are high due to higher input costs and the developers’ margins are getting compressed. I would yet argue the fact that record inventory in the market is due to your own mistakes and, most importantly, not learning from the past mistakes. The affordability, or the lack of it, which is a major cause of standing inventory continues to be calculated on your part with the cost per square feet, while turning a blind eye to the market realities.

Isn’t it a fact that the nature of the product allows you to live with this denial? Had the houses been perishable commodity you would have had the same mindset? Can’t you reduce the prices by constructing smaller units?

The fact is that the developers in their collective consciousness have preferred to live with denial. The deep-rooted psychology that the cyclic nature of the business would ultimately bail you out is what is coming in the way of course correction.

To add to it, what has undoubtedly hurt your business is broken trust with buyers. You have forced the buyers to accept the reality that delay is an inevitable part of this business. Dates and deadlines mean nothing to you and you conveniently look for denial with excuses galore, ranging from delay on part of the government agencies to grant approvals or unavailability of raw materials.

What is even worse on your part is the fact that you don’t even accept your accountability for the project delays. A helpless buyer who has made the mistake of giving initial payments, often upfront 80% value of the apartment cost, is left with no choice but to sulk. It is true that you have an upper hand over the buyers in terms of bullying and even litigations. But what you fail to understand is the fact that you lose market reputation, credibility and acceptance due to negative word of mouth.

As a journalist with specialization in brand management, what I can vouch is that the brand management is one of the critical but least understood aspect of this business. You don’t even seem to understand as to who is your target audience. 

I keep a track of the reputation management of no less than 500 developers in the country. Basis my experiences I can assert that only a few exceptions in the business do understand what is brand management and how reputation is managed, both online and offline. More importantly, you fail to identify new buyers in quest to attract new buyers.

You do spend a fortune to hire publicity agents in PR industry whose understanding of the business of real estate and its brand reputation is often lesser than the developers. They come on board with only credentials of handling PR mandate of more real estate companies. Agencies are also taken on board on merit of personal relations with builder or his top management where professionalism is relegated to the dustbin.

Most of the developers have today made their online presence through Facebook, LinkedIn, YouTube and other channels. But it is not the medium but the message that is a casualty. Self-glory or congratulatory socio-political messages is not what can help you to communicate & connect with the larger audience. It is your work and shared experiences of the homebuyers that can elevate you as a respectable brand. Unfortunately, this connect with the happy homebuyer is the glaring missing link in all your communication.

I have a strong feeling that the anomaly is because you have failed to identify who is your target audience. Is it someone who is looking for a builder to congratulate the nation on rocket launches? Is it someone who is desperately looking for a responsible builder who congratulates the nation on Independence Day through his Facebook page?

Sorry gentlemen! You have got your priorities wrong. What your brand stands for and how it is constantly helping the living experiences of homebuyers is what would drive a stranger on the property hunt closer to your brand. More importantly, in a market where only credentials today is word of mouth goodwill your communication has completely failed to showcase it to the prospective buyers as to what is the livability quotient of your existing buyers.

But the poor brand philosophy and even pathetic brand management is what is driving you directionless today. You want everything ROI driven and that too has to be immediately tangible. This is what makes you look another greedy seller in the market without any brand differentiation or cutting edge.

The glossy full page or cover jacket advertisements that at one point of time was a tangible parameter to evaluate is still goading you. What you have failed to understand, or deliberately tried to ignore, is the fact that such publicity blitz was working in an eco system where the market was on a Bull Run and best asset class in terms of ROI. I don’t think the same strategy would work any longer. 

The receding phone calls post advertisements today (tangible parameter of ROI) clearly suggest that the market has changed and so has the buyer. Even otherwise, the same full-page advertisement with a national daily newspaper by various developers elicits different number of enquiries to different developers. Does not it clearly suggest that it is the brand reputation that commands the sales enquiries, even though investment and its expenses are intangible in the context of ROI.

The Indian real estate might claim to be the second largest employer in the country. But my fundamental question is whether you have emerged as brand employer where your employees could be your brand ambassadors. Sorry to disappoint you gentlemen, but the ground reality is that real estate has offered one of the worst working culture to its employees. It is money and money alone that gets you employees but not the quality talent who would be ready to flaunt company’s brand reputation in their social circle.

I have been exhaustively reading the real estate brand management and sales strategy in other developed real estate markets like the US, UK and China. My criticism of the sector apart, I still maintain that Indian real estate could play the same kind of role to the nation’s economy if only the market learns two key lessons of investing into buyer satisfaction and brand reputation. Third party endorsement works like an investment magnet that no self publicity blitz can command.

That, unfortunately, is a far cry in a business where quick fix solutions and tangible returns are the only criterion of performance evaluation. However, the short term gain that the developers have enjoyed during heydays has now become the long term pain for the sector at large. I, hereby, rest my case.

Yours truly 

A journalist monitoring brands in wrong business

 

 

Triple intervention helps homebuyers; hurts developers

Posted on by Track2Realty
Track2Realty Exclusive

News Point: Consumer activism, media trial & judicial intervention come to the rescue of harassed homebuyers; developers clueless to deal with it.

