Tuesday, August 8, 2017

RERA , GST & Connecting to Clients!










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“To be successful in real estate, you must always and consistently put your clients' best interests first. When you do, your personal needs will be realized beyond your greatest expectations”… Anthony Hitt.

CEO at Engel & Volkers North America, Anthony Hitt has served as Chief Executive Officer of Engel & Volkers North America since January of 2014. Anthony has been personally involved in Engel & Volkers’ emergence in the United States since 2010; those who doesn’t know Engel & Volkers, for them its one of the world's leading service companies in providing their clients with luxury real estates, properties, yachts and boats. The firm has around 520 residential property offices and 49 commercial offices across the globe, brokering retail, office and industrial space, investment properties, multi-purpose apartment and office blocks and property portfolios. No wonder it’s his work experience & authority which gets reflected from above words of Anthony which unfortunately his fellow collogues in similar business in our country has not yet understood! I am referring to real estate developers popularly known as builders, a term which many in the business doesn’t likes yet that’s what common man knows them by. For ages real estate is supposed to be the profession which cares a hoot about its clients, rare feet as when every other industry or profession was busy in laying red carpet for its customers, real estate never needed to take any effort on this front. Reason was simple, there was always more demand than the real estate industry can supply & then flat, plots, shops, offices were gold mines making anybody associated super rich & in our society mostly the rich don’t bother much about getting connected with masses is unfortunate fact. And when I say masses it means the common flat or say home buyers; those who doesn’t agree then go back a little in past & ask the flat buyers in 80’s & 90’s, that what was their experience while dealing with builders as well how many of them have been lucky to actually meet the builder himself? There are few builders who might not be falling in this category but in general that was the scene on connecting with customers in real estate.

The real estate was sailing comfortably with all its perks & affordability of not being in touch with clients till late 2012 at least in Pune but silently things were changing under the smooth surface of appreciation & margins in home making. There were ups & downs though & if you consider last thirty years then at least the real estate has seen five to six cycles of recession yet it has survived as every time it was correction & still the demand was more than the industry was able to supply. But in last five years things has changed a lot & due to urban policy of the State more & more land was available for real estate at the same time for generating more revenue the local bodies like PMC & PCMC started offering more FSI as well TDR for the existing buildable lands. And on other side as there was no control on land prices the land lords were sitting dead on the land holding which made the raw product i.e. land costliest factor in the real estate. Simultaneously labor costs along with material costs went up in construction; needless to say even govt also kept premiums, stamp duty, taxes graph rising eating out most of real estate’s appreciation. The outcome was the end product got so costly i.e. production cost of home making, that it went out of the pocket of common man at the same time there was more supply in market. If all this was less so the govt came up with three things in succession, Demonetization, RERA & finally GST; this was final blow to drive out customers (read investors) out of real estate & this is something real estate was not used to face ever! Now the only solace is real buyers but how to identify them & connect them if you identify the clients, as this is not something the builders were ever good at!

Before touching this aspect I will share my own recent experience on this front of clients’ connection. At VJ-SD (Vilas Javdekar & Sanjeevani Dev) we always try to reach out for our end customers by every possible mean & we believe our existing customer is our best brand ambassador. Right from conducting plantation programs at site to arrange get together at ongoing site to wish our clients on their birth days, we do keep a very regular contact with our customers. Off late our majority clients are from outside of Pune that too from Nagpur region (Vidarbha) & it’s not possible for their families to participate in our events here in Pune. So we thought why not arrange a get together in Nagpur itself for our clients in Vidarbha region so most of them can make it to meet their builder & his team (read “us”). Though there was risk involved & that is as most of these people are not living in Pune there could have been lapse from our side in communicating with them in past & the anguish might be expressed across in event spoiling the tempo but we decided to take the risk as I personally believes the tag line of Mountain Dew (a cold drink), “darr se aage jeet hai’ i.e. you need to put your fear aside if you want to win! So we went ahead & we took simplest path of invite one to one, via whats-app as well email as well post. In this era of electronic media agreed the world has come closer but yet someone needs to press "enter & send" keys to communicate & as a builder I feel it’s our duty to do it first than awaiting our client to contact us!

