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ONE-STOP SHOP - Value Chain in Realty


ONE-STOP SHOP - Value Chain in Realty

Last updated: November 4 2007
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  • ONE-STOP SHOP - Value Chain in Realty

    The real estate industry started by doing everything on its own, then started outsourcing services and is now moving up the value chain by consolidating specialised services under one banner, says Jayashree Kurup

    Economic Times : 4th November 2007

    THE real estate industry is heading the automobile way. Remember how Maruti started manufacturing everything and this gave rise to a host of ancillary industries which started in its vicinity. Finally this led to Maruti became the mother company and the consolidator of every service, which it started managing. Earlier each developer had to have the capability to do everything. Driven by competition and market demands, each residential colony in Gurgaon for instance, had to have its own set of lifestyle amenities to improve the marketability of its real estate projects. They had to create a club house, landscaped lawns, power back up, shopping complexes etc.
    While others were just catering to a demand, the Ansal API group went a step further and roped in the best hospitality expert Vipul Luthra for its club — The Palms Country Club and more than met with the expectations of Sushant Lok residents. What was created as one of the many services has become a de facto standalone product. Says Vipin Luthra: “ I see it evolving as a standalone product rather than one catering to just a limited set of people for limited usage.”
    Today the club has its own brand value, from which the developer or even other Users can derive benefit.
    There are many examples of this in the hospitality industry. Take for instance Bukhara at Maurya which was a restaurant created for a hotel initially. But after perfecting the processes, Bukhara was positioned as a standalone product by the hotel. This led to the restaurant adding tremendous brand equity to Maurya, which was beyond all expectations.
    Real Estate is now graduating to become a full fledged industry with specialists available for every service — earlier real estate developers would hire a facility management company and they would in turn hire vendors for various services such as springcleaning, window cleaning etc. According to an expert on housekeeping services — “Today the vendor determines the quality and service in any specialized domain of activity in facilities management.” Now window cleaning has become a specialized service within the gamut of other services in facilities management and the facilities management company has become a
    consolidator of services, bringing in world best practices to Indian real estate industry. Take for instance Intelligent Building Management System (IBMS) which makes the building energyefficient. Indian realtors have started bringing BMS in order to deal with issues concerned with power crisis. Just imagine that an average size mall takes as much as 1,600 gallons of diesel a day (as recorded in Gurgaon and Mumbai) to run its generators during power cuts. A number of organisations in view of managing electricity crisis have opted for technological solutions leading to most efficient use of energy within their premises, and they have not only managed to significantly cut down their cost of operation but also improved on the overall reliability and safety aspect of the power supply system. This has already been implemented in some of the Indian buildings such as IT park at Shatri Park. You may find it interesting to know that by using energy efficient systems, organisations
    Under the system, the open networking technology — has actually made it possible to network electrical and electronic devices to form a single open system. The technology remarkably integrates lighting and security equipment, elevators, computers and HVAC (Heating, Ventilating and Air-conditioning) devices as a smart building system that enables optimum utilisation of electricity across the network.
    The technological feast even enables access to any of the attached device from anywhere in the network through its intelligent routers, which make the operations easier, cost-effective and reliable.
    It has been observed that a BMS saves anywhere between 20 and 30% of electricity consumed by equipment. With this, we can imagine the volume of electricity that can be saved by this system, which can be installed in any building, from a shopping mall to airport to hotel.
    The platform overcomes the shortcomings of traditional systems that resist access to data, introduce single point failure and increase complexity. Of late, the technology is made available in India as well by country’s leading systems integrator and IT infrastructure management services provider Allied Digital. The company has strategic tie-up with US based Echelon to provide its LonWorks platform to Indian realtors.
    With better consolidation of quality services, the winner is surely the consumer who gets value for money proposition and quality services delivered at the end of the day. This growth matches the quality principle. At first an individual or company started with delivering over and above the customer’s expectation to benchmark themselves as the best. Then, they started consistently delivering the best and put a process into place. After perfecting the process, they had to achieve economies of scale for which they needed inputs both internally and externally. This is exactly what is happening to the real estate industry and this illustrates that its in a stage of maturing right now.
    The real estate sector which has not been classified as an industry yet, is functioning as a de facto industry now, where the developer is the consolidator and what he is consolidating is services provided by specialists. Earlier a developer had to engage in non core activities but now each product is being managed efficiently by people, with the core competency to manage that.


    • Real estate is now graduating to become a full fledged industry with specialists for every service

    • The real estate sector which has not been classified as an industry yet, is functioning as a de facto industry now, where the developer is consolidating services provided by specialists
    • With better consolidation of quality services, the winner is the consumer who gets value for money proposition
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