Real Estate

The real estate landscape is suddenly dotted with big corporate names like Tata, Godrej, Oberoi, am

The real estate landscape is suddenly dotted with big corporate names like Tata, Godrej, Oberoi, among others. What makes this industry attractive to them and how are consumers reacting.

Big names have suddenly cropped up along the real estate landscape – be it Tatas (Tata Housing),Godrej (Godrej Properties),Oberoi Group (Oberoi Realty),Hero Honda Group (Arrow Infratech), Essel (Suncity),Jaypee (Jaypee Greens),Paras (Paras Buildtech) – nobody ,it seems, wants to be left behind in grabbing a share of the attractive real estate pie.

They all agree that the sector is disorganized, perhaps plagued with more issues than any other industry; but none seem deterred by the challenges. In fact, they seem ready to unleash the ‘huge opportunity’ that the realty sector can offer, given a combination of demand-supply mismatch in housing and a lack of quality real estate in all segments along with enchasing on their brand name and an existing customer base, which is brand loyal.

Take a look at Tata Housing. Their Raisina Residency was completely sold out and some investors confess that they did not even wait to see the layout plan. Ask any professional, and they say the name of a credible corporate house wins favour with them hands down vis-a vis a project by a private developer. Says Sumit Sethi, a Gurgaon based banker ,”There is a stamp of credibility if a good corporate name is associated with the project. To an investor like me, It gives an assurance about everything – right from project execution to quality of construction and timely delivery to clearances being in place. The fact is there is a lot of money involved in a real estate investment and it involves a huge risk, so the realty firm with a corporate brand makes it worth the while to take a calculated risk.”

At the recently launched Godrej Frontier, the firm managed to sell over 200 apartments within two days of launch, even though it was not officially announced. Investors were not deterred by the fact that it is close to Manesar and is the group’s first project in northern India.

So, do the corporate have an edge over other individual players in having better branding and marketability, understanding of consumer needs and preferences According to a Godrej spokesman, “The major advantage of being a corporate Real Estate Developer is the brand name – the brand is instantly recognized even when the company undertakes projects in new markets. Most developers have a regional setup while a company follows customer-centric approach and even ropes in international architects and brings in newer designs. Typically, a company then ties up with reputed construction companies like L&T, thereby ensuring superior project quality and on-time delivery.”

Godrej Properties started operations in 1990 and its first project was Godrej Eden woods in Thane. Subsequently, it developed projects at Worli sea face, Kalyan, Panvel, etc. Now, the company is doing large projects and has a presence in 11 cities across India. According to Milind Korde, managing director of Godrej Properties Ltd, “The company uses the joint venture (JV) model of development. This is an asset light model where a certain portion of the land cost is given as an advance to the landowner and the arrangement is either area sharing or revenue sharing or profit sharing.”Even in the Godrej Frontier project in Sector 80 in Gurgaon, the Godrej Properties’ joint venture partner for this project is M/s Frontier Home Developers Pvt. Ltd.

Their focus is on medium to high-end residential properties. Some of the key projects of Godrej Properties include Planet Godrej, Mahalaxmi, Mumbai (a premium high-rise residential project located in Mahalaxmi, Mumbai),Godrej Woodsman Estate (Bangalore) and Godrej Prakriti (Kolkata).Godrej Garden City is a 250-acre township planned in Ahmedabad. Besides, there is Godrej Avalon at Mangalore, a high-end residential project spread over 6 acres, which will have three 23-storey towers offering 3 and 4BHK luxurious apartments with panoramic view of the city, the surrounding valley, and the sea. The Godrej Group has several land assets across India and there will be arrangements as and when they get ready for development. Currently, the company has signed a JV for developing 35 acres in Vikhroli. This will be a mixed use development. One thing common to corporate developers is they are all seen taking the JV route. Many a time, there is an inherent advantage in tying up with a local developer who can consolidate land banks, get clearances and as a real estate broker says, “get the dirty work done”. For a local developer, they derive mileage from their association with a big brand player. Essel Group’s real estate division, Sun City, recently developed condominiums in Gurgaon in collaboration with a local player ABW.

The expectation of an investor or an end user is pretty high when a corporate name is associated with a real estate project. According to Brotin Banerjee, MD and CEO, Tata Housing Development Co Ltd, “As a corporate real estate developer of choice we work extremely hard to win over our consumers in delivering products with design excellence not only in aesthetics but also functionality. We have an approach that is customer-focused and customer-centered. Every residential or commercial premise is created o the basis of a thorough understanding of the stated and unstated consumer needs, which are obtained through a concentrated and focused consumer and market research. All our projects have been conceptualized and designed on the basis of a theme or concept, which is driven by consumer insights. We have an increased commitment to environmental stewardship and conservation that results in an optimal balance in terms of cost, environmental, societal, and human benefits while meeting the mission and function of the intended facility or infrastructure. All of Tata Housing’s projects are green-building initiatives constructed and designed under the guidelines of the Indian Green Building Council (IGBC) and certified for Leadership in Energy and Environment Design (LEED) to positively contribute to the environment, like ‘Xylem’, Bangalore’s first LEED Gold Rated Green Building; Aquila Heights, the first in India to be honoured with the AAA+ Certification by Construction Industry Development Council (CIDC) and Construction Quality Rating Agency (CQRA),which benchmarks construction quality levels.”

Talking about the huge opportunity that the real estate sector offers, Brotin Banerjee says: “The opportunity presented by the Indian real estate industry is extremely large. There is immense potential in this sector due to the shortage of housing units, estimated at nearly 26.53 million and the contribution of this sector to India’s GDP is 8%.”However he voices concern that “the real estate sector is predominantly unorganized in nature. Most of the developers have scattered and fragmented local or regional presence. Further, the lack of a common regulatory authority increases the hurdles faced by developers and consumers.”

Courtesy:- ET REALTY – dt-10-12-2010

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Tony Rowe with Chris Gray / Sky News on Real Estate Technology

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