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Articles from print media

HOW BUILDERS ARE CHEATING CUSTOMER!!!

Postby ddamitav » Sun Aug 14, 2011 5:45 pm

Folk,
This is a very good article in ET, Worth Reading
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http://economictimes.indiatimes.com/fea ... 597753.cms

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BANGALORE: Building apartments and standardized mansions for sale is passe . Customers accepted such wanting and trashy products and services, weighed heavily in the sale agreement towards the seller, for years. Now they want more. For one thing, they want transparency in the deal. Well, for starters the current school of real estate developers never studied transparency in school except for their favourite teacher's dress. Therefore, they are in no position to offer any kind of transparency to their customers with their current domain knowledge.

The business model employed by the current crop of real estate players is to rope in as many buyers as possible, collect a hefty booking amount from the customer's personal funds and then ask the customer to collect a loan from a bank. This way, the developer is sitting on a pretty pile, has collected a tranche of public funds from the bank or financial institution and also got a few hundred hapless buyers to start paying equated monthly instalments (EMI) to the bank even before the first brick has been laid on the building.

This was a good way of making money for new swanky cars, pleasures of the flesh and fully paid luxury holidays for quite a few real estate developers.

Real estate developers were never accountable to the customer as there was neither any central nor any state law to back up the customer. There was never any serious competition for the developers to vie for the customer's business as there were more buyers than sellers.

Little things like badly drafted agreements and larger sized sample flats than the actual flat to be sold would go a long way in killing the customer's happiness all the way. For instance, Puri Constructions in Faridabad would show case an eight feet wide verandah while the same was marked six feet in the plan. The Meriton group would show off a 22 by 16 room for an actually planned room of 14 by 11 in Indirapuram. This would raise aspirations in children and wives and they would press their husbands with expectant looks to buy that shoddy product.

Well, that was phase one of the Indian real industry's primitive attempts to grow and mature. Now it is time for phase two. The country needs wholistic real estate development instead of each developer going his own separate way.

The various elements i.e. government represented by the city planning authority, central government bodies doing infrastructure such as National Highway Authority of India and Central Public Works Department, the private sector such as independent developers and real estate companies and lastly the equipment suppliers to all three such as manufacturers of steel slats, angles and rounds, cement manufacturers etc.

All these bodies have to work together through a non-profit or BOT (build operate transfer) mode. The most sustainable model is the corporate model, which has stood the test of time. Otherwise, all other models such as registered societies under the Societies Registration Act, trusts under the Trusts Act, Associations under the Societies Act and non-government organizations lead to bickering among the seven chartered members and ultimately result in embezzlement of funds under the guise of non-profit bodies.

Source ET
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ddamitav
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