Tuesday, March 4, 2014

Consumer & Market Trends in Real Estate

Real estate in India continues to be a favored destination globally for investors, developers and non-resident Indians (NRIs), driven largely by investor-friendly government policies and increasing globalization.

Being a good employment generation sector, real estate contributes effectively to India's gross domestic product (GDP). The foreign direct investment (FDI) in the sector is expected to be much better in the next 10 years from its current status. The real estate sector in India is witnessing rapid growth in the residential, commercial and industrial segments.

Real estate development, once restricted to bigger cities, have shown marked progress in smaller cities and towns owing to availability of banks loans, higher earnings and improved standard of living. The sector's progress is driven by factors such as rapid urbanization, a growing trend towards nuclear families, positive demographics, rural–urban migration, ever-developing infrastructure, higher income levels and housing demand. The real estate sector, with its growing investment opportunities, is expected to boost annual revenues to a great extent.

The Real Estate (Regulation and Development) Bill, 2013, as approved by the Union Cabinet is a pioneering initiative aimed at delivering a uniform regulatory environment to protect the consumer, help in quick verdicts of disputes and ensure systematic growth of the sector. The Bill will promote transparency, fair and ethical business practices, relating to transactions, through disclosure of project details and contractual obligations vis-à-vis the project and the buyer, promoting informed choice for the buyers. This will substantially reduce the power asymmetry prevalent in real estate transactions.

The Bill will infuse professionalism and promote planned development of the real estate sector through the promotional role of the Regulatory Authority. The Bill will ensure timely completion of projects, and prevent fund diversion. The Bill provides for a speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector.

Another upcoming trend is namely the increasing focus of online property transactions. Traditionally in India, agents are the centre of real estate transactions. Involving face to face contact not only means a much more personal approach, it also reduces the risks of property scams. There is an involvement of the third party as a mediator, to take care of the intricacies. This position of an agent has been a distinctive feature of the real estate business model in India for a long time.

Recently, there has been a change to the role of an agent as middle man, with a number of online resources entrenching their position as the agents’ front window, listing hundreds and thousands of properties for sale and providing advice to buyers. Improved technology is increasing the popularity of virtual tours of properties, blogs with current information on the market and insights and use of social networks. With buying real estate being the biggest financial commitment for most consumers, it is hardly unexpected that home buyers are willing to use what the Internet has to offer to support their buying decisions. The impact of the Internet on the real estate profession should not be underestimated. Agents should utilize opportunities offered online to adapt in their business models and include the use of technology in their business success strategies.

Agents are already embracing the use of the Internet, dedicating a greater percentage of their marketing budgets to online initiatives. Despite the challenges the Internet has brought to the real estate profession, it is doubtful that it will replace agents. Indeed, expertise offered by professional real estate agents and their social networks to other professionals cannot be substituted by online resources. It is important to remember that new technology poses threats but at the same time delivers benefits. Agents need to adapt themselves to this changing consumerism, success lies ahead if they can be more transparent, fair, professional and educated for the transaction.