Tag Archives: Nikhil Hawelia

Shift from product-based to service oriented mindset

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View Point: Indian real estate has always been addressed as a product-based industry which runs on independent guidelines and regulations varying from developer to developer, writes Nikhil Hawelia, Managing Director, Hawelia Group.

Nikhil Hawelia, Managing Director, Hawelia GroupBest practices in any industry have been identified as the means by which result superior from all other alternatives can be achieved. It mainly refers to the standard way of executing a task which is among the best available methods.

Real estate industry in our nation has always been in question due to prevailing autonomous rules and guidelines of every developer. There is an immediate need of a governing body which can address all such concerns of the sector. Government of India at national level has already introduced RERA which will address all these concerns.

In my opinion, apart from this commendable initiative of our government, developers too should undertake at all possible levels the best practices in the sector such as commanded fiscal management, timely execution capabilities, perception building, transparency, functional professionalism and last but the most significant ‚Äėconsumer connect‚Äô.

In my experience and belief, lack of financial management discipline is also the key reason to make any developer fiscal risky. Over leveraged balance sheets, unreasonably high cost of acquisition of newer land parcels, too many launches of new projects and at the same time unforeseen challenges in the construction business is hurting the sentiments of real estate companies which in turn forces the developer to expand on funding even at high cost of finance.

The major concerns like delay in possession and quality issues directly or indirectly occur because of over-limit & uncontrollable growth especially in the north region of the country. Involvement of higher management at all verticals is crucial to meet up the commitments and promises. Working in such controlled atmosphere and leveraging rightly at every cycle of business will help scaling their business positively while achieving the progress in execution capabilities.

Perception building and transparency are inter-linked or we can say inter-dependent on each other. The existing perception can only be changed if the developer fraternity adopts practice of transparency and streamline their professional intent. Foremost the developer should draw a limit to the quantum of work which is under their control for a certain business cycle. Execution capability ratio plays important role to inline these two aspects. It is the capability of the company to execute the amount of work in controlled manner in all respect.

Functional professionalism is the need of the hour at all segments and levels of a real estate company. Developers have undertaken far beyond the limit range of work and projects which is directly impacting the professional approach at all in-company department(s) right from sales, marketing & purchase to customer support, finance, accounting & construction.

It has been noted that whatever the team represents at one end of the chain is what is being flowing from the top end. Highest management vision and work direction should be based on transparency and professional approach, so that the system can never go in misguided path.

As per the traditional mindset, many developers consider that a homebuyer is a onetime consumer because of which they have always failed to explore the benefit of relationship management. The Indian real estate sector has gone overboard with brand campaigns and publicity rather than identifying the gains by connecting with the customer. The developer should take extra care to face and answer all types of queries of the customer as well as third parties to gain the confidence of the market.

Addressing the concerns and issues of consumer on realistic ground with assurance will give a meaningful result oriented solution. One should prioritise the customer needs and focus on their actual problems. In today’s real estate scenario, most of the developers who are gaining grounds are mainly focusing on customer satisfaction and relationship management, which in turn is the best marketing medium for word-of-mouth publicity. Exploring this medium by gaining trust of one customer for lifetime will surely open threshold for many satisfied referred clientele and direct boost in sales graph.

It has been wisely said that period of product specific industry had gone; now the time is for service industry. One should be approachable, answerable and responsible towards their customer(s). Indian real estate developers immediately need to adopt best practices in the sector for survival and growth in time to come. Clearance to real estate regulatory bill will also ensure much awaited transparent business practices in the real estate sector.

This is being considered as the first step towards organising this unorganised and immature sector into a professional industry with values and commitments. The Act ensures organization of Indian real estate sector with required transparency and strengthening of relation between consumer and developer.

I sincerely request the respective State Government(s) to accelerate their action on formation of RERA so that sincere real estate players could gain the momentum and the sector will get a boost and confidence of the homebuyers. This will surely help genuine developers to come in front and will show exit doors to most of the fly-by-night operators of the sector.

Key differentiator needed for small developers: Nikhil Hawelia, Managing Director, Hawelia Group

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Bottom Line: In an interview with Ravi Sinha, Nikhil Hawelia, Managing Director of Hawelia Group maintains that the key differentiator is in understanding one’s capability to scale up.

Nikhil Hawelia, Managing Director, Hawelia GroupSome of the lesser-known & smaller developers have today better track record of delivery than larger players. The trend is more visible in the Delhi-NCR Region where many of the larger developers are today reeling under debt burden, over-leveraged balance sheets & challenged execution capabilities.

