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.

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.
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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
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