Property agents enter development stream
Following the approval of new real estate bill that stresses on mandatory registration of all property agents/brokers, many of them are foraying into development line.
Many property agents have started developing housing projects, mostly smaller ones. Such firms are usually backed by huge savings from their booming business. besides, they also have a ground-level understanding of what home buyers want as well as the issues faced by developers.
A Bangalore-based real estate brokerage firm, Silverline Realty, has already floated a real estate arm. The firmâs director Zahed Mahmood is aiming towards a slow growth of the firm. Being very clear about the fact that already there are many leading developers in the realty market, Mahmood is looking to take up small projects and grow slowly and steadily.
Silverline Realty was initially started as a small brokerage and the firm was earning less returns. But now it owns a huge land parcel across Bangalore along with five ongoing residential projects with an average price of 7,000-10,000 per sq ft. It is also planning to sign joint ventures with top builders in Bangalore like Prestige Estate Projects to grow further in the vast market. Mahmood revealed that his brokerage business is growing at 20-25 percent quarter-on-quarter and helps to channelise the resources into the new business venture.
Another real estate brokerage company in the IT capital of India, Mars Realty has taken up the work of designing residential projects for two land parcels of the firm. The firm is also looking at small-size residential projects with 18-40 units with 20 months’ turnaround time. A partner of the firm, Prashanth Sambargi, said that he is in search of such projects because big developers do not get into such small projects.
Sambargi is among a growing group of property brokers turning builders, armed with huge savings from their booming business and a ground-level understanding of what homebuyers want as well as the issues faced by developers.
Many real estate agents, like Mahmood and Sambargi, are keen to interest in starting a separate company for real estate ventures along with managing brokerage business. A major portion of such agents are going for smaller projects comprising 10-30 units in relatively cheaper locations to get into the capital-intensive business while some of the remaining agents are busy entering into joint ventures of project development.
Real estate business has been witnessing a boom across major cities of India. In the first quarter of present fiscal, Bangalore has witnessed a sale of 13,797 residential units which is up from 9,742 units absorbed in same quarter last year. The city has seen 58 percent hike in new launches and 42 percent hike in absorption in the past three months. In the present quarter, bigger markets of Mumbai Metropolitan Region and National Capital Region (NCR) have seen an absorption of 15,501 and 26,798 residential units, respectively. This growth is helping brokers increase their business manifold both in terms of the deal value and the number of transactions.
Deepak Kohli, a real estate agent from Delhi who had started his real estate brokerage and consultancy business 15 years ago, has recently launched a real estate company named âAbodeâ. He admits that brokerage is an attractive business which can yield good income.
Many projects are being delayed for years and hence project delay is the main concern for clients, said Kohli, who is doing few residential projects in smaller towns. His main focus is to deliver the units in his projects on-time.
Even a mortgage professional from Delhi has decided to foray into real estate seeing demand for low income homes. Last year, he started a group housing project in Noida Extension offering 700 units on a joint venture.
Realistic Realtor, a 20 years-old brokerage firm, is planning to launch a million sq ft mixed used commercial project in Gurgaon with investment from high net worth individual and small investors.
The ground-level experience of real estate transactions of real estate brokers helps them to deal with regulatory and financing issues that they probably face while working as builders. But in order to withstand several technical issues that arise in development line and to compete with realty biggies which are well-established and organised, the knowledge of many broker-turned-realtors may not be sufficient.
