Neeraj Bansal, partner – real estate and construction, KPMG India says the Indian real estate sector is undergoing a transformation, with progressive developers adopting best practices and structured business models, to remain competitive.
Here are excerpts from an exclusive interview.
What has been the impact of global investors and large corporates, on the Indian real estate market?
A: After the government opened up the sector to global investors, such as private equity (PE) funds, pension funds, etc., Indian developers are increasingly forming joint ventures and strategic alliances with such players. As a result, these global investors now have a greater say, not just in strategic decisions but at an operational level too, thereby, encouraging the adoption of best practices. Over the past decade, some of the major Indian companies and conglomerates, have also forayed into real estate. These companies have brought in professionalism and best practices that they followed in their other businesses.
Do you feel that the Indian real estate sector is slowly adopting best practices?
A: The real estate industry has become fragmented and as competition increased, developers have started adopting best practices. Developers have become more organised, to remain competitive. Increased pressure on profit margins, owing to increased input cost and the slowdown in residential real estate, have also made it essential to adopt best practices.
How can outsourcing of activities help Indian developers?
A: Companies have started defining priorities and assessing core competencies across the value chain, which can create value for stakeholders. They evaluate the activities that can be undertaken in-house and those that can be outsourced. Many companies that used to conduct most of the activities in-house, are now outsourcing a majority of their activities, to keep their operations leaner and focus on their core strengths. This trend is particularly evident, among the large established players, who engage all the concerned stakeholders at an early stage to realise the full potential of cost-conscious design and project planning.
What future do you see, for the real estate sector?
A: For India to prosper and achieve double-digit economic growth, the real estate sector needs to realise its full potential. The sector is likely to undergo a significant transformation in the coming years, owing to the Real Estate (Regulation & Development) Act, 2016 becoming a reality and the increasing role of foreign investors. Moreover, the buyers/end-users of real estate are becoming more aware and are now taking informed decisions. Therefore, it becomes even more important for the companies involved in the real estate business, to assess the models and practices that they adopt, to make their business sustainable.