Track2Realty Exclusive: Making the strategic shift of corporate in realty is not easy and getting things right is even more complex. Even though real estate business may not be the primary operations of several conglomerates who have entered this business space, sound corporate governance is based on more than just simple compliance with ‘universal standards’.
Economic and financial decisions are entrenched in an array of relationships that tie company directors, senior executives, shareholders, money managers, stock analysts, and government regulators, where ‘greener pastures’ are definitely not the sole consideration of conducting realty business, says most of the corporate brands in the realty domain.
The major challenge is in discovering the right combination of features that can yield high investment returns and robust growth for the business and delivery, cost effectiveness and quality for a consumer, while at the same time addressing the ever growing demand for livable and quality real estate and ensuring that the housing needs of people are adequately addressed.
Most of the corporate into realty are having a business model of tie-up with local developers. How far will this help in giving a facelift to real estate-just brand name? Sachin asserts reforms in the real estate sector are multi-faceted and call for combination of legal, regulatory, and market measures to be taken. Changes along legal and regulatory lines envisaged for the sector, must take into account the enforcement capability of developers, which is often a binding constraint. Even as firms face competition and adapt themselves, they must operate within these institutional frameworks.
Some analysts believe it is profoundly in the self-interest of these real estate developers, be it through joint ventures, tie-ups and/or affiliations, going forward to implement a list of ‘to-do’s’ in order to convert the challenge of corporatization into an opportunity.
This comprises linking strategic goals to daily activities in order to establish a premise for corporate performance management; obtain timely, accurate and relevant information as and when needed; implement and enforce strategies and policies; assess and validate expectations; benchmark best practices; and develop key performance indicators.
The question that is all important from the buyers’ perspective and for the benefit of the sector itself is whether the presence of corporate ensures the rate of best practice transfer over time?
Of course, the urgent need is to endow organizations with the capacity to analyze their situation and tailor their corporate governance mechanism to fit their business operations, rather than simply apply an advocated standard model.
Companies should subscribe to a systematic approach that will assist them to make sense of experiences garnered by both domestic and international organizations, understand what factors have made implementation successful in its place of origin, and deal effectively with differences in social, economic, political or institutional conditions that might stand in the way of successful adoption.
