"Real estate organizations will look for employees who have knowledge of standards and skills required for compliance with RERA act. There may be higher demand for professionally qualified chartered professionals as organization will not like to take any chance of default on RERA compliance for the fear of penalties as well as its adverse impact on their brand image."
Indian real estate will remember 2017 for the tsunami of regulations which had impacted the sector. The year started with demonetization wherein high denomination notes of 500 and 1000 were demonetized resulting in temporary vacuuming of cash from the economy. In a country where real estate transactions consists of high cash component, demonetization along with Benami Property Act 2017, forced the structure on transactions.
Indian economy was still recuperating from the effect of demonetization when twin tsunami of RERA and GST hit the real estate. While impact of GST is still not clear but RERA has clearly had an impact on the real estate sector. RERA was promulgated w.e.f. 1st May 2017 and it gave only 3 months to real estate developers to adopt standards prescribed in the act.
RERA has a profound impact on the way of doing business in Indian real estate. Six months into the Real Estate (Regulatory and Development) Act, and the whole real estate industry of the country has been changed drastically. The Real Estate Act, popularly known as RERA, for the most part has been advantageous to both the real estate developers as well as homebuyers.
RERA has prescribed penalties for violations which are not only penal and monetary in nature but will lead to bad publicity as well. Builders will get 3 years of imprisonment or be penalized with 10% of the project cost for not obeying the orders under RERA. For providing false information, they will be penalized with 5% of the project cost, and for other contraventions the penalty will be 5% of the project cost.
"RERA will bring in only full-time brokers and they will work only with long term developers to ensure that whatever they are selling is a good product. The builders will also have an opportunity to work with professional players, who are registered and qualified to sell their product. Those who do not follow the Act, will face severe penalties depending on the rules and responsibilities."
RERA will have impact on the talent management in Indian real estate. RERA mandates that only professionals who have the requisite knowledge and skills will be allowed to execute real estate transactions. This mandatory requirement will push for adoption and growth of professionalism and standards in Indian real estate. The influence of this act on talent requirements in a real estate organization can be understood from the perspectives of talent acquisition and talent development.
Indian real estate had typically been dominated by non-professional workforce. Most people were devoid of any standard. Entire process lifecycle starting from land acquisition to asset management was managed by people who had no structured education in the sector. The prized competency of a real estate worker was the talent to negotiate and broker the deal making.
The work process was so fragmented into multiple specialists that there was hardly a need for developing comprehensive knowledge of the entire work flow. A successful team would normally consist of experts from legal, mortgage, brokerage and an asset manager. There were only a few professional who would understand and operate on different work processes. The real estate transactions were devoid of standards, ethics and discipline.
RERA will require registration of all the real estate development. RERA also mandates registration of real estate brokers. Though no pre-qualification has been prescribed for registering as real estate broker however since the act requires the brokerage business to be managed with certain standard and ethics, it will push people to gain requisite knowledge and skills.
Real estate organizations will look for employees who have knowledge of standards and skills required for compliance with RERA act. There may be higher demand for professionally qualified chartered professionals as organization will not like to take any chance of default on RERA compliance for the fear of penalties as well as its adverse impact on their brand image.
RERA will also ensure greater focus on discipline and ethics as any employee who does not demonstrate desired behaviours will negatively impact the commitments as prescribed under the act. This non-compliance will also lead to increase in overall cost structure of organization resulting in direct impact on profitability and competitiveness of the organization.
Indian real estate organizations will have to invest in re-training of their existing staff as well. Since RERA act penalizes delays and poor quality of work, organizations will have to develop professional skills into their staff. Creating awareness to RERA act itself will take lots of efforts and investment from the organizations.
There will be a great amount of training required for sales and marketing staff as well as project management department of the developer organizations. While sales and marketing staff will have to develop skills related to basics of real estate selling and website management, the project management staff will have to inculcate competency on project management skills and best practice approaches in project management.
Besides the training department of real estate organizations will have to equip themselves with better product and service details so that they can develop better communication. The marketing staff will have to adopt IT skills for regular and accurate disclosures on the website. Organizations will have to invest in giving real estate basics training to each and every employee.
The Act will eventually be notified in all the states soon, and that will give a boost to the entire real estate industry. In the meantime, RERA has already proved to be a strong force with the potential to revive the entire real estate.