Corporate governance and professionalism are the emerging mantras for survival in the Indian real estate sector. However, the man who visualised the need for this decades ago maintains a low profile, refusing to take any credit as the first mover in institutionalising Indian real estate. As the industry body CREDAI decorates Ravi Puravankara, the founder and chairman of Puravankara Ltd, for his lifetime achievement, Ravi Sinha interviews him to understand what goaded this first-mover to adopt corporate governance.
Edited excerpts:
Q: How far has the sector evolved over the years?
A: In my opinion, the Indian real estate sector has advanced beyond the stages of evolution and consolidation. As I see it, we have now entered the stage of maturity. Today, it is easy to differentiate between a professionally run real estate enterprise and a family-driven venture. Also, the performance of different brands has undergone extensive scrutiny over the years, making buyers, financial institutions, and stakeholders more conscious of the differences when dealing with established brands. It translates into professional real estate brands having easy access to funds at lower costs and reduced client acquisition costs, along with shorter product tenure in the market.
Q: The large universe of real estate companies is still family-run businesses. Is the nature of business not conducive to a professional boardroom?
A: I firmly believe that organisations are built by their people. Working with people who share your beliefs, value systems, and drive is important. A company should be run professionally and led by the best and most able talent. Real estate entrepreneurs must strive to build an institution that withstands the test of time. For this, it is important to separate management from ownership.
The role of real estate entrepreneurs should be to build a sound professional culture and invest in systems and processes to ensure the enterprise functions efficiently. If the foundations are strong then only Gen-Next would also share the vision and take the initiative to contribute towards building a long-lasting institution with authenticity.
Q: No-cash deals in a business such as real estate sounds challenging even today. How could you weather this challenge in the initial years?
A: Our conduct has been crucial for us since the inception. No transaction occurs with unaccounted money, and it remains one of our core values and strengths. Ethical practices and transparency form the foundation on which our brand is built. All our practices are aligned with legal and regulatory compliances in both letter and spirit, and the entire ecosystem is based on shared responsibility and accountability.
Refusing to deal with unaccounted money has been an impediment to growth at times. We have lost out on sales, land deals and joint ventures. However, at the same time, it also proved to be a source of strength. These values are why the brand has today managed to generate interest among investors like the International Finance Corporation (IFC) – part of the World Bank, among others.
Q: While many developers across the world have diversified into various segments of real estate like office, retail or hospitality, why has Puravankara been focussed on housing only?
A: Engineering has intrigued me from a young age. The ability to take a piece of land, create a living space where people spend their lives, and eventually leave that value to the next generation, was compelling. A home is a basic need for everyone; it is a primary responsibility to provide security and safety for your family. For me, it was no different. I have been so passionate about housing that I could foresee the housing segment itself as a business catering to various segments of the masses. As a result, Puravankara is arguably the only real estate brand where various housing sub-brands or verticals operate as different segments. Right from Purva to Provident Housing and WorldHome Collection to Purva Land, we have set up a bouquet of housing options for every budget segment.
Q: With the majority of the real estate stocks showing inconsistent price patterns, compared to their respective PE & EPS, do you think getting listed on the bourses is more of a liability than asset?
A: At a time when others dismissed that the nature of the business is not conducive to getting listed, many of us in the business opted for an IPO as early as 2007. Getting listed is not just about raising capital. Developers with a good track record of delivery and a fair amount of transparency can raise capital at a reasonable rate without going public. However, developers still go for an IPO as it helps increase awareness about their products and values, which tremendously improves brand equity. It also provides listed players with an avenue for fundraising. Today, by virtue of being a listed company with strong corporate governance, the top developers are recognised as trusted real estate brands.
(Interviewed by Ravi Sinha, CEO, Track2Realty.)
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at [email protected] |
Ravi Sinha is a journalist with nearly two decades of cross-discipline media exposure. He is the CEO of real estate think-tank group Track2Realty. He has been writing extensively on the real estate sector for nearly a decade. Evaluation of real estate brand performance is his expertise and he has immense insight into consumers’ psychograph in the property market.
Twitter: https://twitter.com/ravitrack2media
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