C HAPTER T HREE
3.5 Developer’s Credibility Problems
In the 2006 Bollywood comedy Khosla ka Ghosla, the “unscrupulous realtor” Khuranna steals the plot of the land in which the middle-class hero, K. K. Khosla has invested his life savings.39 The two couldn’t be more different. Khosla is soft-spoken,
polite, and anxious while Khuranna blusters and yells. The former lives in a modest house in Delhi; the latter in a palatial suburban home with a skylit dome, columns, and interior fountains. The former has painstakingly saved a lifetime of earnings from his salaried job; the later has grown rich swindling people of their property.
The film pits Khuranna against another character: an actor playing a Dubai-based NRI named Sethi, who Khosla’s children are hoping will lure Khuranna into a fraudulent land sale, producing the money they need to get their father’s plot back from Khuranna. Khosla’s children provide the actor with all of the props of a successful NRI: a Mercedes with a driver, an obsequious secretary, two mobile phones, and a suite at a five-star hotel. When they meet for the first time, Sethi is aloof and cool, dressed in a dark suit with a silk cravat. Khuranna slouches in his chair, his shirt unbuttoned to reveal his gold chain. A driving cap is angled sportily on his head. He fingers his sunglasses and his oversized Nokia 9500 phone.
39 The title means “Khosla’s little house,” a reference to the dream house Khosla hopes to build on his plot of land.
It is clear that Khuranna admires Sethi, taking his stiff formality (a byproduct of the actor’s discomfort with the deception) as a sign of superiority. In one of the last scenes of the movie, Khuranna has invited Sethi back to his house for a drink. Sethi sits upright in his seat while Khuranna leans forward and drunkenly admits, “Mera problem kya hai, sir, aabhi bhi mei pichche ho jata hai.” (My problem is, sir, that even now I am behind/ I haven’t progressed). He makes a face and looks at his associate, hovering in the background, “Chchoti log ki
company hai na sir” ([It’s because] I keep company with inferior types). He follows Sethi out to the car, urging him to become his real estate partner. When Sethi drives away without responding, Khuranna wanders into the lawn to take a leak.
Khuranna presents an unflattering stereotype of the developer. He is crude and dishonest, with unfortunately low-class habits: he hikes his trousers, scratches his crotch, and laughs with a splutter. He embodies the popular perception of real estate developers that many developers themselves would like to overcome. Indian real estate developers have never enjoyed a good reputation, but their reputation has now become a liability in the process of attracting foreign investment. Accessing capital increasingly requires playing by foreign investors’ rules. An influx of potential partners used to interacting with established corporations run by CEOs and boards of directors, trained professionals in separate
departments, and “white” account books have transformed Indian developers’ reputation as shady characters into a new problem.
Indian developers have embraced investors’ calls for increased transparency, in part because they coincide with their own project for self-improvement and their desire to be seen world class professionals, not real-life Khurannas. Indian real estate developers’ quest for international finance is thus also a personal quest for respect. An Indian developer
asserted in a session called “Finding Local Partners” at the 2006 Global Real Estate Institute conference in Mumbai, “we want to become fine real estate property companies. How do we make a fine real estate property company? How do we become ‘world class’ with appropriate returns, where the market would respect that company?” The skeptical answer from a foreign investor: “You might mean that, but does everyone feel the same? Some [developers] just want to make a profit and after five years, go play golf.” In order to prove themselves to be serious contenders and to conjure a flow of capital from London, New York, and Singapore, Indian real estate developers engage in their own transparency projects, building credibility by crafting new corporate and personal personae.
Members of the Indian real estate industry express their reputation problem as a lack of “professionalism.” For them, this is an issue of local personal status as much as
international funding. Longstanding characteristics of the industry place it on the wrong side of the divide in India between the persona of businessman and that of professional. A businessman is a shady, uncouth trader, a small-time operator who deals in black money. Marketer Rama Bijapurkar describes businessmen as the segment of “self-employed India” associated with pre-liberalization business practices and the black market: “the business people” among the self-employed, she writes, “(as contrasted with professionals) have a fair amount of black money or undeclared income and will spend on ‘invisible’ or hidden assets.” (Bijapurkar 2007, 213).
By contrast, a professional is educated, above-board, and middle class. With the rise of white-collar employment in the service sector since liberalization, the Indian middle class has reoriented its aspirations from government employment to banking and multinational corporate jobs (Fernandes 2006). This shift has expanded the definition of “professional”
from the professions (doctors, lawyers, engineers, civil servants, teachers) – many of which traditionally included the self- or government-employed – creating a desirable new persona: the figure of the high-earning, educated professional associated with international firms and the new economy. It is this “professional” that my informants contrasted with the image of the “businessman” and to which they now aspired. This professional is “world class,” earns a steady, white salary, and is associated with contemporary Western dress, beliefs, and behavior.
