Category Archives: real estate

Startup Disruption in Indian Real Estate Through Technology-Driven Solutions

Startup Disruption in Indian Real Estate Through Technology-Driven Solutions
80% of the industry is unorganized and a task for a startup is to get professionals

Nirupa Shankar
Guest Writer
Executive Director at Brigade Enterprises Ltd and Brigade REAP

The Real Estate sector in India is ripe for technological disruption as it is heavily dependent on unskilled labour for construction. The Construction industry spends less than 1% on technology, one of the lowest percentages across all industries. Construction labour productivity has not kept pace with overall economic productivity. Even on a global level large projects take 20% longer to finish scheduled and 80% of the projects overshoot budget. These figures are ratified by McKinsey and Company in a 2016 report on Disruptive Technology Trends.

One regulatory disruption in the Real Estate space has been the introduction of the Real Estate Regulatory Act (RERA) – which has impacted operations and business viability for many developers across the nation. While the act is consumer friendly, requiring developers to deliver projects on time and provide quality products, the act also places onerous restrictions on developers. For instance, the act severely limits the fungibility of monies raised from a particular project and has harsh penalties for delays even if the reason for delay is beyond the control of the developer. This creates more reason for developers to adopt technologies that can help them in the following:

Plan better / enhance operational efficiency

Control costs

Save time

Deliver quality, snag free apartments

Increase customer satisfaction

However, despite all the issues waiting to be resolved, adoption of technology is fairly limited. The reasons for this are many. While developers are looking for solutions to help them be RERA compliant, it is found that there is a lack in:

Plug and Play Solutions: Many of the start-ups with solutions focussed on the real estate space require a lot of tweaking to their current business model in order to fit in to a developer’s existing systems and processes. Since 80% of the industry is unorganised, the start-ups need to work with the few developers who are professionally run, using established ERP solutions or those who are ready for tech adoption. Developers also keep in mind the cost-benefit of spending time to tweak and implement a solution by a start-up as opposed to working with more established technologies and solutions.

Must-Have Solutions: Most of the existing services offered are “nice to have” services that a developer is not keen to pay for. Unless a service or product can show concrete savings in time or money, or directly attributable increase in revenue, a developer will not want to pay a monthly or annual fee for it. He will ask for a success based fee which will require a clearly defined outcome.

Scalability: Every company has a trajectory for growth. Just like how medium sized companies struggle to make the quantum leap from mid-scale to large scale, many young companies struggle to make the leap from start up to small-scale. At every stage, companies go through growing pains and the need to scale up is a constant pressure for founders. It is often found that a developer gives a proof of concept (POC) opportunity to start up to “try out” their service.

The start up might do a good job with the limited scope. However, when the same start up is asked to implement the service across all the developers projects, it will struggle to keep up timelines, quality and cost due to recruitment challenges of finding quality talent, retaining quality talent or the ability to create processes that work seamlessly or lack of back-end support and tech to scale up exponentially. This creates lack of confidence in a start up’s ability to handle large quantum of work.

Sustainability: Every company has problems. It’s just that different companies have different types of problems depending on which stage they are in. However, the focus of creating a sustainable company is one that can scale up while being profitable or at least see profitability at the end of the tunnel.

This is to ensure when developers put their faith in a start-up, work with do not suddenly come to a standstill or the start-up does not suddenly wind up and close shop one day due to lack of funds or a founder quitting. It impacts the developer’s ability to service his/her customers thereby impacting reputation.

Bottom Up Buy – In: Lastly, buy-in from the developer’s team is essential for technology adoption. Unless there is buy in from the people who are required to implement the solution or adopt the product, progress will be slow. Adoption of technology does not happen top down.

Staff down the ranks will find a reason for why something does not work unless they have “buy in” of the product / service and that means clearly knowing “what’s in it for them” or having clear visibility on the benefits of the product or service.