In an interview with Ravi Sinha, Nikhil Hawelia, Managing Director of Hawelia Group maintains that controlled launch to sales ratio and prudent fiscal management with focus on delivery is what is making some of the new entrants a promising brand in the Delhi-NCR region.

Ravi Sinha: Is it just the imbalance of scale to capacity ratio of larger developers or there are other inherent reasons for smaller developers to gain more ground in Delhi-NCR?

Nikhil Hawelia: In comparison to larger player, mid size developers have better stability in their ventures, with their funds and resources concentrating on their limited projects. Larger real estate developers especially in North India are mainly focusing on multiplying their work quantum just to grow their scale unreasonably. Whereas small & mid size developers are ensuring on-time and quality delivery with maximum customer satisfaction. In case of us, lesser management hierarchy results into direct involvement of higher management in key decision making which further enhances work efficiency.

Ravi Sinha: What is the ideal launch to sales ratio to keep fiscal management in control?

Nikhil Hawelia: Instead of calling it an ‚Äúideal launch to sales ratio‚ÄĚ, I would rather name it ‚Äúcontrolled launch to sales ratio‚ÄĚ. Again, it cannot be generalized for all categories of the projects as cost of land varies which changes the break-even point in the financial planning of the project. In the affordable housing we are executing at Greater Noida West, the controlled launch to sales ratio can be put up as 45-50% as per our planning and experience. Having said that, one must not grow beyond capacity to compromise his reputation and future projects.

Ravi Sinha: What is controllable scaling up vis-à-vis execution capability ratio?

Nikhil Hawelia: Execution capability ratio is the capability of the company to execute the amount of work in controlled manner in all respect. The developers should define a fine line between controlled & over-limit work and should restrict the amount for a single business cycle. Working in such controlled atmosphere and leveraging rightly at every cycle of business will help scaling their business positively while achieving the progress in execution capabilities. Growth is not a bad word, but definitely there is a thin line between hunger for growth and greed for growth.

Ravi Sinha: Can one say that smaller developers are better positioned to maintain best practices?

Nikhil Hawelia: The time has come that the Indian real estate developers need to adopt best practices which can be termed in as commanded fiscal management, timely execution, perception building, transparency, functional professionalism, consumer connect etc. It is also imperative that the government authorities should lay down unambiguous guidelines for development norms and ensure a transparent and timely approval process.

Ravi Sinha: When is a company fiscal risky?

Nikhil Hawelia: Lack of financial management discipline is the key reason to make any company fiscal risky. Over leveraged balance sheets, unreasonably high cost of acquisition of newer land parcels, too many launches of new projects and at the same time unforeseen challenges in the construction business is hurting the sentiments of real estate companies which in turn forces the developer to expand on funding even at high cost of finance.

Ravi Sinha: How much over leveraging is controllable?

Nikhil Hawelia: Controlled over leveraging has different basis and structure for different types of project; commercial projects on lease model have better security than outright sold projects. Similarly, low cost or affordable housing projects have frequent sales number than high-end projects; so low leveraging also meets the need of finance in case of affordable projects.

Difference is also noted in cost of land to cost of execution ratio in distinct projects as cost of land varies drastically in different regions which impacts the percentages of overall funding requirement for construction and execution of the project. So, defining and generalizing the percentage of over leveraging in real estate sector is not possible.

Ravi Sinha: Does the personal involvement of developer with only handful of projects make any difference?

Nikhil Hawelia: Involvement of higher management at all verticals is crucial to meet up the commitments and promises. So, foremost the developer should draw a limit to the quantum of work undertaken for a particular business cycle which is under their control. The major concerns like delay in possession, quality issues etc directly or indirectly occur because of over-limit & uncontrollable growth.

Ravi Sinha: At a time when some of the larger players in the Delhi-NCR are losing their brand equity and market share, do you feel new entrants have better chances of making presence felt?

Nikhil Hawelia: I have always felt that our customer base is different, expectations are different and market positioning is also different. But what remains common across the asset class and across the segment of developers is the customer experience and word of mouth in the market.

For example, my study in Delhi-NCR and even in other key Indian markets indicate that while consistently delivering one million square feet of delightful customer experience year on year can make a developer trustworthy brand, volume of delivery with poor customer experience can kill a bigger brand. The Indian housing market will hereafter be goaded by this professional dynamics. It is a different matter that the trend has first been noticed in the NCR market.