Some call it market intelligence and not due diligence where the focus should be more on the micro markets than general trends which could be misleading. However, there are many grey areas where in the absence of proper research and reliable data even the assessment of ground realities is not feasible.
Browsing: Due Diligence
The real estate sector is in dire need to communicate an connect with the stakeholders and society at large. In the name of communication all that they do is to hire a PR (Public Relations) agency for the purpose of brand building but do not understand what is communication in the right context.
Beyond the economic rationale, the developers assert that they are doing their homework properly. One of the largest developers claims it has its own empanelled brokers to give constant feedback on the market before the launch of any new project. They supplement it with a proper in-house research of the market, the catchment area, competition and other market forces.
The fact of the matter is that in the absence of any regulation that defines the standard measurement of super built-up area, built-up area and carpet area, every developer defines it as per his convenience. There is no scientific methodology that defines what is an ideal loading percentage.
Swadeep Sharma was on a house hunt in Noida for the last two years. Last year he could find a house of choice at one of the newly delivered projects in Noida Expressway at INR 5600 per sq feet. He could, however, not manage his finances then. Now that he has managed his finances, he went to the same location anticipating shelling out more money. He was, however, taken by surprise. The apartment in the same society is today available at INR 4800 per sq feet.
It is the lack of proper disclosure that often results in litigations. Across the world, disclosure laws vary from state to state, even down to the city and local governance level. Though disclosure norms are very poor in India, the developers who conceal relevant information about the housing project can still be taken to courts for failure to disclose.
With the reasonable expectation of a roof over the head not very long ago, the real estate boom in this part of the world has scaled up the liberty of choice for the average homebuyers. While the aspirations of even the middle and lower middle income with moderate budget have gone up, there are very many residential projects launched in recent times that seem to fill the gap with the promise of hi-tech amenities, luxurious lifestyle, lush green surroundings within the range of Rs. 30-70 lakhs.
A closer look at the given developer, Gaursons and the market that it operates in, clearly suggests that the sales figure is definitely not reflective of higher consumer confidence in the market that is notorious for the lack of best practices.
There is no rocket science in real estate that buyers can not adopt and understand for their own better understanding of the most valuable asset called house. Proper understanding of the real estate terminology also helps the homebuyers to safeguard against the misleading sale.
The industry body Confederation of Real Estate Developers’ Association of India (CREDAI) has thus far failed to act against the erring builders. They had only been vocal with a resolve to suspend the members who have repeatedly gone back on promises to buyers.