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Realism credai dec 2010 article

Realism credai dec 2010 article

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5 steps to building an 'information edge' in indian real estate.
This 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.

5 steps to building an 'information edge' in indian real estate.
This 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.

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Realism credai dec 2010 article

  1. 1. ARE YOU FUTURE-READY? 5 STEPS TO BUILDING AN “INFORMATION-EDGE” IN REAL ESTATE - Prashant Das - Divyanshu Sharma EDITOR’S BOX This 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. R 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 Any strategic improvements would be contingent upon our crash courses in India on these lines. It is a whole new world understanding of the current state. So, our research team recently today, especially after the recent global economic crisis. conducted a pilot study on a sample of small and medium sized The world looks forward to opportunities in India as do we real estate developers across India to understand their business Indians in the rest of the world. That has clear implications on processes. One of the findings of the study was that Indian Indian developers. Real estate is local and local developers, developers need to strengthen their “Information-Edge”. definitely, have advantages over others. But close your eyes In other words, one of the critical strategies to remain for a moment and ask yourself: is this advantage perpetual? competitive in the market is to understand that “Knowledge If you are a realist, you will see competition knocking at your is King”. Obviously, it has to be the knowledge that is door sooner than you would want it to. They will leave you exclusive to your own firm. The question is: how to acquire that with two options: wait for your “lucky” moment or become knowledge? “Create it” would be our answer if you are serious “better” than the others in the market. about differentiating yourself. One of the biggest sources of In the development business, today’s successfulness does not knowledge is information. And anyone can tell: Information is have much bearing on whether you are going to be successful made of data. Evidently, data remains focal to the remaining tomorrow. The business landscape of this article. It is a misconception that dealing with data is an 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 irrelevant activity for small and medium sized developer firms. how you are going to position your company to be a superior In fact, these are the firms that would benefit the most from this performer…” The message is clear: to remain competitive with competency. In the context of Indian real estate developers, increasingly more sophisticated competitors in the market, here are the five steps that we recommend: Indian developers need to adopt the best practices of real 1. Collect: Secondary data (data collected by others) from estate development, an area where India lacks a formal government agencies is available abundantly in India; and at knowledge system. 38 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 0
  2. 2. no cost. You need an explorer’s eye to find them, though. The the initial pitch. Knowing this will enable you to optimize your publicly available data is actually meant for your use; and they resources and develop efficient strategies. As a thumb rule, have great application in real estate (and, for that matter, any you would need 30-50 data points (number of prospects other business) beyond academics and policy makers. Moreover, from which you will collect your data) for each such factor the argument that public data is usually “old” and, therefore, you plan to examine. Also, if you often fail to price your “useless” pertaining to your real estate project is only partially products appropriately (may be, because you do not find a true, as we remain obsessed with census data. We often fail to close comparable property), such an analysis will become explore the sampled survey data released by numerous central your crystal ball for putting the prices on the properties which and state government agencies. Remember, census and survey you develop that truly “work”. Developers across the globe usually refer to similar but inherently different methods of collecting are known to use “hedonic modeling” in order to optimally data. In census, the attempt is to collect the complete data of the price the properties they develop or acquire. Remember, population whereas a survey typically attempts to collect the data these analyses will give you insights that you would not find of a smaller sample that is carefully chosen to represent the overall in books. Books are aimed at covering “broad” spectrums in population. Due to this reason, it is far less difficult to collect more contrast to your own projects that, perhaps, serve a niche. up-to-date data through sampled surveys. Explore some of these 4. Learn: OK! This is where you need some serious work. sources and you would be surprised at the availability of recent Well designed datasets (primary or secondary) empower and relevant data. you with unparalleled capacity to optimize your investments, 2. Create: While an awareness of the secondary data sources both in terms of time and money. But analysis methods come will provide you an advantage of a relatively “inefficient” Indian in all colors, sizes and shapes. Moreover, they need some understanding of statistical methods and software tools. Do Some sources of latest survey data: not let these words scare you! If you are a developer, you are Ministry of Statistics: http://mospi.nic.in smart enough to learn what it takes to become a developer. Economic Survey: http://indiabudget.nic.in/ Remember, you always have an option to delegate this task Redix for multiple cities: http://nhb.org.in/Residex to someone else in your firm (or simply hire an expert!). Yet, Andhra Pradesh: http://www.apdes.ap.gov.in/ interpreting the results would, again, require some basic Maharastra: http://mahades.maharashtra.gov.in understanding. Consider taking a crash course in “Business Analysis” which includes basic regression. SPSS, Minitab, JMP Tamilnadu: http://www.tn.gov.in/deptst/ are some popular, user friendly software for statistical analysis; and you may learn some basics from Professor Google. Some real estate markets, creating your own, “primary” data would free software are available too (visit: http://www.realism.in/ enable you with an unparalleled information-edge. Take it easy, stat); but they may not be as intuitive. In fact, MS Excel has you can do it in-house with some planning! All you need is some a wide range of in-built functions, although it is usually not a brain storming. If you can afford, seek a few hours of expert top choice for regression-like analyses. In future, as your firm advice (preferably, from a quantitative researcher who loves grows, you may decide to implement Customer Relationship statistical modeling). Review your touch points (opportunities to Management (CRM) packages. With your understanding of interact with your clients/end users) and make a note of how you the potentials of data, you will be far better equipped to exploit interface with your customers. They need not be only the prospects your investments in CRM-like solutions. that you were able to convert. In fact, collecting data about the ones that you could not convert into your customers would be 5. Sell: Achieving the “Information-Edge” means a lot more to more insightful. Now, design a well-laid out questionnaire that you than developing insights for business strategies. A deeper helps you create customer “profiles” with demographic data, understanding of the dynamics of real estate development preferences, etc. Collect them through a website or paper-based business, customers and product strategies set you apart as survey. Later, add some observations from your own side; for “experts”. Your firm can showcase its “knowledge” through example, did they really make the purchase, what price was impressive white papers and corporate presentations at negotiated upon, and so on. Do not forget to digitize your data reputed forums. You add weight to your brand image which in a spreadsheet. may help you build relationships for collaborative projects and win large-scale partners who might be seeking to leverage on 3. Analyze: Most analysts stop after calculating statistics your capabilities for upcoming projects in the region. (mean, median, etc). However, with the same set of data, possibly, they would have been able to draw numerous Divyanshu Sharma - Partner, Realism.IN conclusions critical to your business strategies. As your data (a research & education firm focused on Indian real estate) set gets richer with time, you can conduct more sophisticated analyses with your data. For example, such analyses may Prashant Das - Head of Research, Realism.IN & Editor, India help you ascertain which factor is more critical to a prospect’s China America Institute, Atlanta decision to buy from your firm: the difference between quoted and offered price or the method used by your sales force for 39 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 0

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