eal estate development is an evolutionary

process; so no two developments are exactly

alike. Perhaps, this is what led some developers

to believe that it is better to be “lucky” than to

be “good” when it comes to being successful in the business.

Gone are those days, though. “Strategy” is picking up as

a buzz word in Indian real estate with globally acclaimed

business schools and groups organizing workshops and

crash courses in India on these lines. It is a whole new world

today, especially after the recent global economic crisis.

The world looks forward to opportunities in India as do we

Indians in the rest of the world. That has clear implications on

Indian developers. Real estate is local and local developers,

definitely, have advantages over others. But close your eyes

for a moment and ask yourself: is this advantage perpetual?

If you are a realist, you will see competition knocking at your

door sooner than you would want it to. They will leave you

with two options: wait for your “lucky” moment or become

“better” than the others in the market.

In the development business, today’s successfulness does not

have much bearing on whether you are going to be successful

tomorrow. The business landscape

is changing and you must adapt

to it. Professor Michael Porter of

Harvard Business school said

of developers a long time ago:

“…past modes of behavior

probably will not carry you

through the next decade. The

questions are how you think

about the question of strategy

for your business and how do

you do that in a constructive

way…no matter where you are

operating, you are going to have

to decide exactly how your company is going to compete and

how you are going to position your company to be a superior

performer…” The message is clear: to remain competitive with

increasingly more sophisticated competitors in the market,

Indian developers need to adopt the best practices of real

estate development, an area where India lacks a formal

knowledge system.

R

EDITOR’S BOXThis piece tells us the criticality of the most important tool

– the “data” – where to get it, how to analyse it and how

to use it.

ARE YOU FUTURE-READY?

5 STEPS TO BUILDING AN “INFORMATION-EDGE” IN REAL ESTATE

Any strategic improvements would be contingent upon our

understanding of the current state. So, our research team recently

conducted a pilot study on a sample of small and medium sized

real estate developers across India to understand their business

processes. One of the findings of the study was that Indian

developers need to strengthen their “Information-Edge”.

In other words, one of the critical strategies to remain

competitive in the market is to understand that “Knowledge

is King”. Obviously, it has to be the knowledge that is

exclusive to your own firm. The question is: how to acquire that

knowledge? “Create it” would be our answer if you are serious

about differentiating yourself. One of the biggest sources of

knowledge is information. And anyone can tell: Information is

made of data. Evidently, data remains focal to the remaining

of this article. It is a misconception that dealing with data is an

irrelevant activity for small and medium sized developer firms.

In fact, these are the firms that would benefit the most from this

competency. In the context of Indian real estate developers,

here are the five steps that we recommend:

1. Collect: Secondary data (data collected by others) from

government agencies is available abundantly in India; and at

- Prashant Das - Divyanshu Sharma

C R E D A I I s s u e - O c t o b e r - N o v e m b e r - D e c e m b e r - 2 0 1 038

no cost. You need an explorer’s eye to find them, though. The

publicly available data is actually meant for your use; and they

have great application in real estate (and, for that matter, any

other business) beyond academics and policy makers. Moreover,

the argument that public data is usually “old” and, therefore,

“useless” pertaining to your real estate project is only partially

true, as we remain obsessed with census data. We often fail to

explore the sampled survey data released by numerous central

and state government agencies. Remember, census and survey

usually refer to similar but inherently different methods of collecting

data. In census, the attempt is to collect the complete data of the

population whereas a survey typically attempts to collect the data

of a smaller sample that is carefully chosen to represent the overall

population. Due to this reason, it is far less difficult to collect more

up-to-date data through sampled surveys. Explore some of these

sources and you would be surprised at the availability of recent

and relevant data.

