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REVAMP IN REAL ESTATE: How logistics can push forward the change


The real estate sector in India has grown to over a $180 billion industry, with 30% growth rate projections. It contributes 10% to the GDP. As such, it is a major source of employment in the country and provides a source of income indirectly to the many vendors involved in its functioning. The recent spate of major changes to the economy, however, including demonetisation, Real Estate Regulator Bill (RERA), FDI relaxations, GST, Benami Transactions (Prohibition) Amendment Act, and changes in accounting standards such as the IFRS, have left every major industrial sector in the country reeling, and the real estate sector has borne the brunt of it as well.

The global industry has absorbed several similar changes in the past and has evolved accordingly. Many of these changes have been globally dealt with through incorporation of technology at all levels. For instance, the incorporation of technology to track supplies movement and fintech in real estate finances have helped make the industry much more robust and much cleaner, also bettering the customer perception and making investment in the sector more seamless and risk-free. Real estate in India, though, is due for a massive overhaul.

The country is not too far behind, however, with the biggest players in the industry opting for similar measures, especially in terms of ensuring that their vendors are on-board with a more transparent model, allowing their businesses to save on several overhead costs by digitizing many transactions, reducing the need for too many audits on this front. In fact, this has spelled good news for buyers as well as investors, with more liberalised foreign direct investment (FDI). According to Forbes India, surplus liquidity and lower cost of funds for the banks, leading to lowered lending rates by commercial banks are causing higher financial inflow into the sector with increased transparency bringing building credibility and helping higher investments into developing real estate markets.

This is an industry highly dependent on dedicated logistics, and as such, it makes sense that the more modern, transparent and technology-oriented businesses in logistics become, the more it helps push real estate on the same track. Currently, there are several factors hampering the real estate industry in India and innovation is the key word in overcoming them. Consider, procurement in real estate involves multiple vendors in a single business, each using different contractors for goods movement and travelling from multiple hubs. This involves supervision and audit costs, coordination costs and efforts involving trucking of these supplies, which include plumbing and electrical supplies, and may involve issues with untrained/unverified truck drivers.

Inefficiency arising out of these issues in logistics impacts partnering real estate companies adversely, in turn affecting their ability to churn out more for their buck. In addition to this, dealing with multiple vendors often involves the risk of on-site congestion of trucks and material. Streamlining logistics efforts, especially at the city level, is increasingly being seen as a solution to several of these issues. Only with real estate sector itself pushing for change in the way its logistics is run can it be expected that the sector mature and embrace global changes, as well as make the best of the current economic flux in the country. Technology and innovation are drivers in any industry and this is as true of real estate as it is for the logistics industry. Ensuring that logistics partners come onboard with a tech-driven model is important to successful real-estate businesses and while the USA has been trying to “Uber-ize” logistics, India is not far behind. Several startups have been driving technology for logistics, and in turn, that of real estate. It is early enough to be the trendsetter, if you are in real estate, and all it requires is the right kind of partnership.

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