Introduction
On this Women in Real Estate Series discussion, we would like to introduce Ms. Pavitra Shankar, a Vice President at Brigade Group. Until, recently was managing the US region marketing and business development for Brigade. She is an MBA in Real Estate from Columbia Business School and has also worked with Willis Towers Watson and Rockwood Capital. We discussed with her on digital marketing, technology innovations in Real Estate, impact of RERA on large brands and steps taken by Indian government to clamp black money; here are the responses from her.
Do you think real estate developers are slowly getting more inclined towards the usage of digital & technology to build more efficiencies in the system?
For now, technology in real estate is mostly to do with marketing, sales, CRM and ERP software. Almost every real estate player relies on digital marketing and strong web and mobile presence to spread awareness about its projects to customers. There has been tremendous growth and even consolidation in the online real estate aggregator space. However this is just the tip of the iceberg – there is huge opportunity to integrate technology into the design development, construction and execution aspects of the process.
At Brigade we are following the developments closely and have set up the first real estate focused accelerator program to identify and support new technologies that would benefit the industry at large. Incorporating these into operations will take time but is surely the way in which real estate industry needs to head, in order to keep up with all the challenges and opportunities of the sector.
How does RERA have an impact on large brands like Brigade? Will it bring more parity in the system across different developers? Will it also bring more international investors?
RERA will impact every type of player in the industry, regardless of size and business model. It will force all developers to be more transparent about their approvals process as well as to ensure timely delivery and certain quality standards. It protects customer rights, and in the long run what is good for the end user, is good for the industry.
In the short term however, it will raise the cost of compliance and increased working capital needs for developers. It will cause some players to exit the industry if they cannot scale up to meet these challenges. By improving transparency and accountability, RERA will also lead to higher inflows of capital from international and domestic institutional investors alike.
Did demonetization impact realty in places like Bangalore & Pune where most of the customers are any ways in “zero cash” segment?
Bangalore developers have been fortunate to operate in a market where most customers are salaried professionals who use mortgage finance to make their real estate investments, thereby removing the cash component of the business that is present in a few cities in the country.
Despite this, demonetization definitely had an impact on the Bangalore market due to customer sentiment rather than any change to the ground reality. Perhaps due to the kind of media coverage of demonetization, customers expected deep discounts and price decreases that are unheard of in this market.
Anecdotally, we did not observe any drop-off in the number of enquiries or walk-ins at our projects – the difficulty was in convincing the customers that huge discounts of 30% etc. would not be possible now or in the near future. This was a short term effect that has thankfully not continued into 2017. Brigade has seen promising sales trends this quarter and enjoyed a very good month in February as well.
Besides demonetization do you think government can do any other things to build more transparency and clamp down black money from the sector?
The government can do two things to overhaul the sector – both will hugely benefit the end user and customer. One is to make the approvals process more transparent and accountable, ideally with a single window clearance.
The current approval process is labyrinthine, time consuming, and can be totally arbitrary. There are multiple clearances and no objection certificates sought by different state, city, municipal authorities. Which can take up to a year to receive in order to launch the project.
If developers can reduce the time taken to deliver a project after acquiring the land. The cost savings will surely be passed on to the customer. Second is the level of taxation on property, i.e service tax, VAT, stamp duty, registration charges. All these add at least 25% to the final property price that customers need to pay.
By reducing or consolidating these taxes (beyond what GST will do), the government can pass on the savings to the end customer. This will also help housing become more affordable.
The views expressed here are solely those of the person interviewed in her private capacity and do not in any way represent the views of the brands/organisations she is or has been associated with.