In my interviews, members of the Indian real estate industry used the term
“disorganized” as a negatively loaded catch-all for describing real estate’s lack of professional status. One Indian retail consultant who routinely works with foreign retailers and
developers told me, apologetically, “real estate is not so organized here. Elsewhere, people have four hundred malls, REITS, etc. Here it’s just beginning. A lot of builders just have a small plot of land and they want to build a mall.”40 He uses the phrase “not so organized” to
characterize a new market composed of numerous small players with limited experience in international real estate practices. For the analyst Ajay, the industry is disorganized because firms are family-run: “Real estate in India as you know is highly unorganized, very under- developed, and big players are primarily families.” Similarly, another informant distinguished between “professional” and “individual” companies.
“Disorganized,” like the other negatively loaded terms associated with non- transparency, suggests the taint of criminality; it implies illegality. A public relations man who has worked for several real estate firms summed up the situation: the “reality sector in
40 A REIT, or Real Estate Investment Trust, is a trust invested in real estate (property or mortgages) that achieves a reduced corporate income tax rate by passing 90 percent or more of its income to investors, usually in the form of dividends. Public REITS list on stock exchanges; they enable investors to invest in real estate much as they would in other corporate entities, i.e. by buying shares rather than by directly owning property.
India has a bad name. Mostly localized people and lot of black money handling people and it is like nobody to regulate: it is disorganized.” A consultant, who specified that he didn’t want to be named, described one Delhi-area developer as “a scamster. He’s a petty
contractor. They’ve never delivered. And the staff – it’s all his family, friends, and relatives. They’re making tons of money, but the major portion of their sales proceeds come in black.” The consultant substantiates “scamster” with the man’s background as a contractor, his recent entry into the business (“they’ve never delivered”), his hiring of family members, and his reliance on black profits. His description fits most Indian real estate firms; their
common characteristics are now liabilities. Inversely, these negative descriptors point to new markers of credibility: professionalism defined by white/check dealings, hiring educated non-relative employees, and a construction track record.
A journalist on the real estate beat for a major business daily derided Indian developers in general:
Real estate is an unorganized sector so the rules applied to
interviewing people are not the same. A lot of these people don’t even understand English. They are not transparent. They don’t keep proper audited balance sheets. So you have to pressurize them to get the real figures.
Being “not transparent” involves more than just shady accounting practices; the journalist disparages a style of interaction she sees as secretive and downright ignorant. Moreover, the journalist casts aspersions on developers’ class backgrounds; she writes for an English
language publication but she thinks developers “don’t even understand English.” Interacting with such people, she advised me, requires a different set of rules: “You can’t just take what they give you, you have to ask hard and tough questions.” Linking “transparency” to class,
linguistic performance, and intelligence, she highlights the personal nature of credibility. “Real estate developer” is a crass, ignorant, devious, and un-professional persona.
Members of the industry personally manage the incompatibility between working in real estate and projecting a professional persona. In an interview with the Business Standard, Delhi Land and Finance chairman K. P. Singh responded with umbrage to the question, “Will DLF always be controlled by the family?” Revealing fault lines in his firms’ image, he said, “What is wrong with family control? We have done very well. DLF will always be family-owned but will be a professionally run company” (Rai and Zarabi 2007).
Ashish, a veteran real estate consultant who entered the industry in the 1990s, before it was fashionable, told me that his family had been appalled with his decision, especially as he had been educated abroad. He described his early experiences,
[W]herever I went it was a bit embarrassing because you went to parties and they would say, “Oh you are a broker?” “No, no, no, but we are professionals and everything.” I think first two years, specially first two to three years, were very very tough, personally a) starting the business from scratch, nobody knows the brand in the market. They didn’t understand that real estate could be done professionally.
For him, the challenges of starting a business coincided with the personal challenge of forging a professional identity in real estate.
Part of the reason Ashish found negotiating these identities difficult is that anyone can enter the industry, complicating its members’ claims to a specific professional expertise. As Ashish explained,
Even today and at that time there were no trained real estate people because India did not have any college or institution offering anything to do with real estate. The closest to anything to do with real estate anybody knew was either to be a civil engineer in the construction side or architect on the design side,
but not real estate. It’s only now, there are some private colleges offering some real estate courses, but still, it’s not like the western countries where there’s a discipline itself to study.
While a few real estate courses have been established recently, real estate is not a formal discipline in India.41 There is no certification process; developers and brokers have no
specific real estate credentials. One broker wrote in an opinion piece in Realty Plus, “Unlike other professions, entry into the real estate sector did not demand mandatory academic or professional qualifications. So this field caught the attention of people with unemployable talent who naturally drifted in and ‘colored the water’” (Arora 2006).
Lack of professional training stigmatizes the real estate industry even as it has become high-profile. I heard many disparaging remarks about former brokers, contractors, and landowners becoming developers: “today every second person has become a developer. Even the brokers have become developers,” commented one investor. Another informant compared real estate unfavorably to the Information Technology (IT) industry, which, he claimed “is all professionals. It’s all the IT and the engineers and managers. Totally. See, nobody can enter there. No free player can enter there.” By contrast, with real estate development, “it’s like anybody and everybody can – anybody with huge stretch of land can build a township, you know.”
