Why Indian Real Estate Sector Needs A Technology Moonshot To Solve Age-Old Problems?

SOURCE : NEW18 NEWS

Last Updated:January 22, 2025, 18:07 IST

Technology designed to target specific problems can help us address many of our challenges associated with supply management, timely delivery, and quality controls.

Authored by Sudie Sengupta:

Cities in India became cradles of innovation, economic and cultural progress by attracting and inspiring the best and brightest from across the world. Over centuries from Benaras to Delhi, Kolkata, and Mumbai – these cities attracted the hungry and the ambitious to create great buildings and public institutions. Our urban history, buildings and public spaces have had a glorious tradition of great successes. However, over the past few decades, urban India has been in the public eye more for the wrong reasons – pollution, congestion and hygiene. Must-haves such as electricity and water, safe transportation and civic facilities have evoked frustration even after citizens paid so much for their homes.

What constitutes real estate development in Indian cities has failed to deliver on fundamentals. It’s not about the most expensive houses, or grand corporate campuses but getting the basics right where we have observed most failures. To solve these problems, the decision makers – whether its builders, planners or urban authorities — should learn from the statement often attributed to US General Omar Bradley, “Amateurs talk strategy, professionals talk logistics”. Creative application of technology can offer solutions to bypass the bottlenecks and is a critical need in our resource constrained but high growth economy.

Real Estate sector has underperformed due to lack of proper systems.

Today, real estate businesses employ close to 20% of India’s workforce and influences nearly 50% of its GDP. But the sector continues to struggle with age old supply demand challenges – from land acquisition to delivery – often leaving an agonising gap between what was promised and what is delivered. The poor attention to quality, lack of accountability, and disregard of norms is a collective failure of systems – both private and government. To this mix, if one adds the friction of infrastructure delays, and a regulatory sector that is trying to catch up in the best of times – there is enough to drive away even the most determined customers.

Consequently, we are observing ever-increasing slum like developments coexisting with demand for premium “gated societies” that create isolated pockets of basic facilities pretending to be “luxury” living. Developing such exclusivity only aggravates social disparities which is a disaster for urban harmony. To realise India’s ambition for a $20 trillion economy by 2040, this sector must make the largest contribution and requires serious reimagination using new innovative ideas.

Local demand will propel growth

Given the enormous potential and addressable demand, across commercial and residential markets, the Indian real estate sector will continue to remain one of the most attractive growth opportunities for next three decades. Just to compare the magnitude of the supply and the demand potential, per a recent study by CII and CBRE, as of June 2024, the total commercial real estate office stock in India stood at 881 million square feet.

In comparison, (CBECS estimates from 2018) the 5.9 million US commercial buildings contained a total of 97 billion square feet. A population that is four times of the US clearly has catching up to do. And, if the demographic data is an indicator, a majority of this must happen within the next two decades. Add to this the demand for housing over 120 million potential citizens moving into the cities by 2030 (that is equivalent to six new cities of the size of Mumbai). We are looking at a coordination “moonshot” that could power the next two to three decades of growth not just for India but the global economy. And unlike many other businesses, here the demand for real estate is clear – what we need is good quality delivery.

This has to happen with awareness that India does not have the resources of the rich west or delivery discipline of China. Structural issues and legal uncertainties lead to delays, safety and quality concerns that hurt businesses, professionals, workers and ultimately the customers.

Industry leaders and the government must develop an unprecedented level of partnership to recreate the market ecosystem and set regulatory frameworks to address challenges.

Investment in technology solutions can bring in the answers

Technology designed to target specific problems can help us address many of our challenges associated with supply management, timely delivery, and quality controls. In the past decade, mobile commerce in ride share, food delivery, grocery retail or home services helped both providers and customers leapfrog information and infrastructure hurdles. Smart business adapted western solutions uniquely to India’s challenges and fundamentally altered the way we scanned options, selected what we needed and paid for the services. They achieved this by creating open networks of connectivity and collaboration.

A similar approach for Indian real estate business can help reduce the information gap, improve customer experience, and help ensure quality. To navigate this journey technology will provide the central nervous system – integrating activities across decision making layers. The foundations are already present – a strong banking and financial system that has enabled digital payments, very deep skills available at a very affordable price, and a local tradition of construction craftmanship. The challenge will be in bringing these together and adapting to the context of the customer for each new project.

We may recall the times when the only source of property news was our neighbourhood broker. Today, the action has moved to online where we can evaluate locations and prices. Social media is also active in playing its part bringing in perspective and nuanced information. At the same time, while technology has become critical, the human element is even more in focus as we need trust when making large investments such as real estate.

To address this complexity, business leaders need to develop what in marketing is referred to as “omni experience” across the online and the offline world. The change makers must take a 360-degree analysis of the customers, understand the needs, and fulfill expectations across the lifecycle of ownership. For example, buying a property is not enough.

Long-term satisfaction is when there is maintenance of the property, supporting infrastructure that improves user experience and evolves with the users’ needs. From predicting market demand to anticipating the delivery networks, from resolving process bottle necks to resolving conflicts — the determiner for success in this technology driven growth will not be size or scale but the willingness to collaborate and create partnerships. For that they should identify fit for purpose technology and then set a transition plan using the software as a foundation.

Technology must work with the ground realities – what we learned from the smart cities experiment.

Launched in 2015, the smart cities initiative sought to upgrade infrastructure, living standards, and environmental quality. But taking a hi-tech approach without acknowledging the complex issues led to underestimating the enormity of the challenges. Hopefully, we have learned valuable lessons. Post Covid, we have seen the industry evolve. There is more focus on logistics, and supply chain coordination. Advanced technologies when harnessed properly can be designed to bypass traditional hurdles by creating an entirely new ecosystem of businesses.

The challenge for leadership in India is to use more of technology to be at the forefront of innovation, enable better coordination and achieve a lofty ambition just like the United States government set its moonshot mission over 60 years ago.

(The author is principal director-real estate and workplace solutions at Accenture)