There are legitimate reasons for this attitude towards the real estate industry.
After much exasperation on the credibility of surveys done by real estate consultants, I have taken to doing a consumer survey myself in recent months. It is a long questionnaire but the first question posed to respondents was a simple one: What is the first word that comes to your mind when you hear the word “builder”?
The overwhelming majority of respondents had extremely negative and nasty things to say about builders. Several were so abusive that they could not make it to the final video for the sheer language that was used (watch it here.) By the end of it, I got the distinct impression that most people believe the real estate industry is nearly as menacing as the COVID-19 virus.
There are legitimate reasons for this attitude towards the real estate industry. There is after all no other industry that has left as poor an impression on its customers as the real estate sector. For too long the best-case scenario for home buyers was that a home was merely delivered – even if the standard of offering was well-below the promised word.
The worst-case scenario, not uncommon earlier, was a developer taking the customer funds and merely siphoning it away. To be fair – this is not merely a Mumbai-specific phenomenon. Markets like Delhi-NCR would perhaps elicit even stronger sentiments.
What our survey found
Even though the responses to the survey were not surprising – the reason for putting this question at the top to respondents was a simple one: To gauge whether there is a gradual change in perception is setting in towards the industry? That’s because while there is a long long way to go, it is undeniable that the clean-up journey has begun. The fly-by-night operators are largely out of the game.
The barriers to entry for becoming a builder are becoming more stringent. Corporate developers have made their presence felt thereby uplifting the benchmark of the industry. Profitability levels are at an all-time low while regulatory supervision is at an all-time high – ensuring that only serious developers are initiating projects. Lenders have become proactive in pushing developers to be financially prudent.
With this progress – one would think that the reputation of the industry would have moved slightly to the positive at least. Why then is the reputation yet in tatters of the industry? There are no straightforward answers to this – but in my view there are broadly three reasons for this.
First is the simple reason that in any sphere perceptions take longer to change than reality – especially if perception has been negative earlier. Suspicion lingers for long and needs to be dispelled ferociously and consistently for an opinion change to happen.
Secondly – the improvement on the ground has been only to a limited degree. There are many developers who don’t deserve the acceptance they have received but have yet managed to – for a variety of reasons.
Thirdly – the old guard of the industry, with minor exceptions, have not yet adapted to the new reality. Their successors – often the children of the promoters – have disappointed. Instead of creating a new template for operation, far too many of them have gone back to the old template followed earlier.
Can the reputation change?
It certainly can. And if the trend of greater regulatory supervision and standardized policy norms continues – the industry can see greater acceptance from the common man.
There are two ways to do it.
1) One is by tackling the ground reality wherein more industry participants raise the level of their game. These participants include “branded” as well as “unbranded” developers. As much as unbranded developers have disappointed – the bigger disappointment has been with the conduct of many branded developers. Several home buyers who have paid a premium to them have found the experience – far from satisfactory. My guess is that when 1/3rd of the industry starts providing an experience that is without any tricks and mischief, the perception tide will start changing. If and when around ½ of the developer community comes up the curve – then the industry is set for a revolution.
2) Reality is important. But for it to capture popular imagination needs a cohesive narrative. And in this regard the industry associations and stakeholders have been short-sighted. There is too much time and effort spent with corporators. And too little time spent with society. Upgrades and achievements need to be highlighted at the industry-level. Clean-up initiatives need to be marketed.
The common man may today have an alarming opinion of the industry. They may even consider them to be as frightening as the COVID-19 virus. The industry has to start showing that they are the vaccine. It can be done.