Track2Realty best practices survey portrays poor track record of Indian real estate that is currently struggling to adapt to new business paradigms and patterns – both imposed by regulations and those forced by emerging market paradigms.
The prevailing sentiment among the home buyers is quite negative. The developers have definitely failed to identify the strategic and operational challenges that can goad the sector to adopt the best practices. There is no specified industry standard that can be widely accepted as best practice and the industry bodies are seen as builders’ lobbies.
More than seven out of ten, 74 per cent, feel the prevailing practices in the real estate market has only worsened in recent times. Only 14 per cent believe it has improved a bit, while the rest 12 per cent are not sure about it.
Nearly as many, 68 per cent, are not happy with disclisure norms and builder-buyer agreements. As a matter of fact, the developers even deny them to show any documents before the booking. Only 12 per cent could see the builder-buyer agreements beforehand, and the rest 20 per cent did neither ask for it nor the developer offered it to showcase.
These are the findings of Track2Realty pan-India survey. The survey was aimed at understanding the prevailing practices in the housing market and its critical linkages with the home buying decision. The survey has been conducted in 20 cities – Delhi, Noida, Gurgaon, Mumbai, Kolkata, Bangalore, Hyderabad, Kochi, Ahmedabad, Chennai, Jaipur, Lucknow, Surat, Bhopal, Indore, Patna, Bhuvneshwar, Vijaywad, Pune and Chandigarh – between October 25 and November 10.
A structured set of questions that was based on the home buyers’ understanding of the professional practices and trust & goodwill factor leading to their purchase decision in the housing market was given to the respondents. They belonged to a mix of the luxury, mid-segment and affordable buyers. The survey tried to capture the mind of the home buyers as to which professional practices are apprecited by them and why.
Mind it, the responents are not novices but by and large quite educated home buyers. The study finds that consumer awareness of key industry practices and regulations has been pretty high with buyers being aware of eight out of 10 key industry practices and regulations. Consumers were asked to rate the developers and the prevailing market practices on 25 action points.
These statements are grouped into five professional attributes:
The survey found that consumer awareness of these practices and regulations remained as high as 80 per cent, or 20 out of 25 areas.
When it comes to the delivery timelines, nearly all, 92 per cent, blame it as worst practice on part of the developers. Rest of the 8 per cent feel the developers are also helpless in today’s environment.
In terms of the quality of the house, 72 per cent are not satisfied. Only 15 per cent are quite happy with the house, and 13 per cent feel there has not been major difference between the promise & performance.
Two-third of the respondents, 66 per cent, feel they did not get the amenities and overall livability what was actually promised. 18 per cent are happy with the lifestyle and 16 per cent maintain that livability is quite subjective to deliver a judgment.
The home buyers have to face many kinds of arm twisting by the developers. 48 per cent have been forced to pay escalation charges, 42 per cent feel penalty clause was unjustified and 10 per cent had to face other hidden charges
Is bigger developer actually better? The opinion is divided but nearly half of the respondents, 48 per cent, maintain bigger developers pose bigger problems for the buyers. Only 30 per cent feel bigger developers are better in terms of professional practices, while the rest 22 per cent are not sure about it.
One grudge that three-fourth of the buyers carry against the developer is with the cheating in space. 74 per cent feel loading is unjustified, while 26 per cent crib about change in layout without consent
Project construction status is something that is a subject matter of concern for all the buyers. A vast majority, 82 per cent find the monologue of the developer very unprofessional. 18 per cent complain the developer did not allow them to visit the construction site.
Lack of honest deal in the sector is another worst practice and no less than 60 per cent feel they were taken for a ride with the marketing gimmicks. 22 per cent feel over-promise is a reality in any other industry and the rest 18 per cent could negotiate it on their terms.
In the wake of loss of consumer confidence, have the developers learnt their lessons to initiate partnership with the home buyers? A majority of the buyers maintain that the developers are least bothered to consider their wish list. Only 11 per cent have experience of their feedback being taken seriously, while 7 per cent were asked by the builder to give referrals for some incentives. Rest 82 per cent had no interaction or partnership initiatives on part of the developer.
Even the direct interface between the builder and the buyer is a casualty in the sector. A vast majority, as many as 52 per cent feel there should be no broker or under-writer and the builder should deal with them directly. 34 per cent wish to have regular builder-buyer meeting and the rest 14 per cent complain about the lack of professional staff around the developer.
Arbitration is another critical area for the buyers where the track record of the developers has been pretty poor. Nearly half of the respondents, 46 per cent, want a well defined cancellation policy & exit option for the buyers, while 30 per cent demand uniformity in refund process & interest. Rest 24 per cent demand a buy back process with balanced terms & conditions.
Last, but not the least, an issue that plagues the sector is post purchase and post-delivery, that is facility management. It is one of the most critical areas of concern and buyers’ grievances. While 42 per cent crib about the service quality, 38 per cent have issues with the cost of service and they feel the developers continue to cheat the buyers through facility management. 20 per cent feel most of the issues crop up due to missing consumer connect.
Do buyers have any suggestion that could iron out the differences once the developer has delivered the project? 72 per cent of the buyers assert that defect liability clause itself can make them trust the builder, his professional practices and his intent. 28 per cent suggest the developers should charge one-time cost, included in the apartment cost, for lifetime service.
The survey demography belonged to a mix of society; predominantly educated professionals and nearly equal number of respondents were selected from luxury, mid segment and affordable houses. The buyers had a mix of first time and second time home buyers. Nearly two third of the respondents, 62 per cent, were double-income families. While the buyer awareness was pretty high on real estate and its professional practices, they could easily compare the Indian realities with the best practices of other matured inustries.
A large sample size of 10,000 respondents (500 samples in each city) was targeted. Out of these 8557 samples were finally zeroed down and considered for analysis. Rest 1443 respondents were not considered for evaluation since they either gave incomplete answers, contradicted their responses or were rejected for non-seriousness of their choices & concerns. The total sample size had 60 per cent males and 40 per cent females as a representative set.
The surveying method was one-on-one interviews, in which the researchers explained the theme and purpose of the survey and then handed over the questionnaire to the respondents to be filled and returned the next day. All the researchers being the local residents of the city, they managed to assure the respondents complete anonymity.
The results were based on 10 key industry practices that were linked to 25 action points. These queries were grouped into 5 key concerns of Execution Capabilities, Fiscal Management, Knowledge/Expertise, Ethics/Conduct and Service Excellence.