afaqs! Round Table Conference: Real Estate: Ethical marketing and rational policies needed

The panel brought to the foreground the realities of the gimmicks disguised as marketing tactics, flawed policies and lack of regulation that abounds the real estate sector.

The afaqs! Roundtable Conference held on March 23 at Hotel Shivalik View, Chandigarh, focussed on the requirement of ethical marketing and various challenges faced by the real estate sector in cities other than metropolitan India.

The panel of speakers included Colonel R S Perhar, partner, Stellar Infrastructure Development Company; Satender Singh Jarry, director and chief executive officer, Alchemist Group; Yudhvir Arora, senior manager, marketing and commercial, Parsvnath Developers Ltd; R S Bipin, director, business development, Blessings World; Amit Puri, director, Accord Infra Developers; Gursharan Batra, managing director, Gee Impact Infra Con; J K Sharma, partner, Future Estates; Anil Chopra, chairman, PPR Group; P S Grewal, director, Orbit Apartment Constructions; and Kanwaljit Singh Walia, chairman and managing director, RKM Housing. Dipin Preet Singh, director, West Coast Investment Solutions moderated the discussion.

The panel debated and discussed multiple issues related to the realty industry. Some of the hard-pressing questions raised during the round table session were: Does real estate, like any other industry, need hard selling or does quality of a project speak for itself? Are Indian real estate players setting global standards of construction and infrastructure development? Is the industry doing enough to gain the consumer's trust and credibility? Are issues like affordable housing given serious thought and commitment?

Realty marketing: a farce or reality?

Every newspaper on a weekend is full of advertisements that promote different real estate projects, which just makes things difficult for the buyers. One among many things that the panel agreed upon was that ethical marketing in real estate industry is the need of the hour. "Marketing should be turned to realistic marketing," Chopra said. Word of mouth marketing is the best that a realty project can get and brand equity needs to be built before promotion, agreed the panellists.

According to Grewal, real estate projects value sales more than sensible marketing. "Marketing majorly involves understanding the inherent need of the customer and delivering on it, thereby making your mark," he said, and highlighted that to deliver the best, development of quality needs to be ensured first and for quality projects, one needs skilled manpower, too.

Diverting the attention of those present in the session, Colonel Perhar said that the number of projects completed and handed over in Chandigarh could be counted on fingertips, whereas the number of projects launched was in the range of a few hundreds. This statement brought to the fore the topic of accountability and transparency while delivering realty projects, which many speakers on the panel admitted was missing.

Highlighting the malaise of false claims and unethical advertising, Puri concurred that it's high time that a regulatory body for real estate industry was established. "Any sector, whether it's telecom, automotive, broadcast or stock exchange, when faced with problems sets up a regulatory body."

Cracking the marketing conundrum

How important is marketing for the realty sector? Does brand equity matter here or is it all about tall claims? We are moving from unorganised to an organised way of functioning, said Batra. With increased competition, real estate and infrastructure developers are hiring professional real estate consultants like Jones Lang LaSalle and Cushman & Wakefield to jack up their brand equity and project delivery capabilities.

Grewal added that like any other servicing-led sector, real estate, too, should invest in building brand equity. "Builders and developers have to be conscious of the customers' demand, expectations and loyalty," he said. Trust needs to be established and grown with every project completed and delivered, said the speakers on the panel.

Challenges faced from flawed policies and guidelines

From sticky policy issues to the standardisation of business practices, from vested political forces playing to the gallery to the concept of master plans, a lot of challenges ailing the real-estate sector were discussed and ruminated upon. Some of the challenges discussed in the session included high construction costs and low margins in real estate in North India.

