Q: RERA has brought compliance to quality control, centre-stage in the real estate sector. Does this bode well for corporate developers like Mahindra Lifespaces, for whom being compliant to quality control requirements, is anyway a business prerequisite?
A: The implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA) has resulted in a regulatory paradigm shift in India’s real estate sector. The creation of an environment that demands quality, accountability and customer focus has brought home buyers’ needs to the forefront of business operations. Certain behaviors that were implicit to us are now an explicit expectation from the industry. This is an environment that necessitates even more so, the need to sell genuinely, build responsibly and deliver on time.
As a responsible corporate citizen, Mahindra Lifespaces’ approach of self-regulation has always held us in good stead. In fact, we were significantly compliant with several provisions of RERA (such as launching projects only post all requisite approvals, quality management system, etc.) even prior to the implementation of the Act. Our focus on customer-centricity, thoughtful design and execution excellence has, thus, meant that we have been able to quickly calibrate to a fast-evolving regulatory landscape. This continues to be evinced in the fact that our H1 FY19 sales and collections performance has been among the best in recent years and customer referrals continue to contribute significantly to our bottom line.
We believe that the current regulatory landscape bodes well for India’s real estate sector in the long term and represents an opportunity for the industry to grow meaningfully and sustainably, while delivering on the positive emotions that one would normally expect as buyers. RERA has helped revive consumer confidence and brought positive sentiments back into the sector. Overall, there is a sense of renewed optimism, with signs of an uptick in end-user demand. In this context, responsible developers will continue to attract customers who are seeking high quality homes, timely development and the right price point.
Q: RERA has also caused market consolidation. Would you say that puts corporate developers, who are more financially stable, in a better position to enter into joint development ventures with other developers?
A: Indian real estate is witnessing substantial consolidation post-RERA, via mergers, acquisitions and joint development projects. Consolidation will lead to good growth for relevant developers across markets. There is a clear RERA-driven preference amongst customers, financial institutions, land-owners and the ecosystem at large for regulated real-estate brands, with a strong track record of compliance and completion. Projects that were stalled earlier, are being revived, thus, providing relief to customers; and development opportunities have opened up hitherto ‘niche’ markets. Moreover, there is a significant interest in distressed assets. This trend can eventually benefit the real estate industry by way of new opportunities for developers, both, large and small; customer-focused products and services; timely development; and reduced risk on investment.
Q: What according to you, are the best practices that corporate developers have brought to the Indian real estate market?
- A: Corporate governance policies, which ensure transparency in operations and adherence to all regulatory compliances, thereby, establishing an environment of trust.
- Unwavering customer focus at every step of the value chain.
- ‘Green’ homes: Sustainable development practices that consider the long-term health of the larger ecosystem, including the planet.
- Thoughtfully designed living spaces/homes that enable vibrant, healthy and safe community living.
- Design on par with global standards, yet, attuned to Indian conditions and requirements.
- Strong quality management systems.
- Focus on creating value for stakeholders, especially home buyers.
- Strong project fundamentals: Prerequisites such as connectivity, social infrastructure, etc., are well taken care of.
- Technology innovation and adoption of best practices (in operations, construction, etc.,) to maximise efficiency and reduce carbon footprint.
Q: Would you say corporate developers are a safer bet for home buyers? Why?
A: The decision to buy a home is usually one of the most significant investments by a consumer in his/her lifetime and an intending home buyer would do well to carefully assess the value proposition beyond the initial point of sale alone. Projects by corporate real estate brands might attract a certain premium, because of multiple attributes – brand value; quality of development; previous track record; features and amenities; proximity to social infrastructure; focus on building communities that extend beyond individual homes; and connectivity to business districts. However, such projects also typically generate better returns on investment in the long-term, offer improved ease of access to home finance and more importantly, deliver wholesome living experiences.
Q: What would be your strategy for growth, for Mahindra Lifespaces, in the coming quarters?
A: Responsible developers like Mahindra Lifespaces, have a natural advantage in the current regulatory climate. Our present focus is on strengthening our brand equity and stakeholder value through differentiation and scale. We will continue to launch projects only after careful due diligence and thorough evaluation of customer needs and micro-market housing/infrastructure trends. We are actively working towards deepening our presence in our primary focus markets of Mumbai, Pune and Bengaluru. The other regions we are looking to grow are NCR and Hyderabad. We are also gearing up for the launch of two mid-premium segment residential projects in Mumbai and Pune and our upcoming Happinest project in the MMR. At the same time, we are evaluating opportunities for joint ventures. We are actively evaluating opportunities in both, greenfield and stressed assets, in the mid-premium and affordable segments.