Track2Realty Exclusive: The debate over promoter driven versus professional driven also brings to the table the fundamental question as to whether the entry of corporates into the business has changed the outlook of real estate in India. Have they brought about transparency and corporate governance?
In the realty sector where a majority of operations are based on exchange transactions – adoption of transparency standards in interaction with investors and stakeholders alike, are major advantages that will help avoid a system break down.
With some regulatory changes having taken place in the sector over the last decade, there is increased investment in the sector, along with heightened competition and increased number of consumers that need to be catered too. Given the attractiveness of the sector to investors and businesses alike, over the last few years we have witnessed some large existing business houses and corporations foray into the sector and diversify their business lines.
Sachin Sandhir, Managing Director, South Asia of RICS is of the opinion that these, corporations are steeped in sound corporate-governance practices, which are implemented and advocated to boost investor confidence and enhance the credibility of the organisation, leading to lower capital costs and increased foreign direct investment.
“In fact, there are several organisations within the realty space that have made great progress in providing their institutional investors with the level of information and disclosure that is a prerequisite for an open dialogue and long-term relationship. Therefore, these new corporatized real estate businesses instantly draw on the strength of their brand positioning and attract their existing customers, on the premise that ‘quality’ is never a compromise and have definitely changed the outlook of the realty sector in the country,” says Sandhir.
Critics, however, assert for Tatas, Mahindras, Godrej, real estate had never been the real forte. Is it just greener pastured driving them? Experts believe there are various regulatory stipulations and hurdles that continue to exist in the sector; whereby company promoters, stakeholders, and business leaders continue to have to make complex decisions that direct the destiny of their overall business operations.
In doing so, they may have to discharge some essential, interrelated tasks which are the foundation for building trust in corporate governance and addressing questions of corporate accountability.
…..to be continued