2. Create: While an awareness of the secondary data sources

will provide you an advantage of a relatively “inefficient” Indian

Some sources of latest survey data:

Ministry of Statistics: http://mospi.nic.in

Economic Survey: http://indiabudget.nic.in/

Redix for multiple cities: http://nhb.org.in/Residex

Andhra Pradesh: http://www.apdes.ap.gov.in/

Maharastra: http://mahades.maharashtra.gov.in

Tamilnadu: http://www.tn.gov.in/deptst/

C R E D A I I s s u e - O c t o b e r - N o v e m b e r - D e c e m b e r - 2 0 1 039

real estate markets, creating your own, “primary” data would

enable you with an unparalleled information-edge. Take it easy,

you can do it in-house with some planning! All you need is some

brain storming. If you can afford, seek a few hours of expert

advice (preferably, from a quantitative researcher who loves

statistical modeling). Review your touch points (opportunities to

interact with your clients/end users) and make a note of how you

interface with your customers. They need not be only the prospects

that you were able to convert. In fact, collecting data about the

ones that you could not convert into your customers would be

more insightful. Now, design a well-laid out questionnaire that

helps you create customer “profiles” with demographic data,

preferences, etc. Collect them through a website or paper-based

survey. Later, add some observations from your own side; for

example, did they really make the purchase, what price was

negotiated upon, and so on. Do not forget to digitize your data

in a spreadsheet.

3. Analyze: Most analysts stop after calculating statistics

(mean, median, etc). However, with the same set of data,

possibly, they would have been able to draw numerous

conclusions critical to your business strategies. As your data

set gets richer with time, you can conduct more sophisticated

analyses with your data. For example, such analyses may

help you ascertain which factor is more critical to a prospect’s

decision to buy from your firm: the difference between quoted

and offered price or the method used by your sales force for

the initial pitch. Knowing this will enable you to optimize your

resources and develop efficient strategies. As a thumb rule,

you would need 30-50 data points (number of prospects

from which you will collect your data) for each such factor

you plan to examine. Also, if you often fail to price your

products appropriately (may be, because you do not find a

close comparable property), such an analysis will become

your crystal ball for putting the prices on the properties which

you develop that truly “work”. Developers across the globe

are known to use “hedonic modeling” in order to optimally

price the properties they develop or acquire. Remember,

these analyses will give you insights that you would not find

in books. Books are aimed at covering “broad” spectrums in

contrast to your own projects that, perhaps, serve a niche.

4. Learn: OK! This is where you need some serious work.

Well designed datasets (primary or secondary) empower

you with unparalleled capacity to optimize your investments,

both in terms of time and money. But analysis methods come

in all colors, sizes and shapes. Moreover, they need some

understanding of statistical methods and software tools. Do

not let these words scare you! If you are a developer, you are

smart enough to learn what it takes to become a developer.

Remember, you always have an option to delegate this task

to someone else in your firm (or simply hire an expert!). Yet,

interpreting the results would, again, require some basic

understanding. Consider taking a crash course in “Business

Analysis” which includes basic regression. SPSS, Minitab, JMP

are some popular, user friendly software for statistical analysis;

and you may learn some basics from Professor Google. Some

free software are available too (visit: http://www.realism.in/

stat); but they may not be as intuitive. In fact, MS Excel has

a wide range of in-built functions, although it is usually not a

top choice for regression-like analyses. In future, as your firm

grows, you may decide to implement Customer Relationship

Management (CRM) packages. With your understanding of

the potentials of data, you will be far better equipped to exploit

your investments in CRM-like solutions.

5. Sell: Achieving the “Information-Edge” means a lot more to

you than developing insights for business strategies. A deeper

understanding of the dynamics of real estate development

business, customers and product strategies set you apart as

“experts”. Your firm can showcase its “knowledge” through

impressive white papers and corporate presentations at

reputed forums. You add weight to your brand image which

may help you build relationships for collaborative projects and

win large-scale partners who might be seeking to leverage on

your capabilities for upcoming projects in the region.

Divyanshu Sharma - Partner, Realism.IN

(a research & education firm focused on Indian real estate)

Prashant Das - Head of Research, Realism.IN & Editor, India

China America Institute, Atlanta