Foreign investors also derided Indian developers’ lack of professional origins. As Simon commented, “there’s also the vast majority who are just jumping on the bandwagon and saying ‘Oh, I’ve got a five acre parcel of land in the city center, we’ve got to do a mall here,’ but they haven’t really thought about it.” Similarly, EuroFund’s consulting American
41 At the time of my fieldwork, a few organizations had begun real estate courses, including: the Indian School of Business in Hyderabad, the Indian Institute of Real Estate in Pune (Hussain 2008b), and jointly, the Housing and Urban Development Corporation and the National Real Estate Development Council.
architect commented about EuroFund’s partner, BuildIndia, “They just had this money, this land that they’d assembled over decades, and suddenly it was worth a gazillion dollars, and they didn’t have the infrastructure to develop it or to know what to do with it.” Sumit, the Indian representative of an American mall developer, complained,
[T]here are many developers who are developers by virtue of holding great land pieces, and suddenly they become developers. Yesterday he was maybe a FMCG [fast-moving consumer goods] manufacturer, but today he has become a developer because his grandfather or somebody bought that great piece of landbank in Mumbai, so he has become a developer today.
If “yesterday,” the developer was merely a landowner, Sumit questions, “OK what is your expertise? If your expertise is only land, then OK, great, you become equity partner with us, we will bring in a construction partner and we'll bring in our expertise.” Sumit would demote the Indian real estate developer from developer to equity partner, someone with no expertise, only land.
At a discussion at the Global Real Estate Institute conference in Bombay in 2006, one participant based his skepticism in Indian real estate on developer inexperience: “I don’t think development industry in India is sophisticated enough – they don’t have the ability to hold supply to make demand. Anyone buys land, builds a building, and calls himself a developer. The business needs discipline.” For foreign investors and developers, the idea that Indian developers don’t know how to “hold supply to make demand” is a major threat to the return-generating prospects of their investments. This has EuroFund’s Jeremy concerned:
We’re working in an environment where there are people out there who have, who already control, large amounts of land and who may or may not know anything of what they are doing about real professional real estate economics but nonetheless have the
capacity to start throwing buildings up very fast and a lot of them.
Indian real estate developers – inexperienced landowners-turned-developers eager for quick returns – might drive down prices by generating an oversupply. Their inexperience
constitutes a risk for foreign investors.
Disparaging Indian developers’ understanding of “real professional real estate economics,” Jeremy is discursively distinguishing himself and his firm from his potential partners in India. These claims are examples of “boundary work” – a term sociologists of science use to describe scientists’ attempts to construct epistemic authority by “drawing a rhetorical boundary between science and some less authoritative residual non-science” (Gieryn 1999, 4-5). Through derisive comments about Indian developers’ origins and lack of professional training, Jeremy, Simon, Sumit, and others are discursively creating value for their own international real estate expertise by denigrating Indian real estate developers.
Indian firms engage in boundary work, too, in order to set themselves apart from their competitors. The corporate communications manager for the Indian firm Taneja Developers & Infrastructure publicly called for more regulation of the industry in an
editorial in the Hindustan Times, complaining “While reputed developers have zipped through the learning curve to become professionally competent, many fly-by-night operators draw attention through their lack of transparency and inflated land bank claims” (Michael 2007). Using the same language as many foreign investors, he attempts to distance himself from “fly-by-night” or “non-transparent” developers and distinguish himself as among the
“professionally competent.” In so doing, he contributes to the general image of the industry as unprofessional, inexperienced, and shady.
Similarly, the rash of inexperienced entrants to the industry bothers the marketing director for a Gurgaon-based real estate developer:
I just hope that people are realizing that it’s not as easy, just building. I mean, you know, these days in building construction specifically, there are agents, there are brokers who have become developers. It’s our core business. I mean, we can’t tomorrow be going into mining or setting up a telecom company just like that, but people who used to sell property for us, three years back or four years back, are making buildings, and talking about high technology and all that, but this is all crap from my point of view.
He emphasizes that real estate development is a specialized industry, “it’s not as easy, just building” and that development is his “core business” – not the expertise of some broker who has recently ventured into construction. Here he exploits the other key marker of developer credibility: the ability to construct buildings, in local parlance, to “deliver.” The labels “broker” and “landowner” pin a competitor as merely a dealer, not a constructor. By using these labels, the marketing direct questions his competitors’ construction ability and thus their capacity for making good on their promises; he questions their integrity.
Ironically, this informant later told me that his firm had started as a landholding company. Before 1999, “we used to sell farm lands to people, one acre each, two acres, and people used to build their farm houses.” While he derides brokers-cum-developers, his firm began as “just a business house which was selling land.” What is the difference between “just a business house” and a broker? Claims to expertise matter. As Indian developers compete for investors and consumers, they delineate boundaries between real estate development and “just building,” between brokerage and construction expertise, between