"With rising inflation, the Reserve Bank of India has raised the bank's cash reserve ratio around a dozen times. A few years ago, land cost Rs 1,600-1,700 per sq. ft. Now, it is Rs 3,500-3,700 per sq. ft," Grewal said. Agreeing to this, both Arora and Bipin endorsed the view that since costs were running high, marketing and ethical promotion of worthy projects was not done adequately. Summing up what promotion of a real estate project should include, Col. Perhar enumerated, "Location - details and legitimacy; a project's layout and ambiance; specifications; facilities and amenities; true accountability and time-bound delivery."

Highlighting the flawed governmental policies on developing land banks into habitable residential colonies, Jarry said, "I have made several representations to the Haryana government for roads, sewage plants, street lighting and landscaping on lands we were developing, but I'm sorry to admit that really shoddy, lax and old land development policies prevail currently.

Grewal pointed out that environmental impact assessment is not given a serious thought in official policies. There are so many clearance windows in place that instead of facilitating development, they act as impediments to project completion. Chopra agreed and cited examples of multiple cities in Punjab where unauthorised colonies were given preference and offered lenient taxation compared to regularised ones.

"In Punjab, 95 per cent of urbanisation is unauthorised. Due to political interests and backstage lobbying, unauthorised colonies get preferential treatment," he said. Arora brought in a streak of optimism when he referred to the introduction of the Real Estate Bill that addresses a lot of industry problems.

Walia deliberated that developers are resorting to corrupt and unethical practices due to stringent and irrational tax regimes. On a project worth Rs 50 lakh, about Rs 20 lakh goes into taxation, he concurred. In 1995, there was no external development tax, while the development charge is Rs 7 lakh per acre today.

Global standards: a great outcry

Bringing in a perspective of what prevails in metro cities, Bipin said, "In a bid to meet deadlines and completion of projects, many a times developers miss out on delivering the promised global standards." Arora opined that master plans should be made, strictly frozen and adhered to.

"Like the West, after great deliberations and feasibility analyses, a master plan needs to be drawn and then implemented, followed by a detailed zoning plan. Making a fancy master plan and then changing it regularly according to some vested interests is common in India," Grewal said.

Many on the panel agreed that the pre-requisites for global standards are internationally trained and skilled manpower, and techniques. There is also a need for the will and desire to compete internationally and make a mark.

Affordable housing - who bells the call

In a 'welfare state', it is the responsibility of the state to shoulder the onus of facilitating access to housing for the low income and economically weaker sections of the society. "Affordable housing to me sounds like a utopian thought," Colonel Perhar maintained. The reality, city by city, is staring us in the face, he added.

There's no clear-cut definition of 'affordable,' the speakers agreed in unison. As a suggestion, Chopra, who also chairs the Punjab chapter of Confederation of Real Estate Developers' Associations of India (CREDAI), said that affordable housing should be incentivised by waving off external development charges for affordable housing projects.

Bringing forth various examples of successful affordable social housing initiatives, Bipin spoke about the colonies set up in Tamil Nadu after the Tsunami and in Bhuj, Gujarat after the earthquake. Batra opined that the government should realise that affordable housing is social infrastructure. Grewal, supported by a few other speakers, demanded that the government unlock land banks, bring in public-private partnership (PPP) projects and have experts on-board to see socially affordable housing projects through to completion.

The National Urban Housing and Habitat Policy 2007 incorporates reservation prominently by stating that 10-15 per cent of land in every new public/private housing project or 20-25 per cent of floor area ration/floor space index (FAR/FSI), whichever is greater, will be reserved for economically weaker sections (EWS) and low income groups (LIGs) of the society.

Puri, though, admitted that due to absence of rational policies in the past, many such projects have not been really good for some developers, but he added that new and vital beginnings can definitely be made.

Wrapping up the proceedings, Dipin Preet Singh, the moderator, said, "A lot needs to be done before the real estate sector can enjoy customers' faith and unflinching trust, and can take pride in contributing more to the gross domestic product and the healthy development of India."

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(Held in Chandigarh, Punjab on March 23, 2012/03, the Round Table Conference on The Challenges in Marketing for Real Estate was sponsored by STAR News)