Realty sector in the throes of ‘growing up’
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Construction industry has to develop core competencies like ‘matured’ industries
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Unlike more matured industry sectors like automobiles, fertilizers, oil and gas and IT, real estate industry is still an infant in its journey of organisational evolution. Unprecedented opportunities for growth came up in the last few years and a dynamic group of entrepreneurs made a beeline for the organic growth in this sector. The success of such growth seeking strategies resulted in organisations which are bigger in size but lack many other dimensions of matured organi
sations.
The causes for such a situation can be many and chiefly amongst them are the unavoidable dependence on disorganised sector for all the inputs required by the construction activity and the focus on short term gains and profits. While the growth and opportunity made the companies grow into organisations, lot of organisational sense needs to be brought into this sector now. The investors look for sustainability of the real estate organisations when making funds available.
Ability to construct and deliver was the key challenge and competence for the sector till now. Now real estate organisations need to develop more competencies to grow and prosper. It would not have been required if the scale of business has remained small, limited and disaggregated. The texture of business is changing and evolution is inevitable.
Real estate projects now take longer periods for completion and have much longer gestation periods for recovery of investments. Size and complexity of projects is increasingly growing with passage of time.
Growth is enchanting but one should not forget the undeniable reality of complicated problems that growth brings. The range of uncertainties due to the dynamically complex business environment is much wider now and organisations in this sector need to be better managed to sustain the growth.
The explosive growth is bringing in new players every day and the competitive landscape is becoming crowded. Frequent announcement of projects by different players in all major cities and towns indicates that competition is turning hot. Imbalance thus generated, in the supply and demand of the real estate affects the profitability of the whole industry.
Y.V.V. RAGHAVA
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