If these roadblocks can be addressed by young companies wanting to disrupt the real estate industry, there is nothing to stop them. The industry is their oyster.

Why Going National is Now Critical for Real Estate Players

Why Going National is Now Critical for Real Estate Players
With RERA and GST, it’s time to spread wings nationally

Baishali Mukherjee
Freelancer, Entrepreneur India

Real estate in India is a subject of individual state because of the federal structure similar to that of the US, where rules related to property differ from state to state . This has, in turn, resulted in the development of prominent local brands and most developers have continued to focus on their regions. With local laws, specific consumer trends and sensitivities, and the sheer diversity of our country, there are few national level developers in India. Large brands such as the Tata Group, Godrej, DLF, to name a few, have gradually expanded to different markets across the country.

Shubika Bhilka, Director, Real Estate Management Institute (REMI), feels, as real estate companies gain scale, receive institutional money and emerge as prominent leaders in their domain, there will be a trend towards expanding their presence across geographies. “A number of companies are gradually diversifying their portfolios to include newer markets, asset classes and it’s likely that this trend will continue as businesses look to develop brands of scale,” she emphasised.

Establishing Brand Identity Before Expanding Is A Good Idea

The year 2017 was significant for the Indian Real Estate sector; there were several amendments that have changed the status of the Indian real estate market. With implementing policies like RERA & GST, the government’s aim is to have market transparency to make the real estate sector much better for investors and consumers.

Abhisekh Bhardwaj, CMO, Shristi Infrastructure Development Corporation Limited believes it’s more important for a company to have a focused vision and efficient implementation. Incidentally, Shristi started its operations mainly from eastern India. The projects developed were mostly concentrated in West Bengal, Assam and North East.

“We didn’t rush to become a national player, our priority was to deliver cost-efficient and quality projects to our customers primarily in Tier II and Tier III cities. Our priority was to establish the brand among consumers before expanding it to Pan India,” asserted Bhardwaj.

However, in the present market reality, it is also important to expand footprints beyond the focused region. Shristi, a Kolkata based company, is now expanding its services in western India, with the first premium housing project coming up in Mumbai. Bhardwaj believe it is the right time for them to become a national developer and expand services Pan-India. However, he also maintained that it depends on developers whether they want to be national players or want to establish their brands locally before expanding.

Rishi Jain, Executive Director, Jain Group, on the other hand, strongly believes that a real estate developer needs to be committed towards the dream that an individual has in mind while choosing a home. “When the developer feels connected and committed towards making the dream a success, the buyers would definitely be content and proud of the home that they have. This rather takes knowledge, willingness, perception and most importantly, passion of the developer, which, we feel; do not need a ‘national’ tag with it. An erudite and committed group of professionals are worthy enough to set the benchmark up,” he insisted.

Time To Cater To MIGs Across All States

Every successful business had a beginning. Its founders usually looked for ways to gradually expand, attracting new customers and increasing monthly revenue as it went. In order to move the business to the next level, expansion will likely become necessary at some point. Whether it means growing one’s product line or setting up an additional brick-and-mortar shop, a long-term growth strategy can make a huge difference. Siddha Group, a prominent realty player, has presence across 4 cities, Jaipur, Bengaluru, Mumbai and Kolkata. According to Sanjay Jain, Managing Director, Siddha Group, the Real Estate Market has a huge demand with less supply.

“The MIGs had been identified with better purchasing power across all states and are looking forward to all buying possibilities. This can lead to expansion of companies. Catering to these states and targeting the potential customers would help in spreading across cities. With GST system imposed, we are able to receive the benefits of input credits across cities, which is a great help for a developer to move to various states as taxation policies do not make the business suffer,” he enunciated.

Compared to last year, the market has improved which brings in great hopes to look forward to optimistic buyers. Moreover, with RERA in scene, this would bring in corporate branding and higher investment opportunities. Time to spread the roots to other cities as well! Of course, if you are in real estate, you better be a national developer. That’s worth as a real player!