estate-business

Real estate business in developing countries like India has more to do with gut feel. While spreadsheets chart corporate’s path, family-run enterprises rely on instincts and seek to leverage contacts and relationships with regulatory organisations. But it is not a cakewalk for the next generations participating in the realty businesses started by their ancestors. The operational vision has to be passed in line with long-term plans. For instance, those at the helm of the family biz might target completing “so many sq ft within so many years,” to the next generation, but internally they would be having the aim of building the firm’s land bank, Prince Foundations Yogesh Harish said. Certain aspects has to be corporatised and it all depends on the structure that one is engaged with, Eversendai Construction ED Narish Nathan While family-owned real estate firms are realising the need to professionalise, it does have a limitation, JLL-M chairman-country head Anuj Puri notes. Unitech and DLF started doing it in the early eighties, with the latter largely successful in professionalising its marketing, financing and execution functions. But attempts to outsource land acquisition activity for outside the geographical locations where it is not present, spelt trouble, he said, responding to a question by JLL-M Chennai/Hyderabad MD Ramesh Nair as to whether professionalising led to natural accretion in shareholders’ value. While most companies tend to professionalise during the pre-IPO or filing the Red Herring prospectus stage, it is imprint to retain the structure post-IPO too, Mr Puri said. It is the organisation’s DNA that matters. While in a family business, ideals flows through generation, the other end about customer-focus or vendor friendliness are competencies that have to be evolved to operate in today’s business environment, Casa Grande founder M Arunkumar said. Though it is essential to tap talent within a family, the ingredient for success is to ensure the right-talent mix. “Better talent, driven by professional pillars of organisation , is the order of the day. Every organisation will have a cultural shift,” he said, adding real-estate firms too should start promoting incentivising concepts like stock-options . Mr Shetty said the critical fabric for family-businesses to sustain is the emotional connect aspect. “Quitting is the last resort. You try innovative ways to keep it going through generations. You want to sustain it whereas in other cases, at the first sign of trouble , sell-off is the immediate option,” he opined. JLL global CEO Colin Dyer observed the common thread world-wide is that of family involvement, particularly in the initial development cycle of real estate. In a developing entrepreneurial environments like Indian, Chinese or Indonesian, the markets have less checks and balances. Intuitive approaches click. Whereas corporates prefer a rational way of doing business. Family biz is about experience accumulation and instinctive dealing methods. Mr Puri said real estate in developing countries operates more out of “gut feel,” where unified leadership under a patriarchal format is the key. But, there are many compromises as well as each of them is treated equal irrespective of their capabilities. “Each of the horses in the race is always treated equal and it is vital to find a leader from within the pack,” he said, citing the instance of the state’s latest dynastic politics coming to the forefront. Commitment, trust and integrity may be the keys, like Gem Group’s V Siddharthan says but the next generation finds negotiating in the fragmented environment tough. “When you are small, it (professionalising ) is a luxury, when you are big, it becomes a necessity. Large parcels of land acquisition requires a different mindset. You may have to accelerate the decision-making pace,” says VGN Developers MD D Pratish.