We kept it very clear, only existing customers & sole purpose is to meet, to share what’s happening here in Pune which is 800 km away from Nagpur & let us know what our clients what to say to us. I have prepared a presentation about Pune & growth but standing at the podium I felt it’s not necessary as if I call this as get together of my family members then do I make presentations when I meet my family? Answer is No, so instead I shared what’s happening in Pune. The main problem for people (read client & their families) who are going to migrate from cities like Nagpur to Pune is they hardly get to know firsthand information of the things happening here in Pune. As all they get is read social media forwards on whats-app or TV channels or new papers which just show one side of the coin. And on the background of RERA & GST most clients wanted to know what will be impact on their homes in making as well there were issues like villages merging in PMC & development of infrastructure etc. Do mind, most of the clients which are migrating from Vidarbha or Marathwada or District places, because of their limited budget can’t afford flat in elite areas like prabhat road not even kothrud or baner but they prefer in fringe area & especially the so called 34 villages. As most of these clients are youngsters just got a job or parents who are buying for their sons/daughters for their education! And they don’t much mind about infrastructure like roads, water as well close proximity to happening places like High Street, Baner or Koregaon Park. But when they read news like GST will make homes costly or RERA will make homes cheap or the area where their project in under construction & where they have booked their home is getting merged in PMC, they have lots of questions about all these things & they can’t come to Pune often. So I explained the difference between Pune & Nagpur & remember nobody likes to leave his home town, so I shared my sympathies with them for the need they have to leave the beautiful city like Nagpur but then their next generations career is in Pune is a fact. Pune offers jobs, education & most importantly Pune offers social secured culture, much better than Nagpur as well than any city in Northern or Central India. Just to let you explain how much important this last factor is, in my home town Khamgaon (Vidarbha) still in cinema halls ladies & gents sections are separate for sitting while you watch the movie & not just that even ticketing windows are also separate for ladies & gents! Now you can imagine how free & comfortable the youths must be feeling when they move around here on Pune roads! Though the infrastructure is a problem for Pune but then back in Nagpur also the civic problems are same. Here roads & water like things follows the real estate, unlike in western world where infrastructure comes first.

About RERA which is talk of every person related to real estate. I explained them RERA doesn’t decide rates of real estate but it’s a tool given to the customers to secure his rights. No law can change the industry but it’s up to us how we are going to make use of the law to get that change in the industry & so is RERA. It will definitely make the real estate transparent but builders will be builders unless until you as client use the law to improve the system. I explained them that RERA will assure that only the builders, who stay committed to what they have promised, will remain in the business provided as clients you also remain aware about what has been promised to you. As earlier also there was MOFA & yet it was unable to protect the customers from the builders as no law on its own can protect anybody but we have to make use of that law in such way that no builder will dare to break the law & cheat clients! As your builder, I assured them we have not been affected in any way by the RERA & neither we are afraid of it but am happy that RERA will help the good builders to remain in business as well control the bad ones! One more thing will be monitored with RERA & that utilization of funds for the project which has been collected from the flat holders. As maximum problems in real estate has been caused due to diversion of funds collected for one project to other projects or businesses by the developer. (Pune has witnessed many such in recent past & by so called reputed builders). Also about GST as it’s too early to comment on its effect yet if we keep transparency then whatever calculations we will have to do so we will & pas on the set off to them, is what I put forward clearly. As due to GST norms flat to flat setoff will vary is what initial picture is; earlier, average customer used to pay nearly 5.5% of agreement cost in form of VAT & Service Tax , which now roughly can go to 6% is what my initial judgment is about GST impact.

Lastly most I said this is era of communication & we are open always twenty four hours for our clients not just for something related to their flat but anything they need which mainly involves their kids here in Pune. Because if we consider our clients as family then whatever their concerns are, it’s our duty to stand beside them! Needless to say the get together was a great success & what more we can want than to see happy faces of the clients!
This is what I will share with my real estate fellow friends that times are changing & we don’t need RERA or GST or Demonetization to make real estate a respectable industry. We are just like any other industry but a lot more close to hearts of our customers as every other commodity comes to him by paying for it but it’s our commodity only where he has to come back as that’s what a Home is! And the client of real estate are changing, with more options available & law on their side as well awareness level high, we need to deliver what our client expects & for that we need to be connected with the clients or else how we will know what he wants us to deliver!  Only the builders who will understand this simple logic of connecting with the clients will survive, is writing on the wall named Real Estate! Finally all I want to tell the home buyers, remember there were good builders & bad builders in real estate, there are good builders & bad builders; there always will be good builders & bad builders; RERA doesn’t makes a bad builder good or good builder bad one, but it gives you opportunity to compare what’s good & bad, choice is yours with whom you deal with!

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Sanjay Deshpande 

Sanjeevani Dev.

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