Unhappy Homebuyers, Consumer activism in real estate, Judicial intervention for homebuyers, Media and real estate, Indian real estate news, Indian realty news, India property news, Track2Realty, Property market of IndiaSnigdha Chauhan has been a dejected homebuyer for long after having invested in a housing project in Gurgaon that could not take off in the last seven years. She knocked every possible door – right from the developer who even refused to meet personally, to the fellow homebuyers who were clueless as to what to do. Media, of course, did not find a story into this as project delays are no news nowadays. And finally, her last resort in judiciary proved to be an ordeal of dates after dates as the developer had more financial clout to afford battery of eminent lawyers.

Snigdha, and many harassed homebuyers like her, are today smiling as the tables have turned and the simultaneous triple intervention of consumer activism, vigilante media and judicial cognisance have changed the outlook of the helpless homebuyers completely. This triple effect is proving to be the boon for the homebuyers and bane for the defaulting developers who took the buyers for a ride too long due to lax regulations and passive institutional responses.

“I was taken aback on that night when I found it in the TV news that after the buyers’ protest and its telecast on the TV news channels, the court has now intervened and ordered that the developer will have to refund the homebuyers’ money with 18 per cent interest. I think the collective power of consumers, media and judiciary saved us from being robbed of our lifetime’s savings,” says Snigdha.

Emerging realities 

  • Consumer activism, media trial & judicial intervention helping the harassed homebuyers
  • Developers are clueless in terms of dealing with the simultaneous spate of consumers, media & judiciary
  • Developers blame it to approval delays but are not open to be transparent with homebuyers
  • Elements of consumer blackmailing also gets legitimacy due to poor perception of the builders

This is not an isolated incident where some of the homebuyers like Snigdha could get the justice; though delayed but not denied. Today, as the consumers increasingly understand the power of collective might & activism and media is supporting the worthy cause leading to judicial interventions & speedy trials, the market dynamics of Indian real estate has suddenly changed a lot.

This also raises a fundamental question as to how long will this triple action continue. More importantly, are the developers at the receiving end of the current spate of consumer activism, vigilante media & judicial intervention ready to change the ways & means of operating recklessly?

Most of the developers admit that today environment is challenging for a real estate developer. They, however, blame it to the external factors than accepting their own fault. A section of developers maintain that there are so many unforeseen reasons and force majeure which are beyond the control of a developer. So, during that period construction is stalled beyond months to years. That period cannot be contracted. Developer faces two losses, one is time, and another is financial loss.

Pratik K. Mehta, Managing Director, Unishire maintains that consumer activism is good but needs to be used constructively to resolving a problem. Similarly, with the vigilante media and judicial intervention, lot of the non-transparent issues could come to light which are not always due to a developer but sanctioning authorities also.

“I understand that there is a valid reason behind the new wave of activism that is taking place and agree that if a developer has not delivered on promises and commitments, they should be penalized but blatant activism without appropriate knowledge of the situation may only worsen the problem,” says Mehta.

A critique of consumer activism, Raj Gala Shah, Partner, Zara Habitats says that such market forces will definitely be the catalyst to better the eco system, provided there is ethical practice followed while fighting for the right cause and for that to happen self governance is crucial. It should definitely be the ultimate aim to weed out unscrupulous elements, not just from the business but also from the consumer activism side wherein certain individuals pursue monetary benefits under the garb of activism.

“Under an united effort the consumer, media and judiciary, the real estate sector can steer the future to a transparent environment, without being dependent on the government. As the adage goes ‘with great power comes greater responsibility’ and it seems apt for the current scenario of consumer activism. With the easy availability of information through RTI, 24×7 media coverage, a judiciary with stern outlook towards the real estate sector, it seems that there are only unscrupulous elements in the business,” opines Shah.

Developers have their reasons to sound like every consumer activism is blackmailing. But the fact remains that it is not consumer activism alone but two pillars of democracy – media and judiciary – that have become part of this ‘operation clean up’.

Of course, certain elements of consumer blackmailing cannot be completely ruled out. But then the developers are guilty of lending credence to every arm-twisting as legitimate activism since they have not taken care of perception management. CREDAI President Geetamber Anand repeatedly talks about perception management but has thus far failed to take any action against the erring developers who have been indicted by various judicial interventions in recent times.

This spate of collective might of consumers, media and judiciary promises to change the market dynamics more than any government appointed regulator. The reason being that it is coming out of spontaneous reaction and calls for fighting against the malpractices in the business where the developers have enjoyed the free reins far too long.

A section of analysts admit that the genuine developers who are not guilty of delaying and denying the buyers should rather welcome this triple intervention. They can also be more open about the issues the developers have to face. Of course, the single most and biggest challenge is the approvals systems for projects. It is the leading cause of worry on part of the developers as reason for many project delays is the system.

There is absolutely no accountability in the approval systems and due to several agencies involved there is lack in coordination and willingness to adhere to timelines. Also, most of the authorities are ill equipped to handle their respective jobs/positions which worsens the situation.

With the onset of consumer activism, a lot of these processes can be monitored, documented and understood by the general public at large to understand the various challenges developers face. This also could pose a huge pressure on the departments to work diligently as now they are answerable to not just a handful of developers but to a larger set of an audience that is not ready to be a silent spectator any longer.

Will the triple force of consumer, media & judiciary weed out unscrupulous elements from the business? There is no second opinion that if channelized properly, this spate of vocal outcry can certainly identify and weed out the unscrupulous elements form the business. Of course, the element of consumer blackmailing threatens to derail all the good work done. But then it is not the consumer activism alone but to monitor and take it to logical conclusion, media and judiciary are also playing an active role. Collectively, this promises a new eco system of housing market in the country.

By: Ravi Sinha