Focus on transparency & quality can bring sustainable growth to real estate
By Anoop Bhargava, CEO & Director, Empire Centrum
Nothing inspires trust the way transparency does. If you don’t believe it, you only have to look at the real estate sector, which has had historically poor trust levels.
A report by the Associated Chambers Of Commerce And Industry of India (Assocham) and JLL, a firm specialising in real estate services, shows how improved transparency due to the Real Estate Regulatory Authority (RERA) has had a positive impact on a sector that was unregulated, fragmented and had a weak regulatory framework.
The report makes an interesting mention of how renewed confidence of home buyers and investors in real estate projects post-RERA led to a drop in the need for institutional funding. The report says the need for institutional funding in the residential sector reduced by 44% from $9.8 billion in 2013-17 (pre-RERA period) to $5.5 billion in 2018-22 (post-RERA period). It is worth mentioning here that though the RERA Act was passed in 2016, it took almost two years before its effective implementation began.
The advent of RERA notwithstanding, or perhaps because of it and other government regulations, the real estate sector has undergone a sea change in the way projects are managed, financed and executed.
Even without RERA, it was just a matter of time before buyers and investors began demanding accountability from developers. This accountability in providing clear and accurate information about the property, its ownership, and associated costs is now mandatory. This has helped develop trust, and realtors who have gained this trust have benefited through positive branding, repeat business, and referrals. It has helped the overall sector too, with one report by the Indian Brand Equity Foundation expecting the Indian real estate market size to be around $1 trillion by 2030, up from $200 billion in 2021.
Another often ignored but obvious aspect of realty projects is quality, and few understand its impact on the sector. The benefits of quality construction are apparent and long-lasting for both the building and the builder. A well-constructed building that boasts excellent workmanship in terms of men and materials lasts longer, requires less maintenance and retains value over time. Quality properties enhance a developer’s reputation and gain customers’ trust. No marketing gimmick can ever stand up to the word-of-mouth publicity given by a satisfied customer and the business it generates.
A focus on quality and transparency automatically translates into compliance with regulations and standards, be it building codes, safety rules, environmental laws, and other legal requirements.
When a sector prioritises quality and transparency, it drives innovation and becomes agile in adopting new technologies, design trends, and sustainability practices. These innovations often translate into lower construction costs without compromising on standards. It also results in the development of unique attractive properties that further drives demand, price and growth of the sector.
In the future, as the real estate sector matures further, more stringent regulations will inevitably come into play. However, we don’t need to wait for it to happen and can instead focus on driving transparency, quality and innovation, which will be important determinants of how long we stay in the race.