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Real Estate

Source : IW Committee

Reality of Realty

Part 1 (introduction)

Four years back, I had to make a choice; I could continue with the unwilling path towards chartered accountancy or trust my entrepreneurial abilities and jump into the supply side of the concrete jungle. My choice was not obvious but was inevitable as I have grown up in the city of dreams and in a family where if not all, most of my relatives are real estate developers. I was drawn towards the dynamics this industry and had an easy entry in this amazing industry Real Estate Development (R.E.D.). Through this article you will see theReality of Realty.

Most people use common terms to address entities in this industry for e.g. everyone is a not Builder, or everyone may not be a Broker. There are various terms to define these entities and terminologies that are often used in (R.E.D.). Given their close inter-linkages, these sectors are often treated as one.

(Courtesy Wikipedia, MNC Reports)

Real Estate – is a legal term that encompasses land along with those improvements to it such as commercial and residential structures, roadways and ports that are all fixed in location

Real Estate Development – is a multifaceted business, encompassing activities that range from the renovation and re-lease of existing buildings to the purchase of raw land and the sale of improved land or parcels to others.

Developers – are the coordinators of the activities such as buying land, finance real estate deals, build or have builders build projects, create, imagine, control and orchestrate the process of development from the beginning to end, converting ideas on paper into real property. Real Estate Development is different from Constructionalthough some developers also construct.

Builders – are general contractors that specialize in building work or construction. Construction is the process of building new infrastructure on real estate.

It’s fascinating that in India till early 90’s and even today developers were/are known or called Builders. The modern trend in construction design has been towards the integration of previously separated specialties, especially among large firms who offer themselves as “one-stop shops” for construction projects. In the past, architects, interior designers, engineers and developers were more likely to be entirely individual companies, even in the larger firms. Far from being a single activity, large scale real estate development is a feat of multitasking by a wide host of professionals, including financial analysts, legal experts, project managers, construction managers, design engineers and project architects, amongst others.

Now we move our focus towards conceptual understanding of R.E.D. and other Developments. We come across terms like Residential Property & Commercial Property; let’s closely look at what is included in these broad terms w.r.t. development:

Sr. No.CategoryType of Development
1CommercialBusiness park, Office building, Ports and waterfronts, Retail park, Shopping mall / center, Shopping streets, Warehouse District
2ResidentialCity block, Company town, Gated community, Housing societies/estate, Mass/Public housing, Retirement community
3IndustrialBusiness cluster, Industrial district, Industrial park, Technology centers
4Science / EducationCampus Research parks Satellite campus Science Park
5MunicipalArcology, Garden city movement, Model village, Planned cities, Planned community
6BuildingsApartment, House, Skyscraper, Tower block, Villa
7MiscellaneousBrownfield land, Cluster development, Construction, Town Park, Parking, Redevelopment Regional planning, Urban Zoning

Conclusion

Over the years the orthodox mindset of building and designing a house to live in it has changed for a typical Indian. A ramification of this is that houses are nowadays counted as a transitory asset. The idea of buying a house that will last a lifetime has gradually vanished. The buzzword nowadays is ‘investment’.

Since 2008 the markets have struggled to stabilize and the rippled effect is hugely seen on the real estate markets. This sector provides for one of the basic necessities (roti, kapda aur makaan) and is surely the highest employment generator in the country. There is an overall slowdown in the industry due to several reasons, major one being the skyrocketing prices of real estate in metros and increasing prices in tier II cities.

The growth story has been phenomenal, the slow down threatening but in reality Realty is unstoppable…

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