Some of these suggestions require financial investment, which is currently a very scarce resource. These could be the long-term goals.
Throw away the old business plans! The age of professionalism has begun! Well, almost. Developers with ongoing projects have no option but to rework their strategy. Many of them might not continue with development once current projects are delivered. Those who will, need not be downcast.
Developers should focus on the basics and do them in detail and well. That has evermore been the key to success and more so now. What are those basics?
1. Set up a compliance department: Provisions of the Real Estate (Regulation and Development) Act, 2016 - RERA (Act) necessitates regular and accurate reporting. Most developers don’t have such discipline, systems or processes to be able to comply with the norms. Either the current teams of the developer are trained or new people are hired or an external agency is employed. Either of the options would be a challenge for most mid and small level developers as they struggle to survive in the slowdown.
2. Establish a quality department: Embracing both technology and processes which are well tested across other industries and businesses is critical for survival and growth of development entities in India. Some firms in the past tried to get “ISO” certifications and were partly successful. This time initiatives towards quality improvement should be across the entire business and on a perpetual basis.
3. Hire professionals: The year 2005 increased and improved quality of professionals in Indian real estate as 100 percent FDI was allowed by the government. Several of those have exited their real estate jobs due to the slowdown over the past 36 months. As and when the demand picks up, however gradually, developers should focus, after incorporating the above two points, to attract more and better quality professionals to run and manage their businesses.
4. Respect the professionals: Most developers in India, as is the case with most other Indian firms, are family-run businesses. Only those Indian firms have gained respect, which have respected their professional cadres. Developers should take a cue from several such case studies and incorporate their best practices in real estate. I look forward to the day when an Indian developer is one of the “most attractive places to work.”
5. Pay the consultants: This problem plagues most developers across India. It is not going away anytime soon. Word and commitments honoured during the current slowdown is equity that developers can encash for an entire generation. Agents, contractors, architects, designers and several other vendors are struggling to receive their dues. A written commitment and earnest effort to pay should be every developer’s first step post RERAs are set up.
6. Well begun is half done: Most Indian developers have a habit of launching a project immediately after securing plan approval. Execution of a project takes much more detailing, which is usually done while sales and constructions are ongoing. This usually results in an inefficient, sputtering construction process causing delays. Besides financial closure, design closure is also critical, going forward, to ensure the project is not delayed and competently completed.
7. Don’t “time the market”: Many developers plan on the basis of ongoing market rates and trends which could be in a crest or a trough. Basic market fundamentals of demand and supply get lost in the noise of sales and marketing. Linked to the above point of detailed planning in advance is the requirement to prepare a development mix most suitable to the site and not go for the “flavour of the season”.
8. Create differentiators: As the industry enters the next stage of professionalism, time is ripe for developers to create their niche. Luxury and affordable housing, for example, are two ends of the residential spectrum. So far people have tried to dabble in whatever returned the highest margin or demand. To ensure a sustained and stable growth, the first step for all developers should be to look inwards, introspect and decide on which segments to focus on, going forward.
9. Focus on strengths: Land consolidation, securing statutory approvals, planning and designing, sales and marketing, construction technique/ technology, acquisition/ completion and maintenance are a few of the stages in the life of a development project. Each developer needs to decide which one or two of these stages are his current strengths and how best they can leverage them. Gone are the days of anyone undertaking all of these stages, in however incompetent manner, and getting away with it.
10. Create a robust IT infrastructure: Finally, the most obvious requirement and investment is in the IT infrastructure of a development entity. Not only should the basic sales related CRM or construction related ERP become the norm for all but it’s time now to determine how the ongoing ecommerce, IoT, 3D printing, virtual reality and related technology revolution can make the industry deliver better.
Some of the above points require financial investment, which is currently a very scarce resource. Developers are straddled with debt, unsold inventory, low sales and delayed collections. These could be the long-term goals.
However many of the suggestions above are easily implementable immediately. A change in mind-set, deep and honest introspection coupled with strategic decisions are required to change directions towards a brighter and more prosperous future.(The writer is Founder and CEO at GenReal)