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Brand Perception of ABAD Builders among the Customers
at
ABAD Builders, Cochin
Project Report Submitted in Partial Fulfillment of the Requirements for the Award for the Degree of
MASTER OF BUSINESS ADMINISTRATION 2008-2010
Of The Mahatma Gandhi University COURSE CODE: CC406
Submitted by
Lekshmi Vijayan
REG NO: 93035
Under the Guidance of Jeena Kuruvilla
(Faculty, Department of MBA)
Saintgits College of Engineering Department of MBA (SIM) Kottukulam Hills, Pathamuttom P.O.,Kottayam – 686532 (Approved By AICTE and Affiliated to Mahatma Gandhi University)
2 Contents
Chapter Title Page No
List of Tables List of Charts Executive Summary
Chapter 1 Introduction 1- 4
1.1 Introduction to the study……….………... 1
1.2 Statement of the Problem……….………….…. 2
1.3 Significance of the Study……….……….……… 3
1.4 Objectives of the study……….……….3
Chapter 2 Industry, Company & Product Profile 5 – 31 2.1 Industry Profile – Construction Industry ………...…... 5-20 2.1.1 Global Perspective……….. 5
2.1.2 Indian Perspective………….……...……...………..…… 10
2.1.3 Kerala perspective…………..………..….……… 19
2.2 Company Profile…… ………. 21-26 2.2.1 Group Companies………..………..………….... 21
2.2.2 Service Divisions in ABAD Builders…….…….……..………..….. 23
2.2.3 Mission, Vision, Goal and Values………..…………...…….. 24
2.2.4 Important Milestones………... 25
2.2.5 Awards and Achievement……….………….……….….. 25
2.2.6 Competitors………..……….………..….……. 26 2.3 Product Profile………... 27-31 2.3.1 Completed Projects…..……….….……….….. 27 2.3.2 Ongoing Projects………..………….………..…….. 29 2.3.3 Upcoming Projects………..….……….… 30 2.3.4 Uniqueness of ABAD……….………….…………... 30
Chapter 3 Theoretical Framework and Literature Review 32 - 49 3.1 Theoretical Framework………...……… 32-44 3.1.1 Marketing…..………..…….………….. 35
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3.1.3 Service Quality………...……… 35
3.1.4 Perception……..…..…………...………..………….…. 36
3.1.5 Consumer Behavior….………..……..…...38
3.1.6 Consumer Buying Behavior….………..………..………... 39
3.1.7 Customer satisfaction………..………..…………..42
3.2 Literature Review………...45-49 Chapter 4 Research Methodology 50- 56 4.1 Introduction………….………...…….………...………… 50 4.2 Research Design………...………..……… 51 4.3 Testing of Hypotheses………...……...………... .52 4.4 Data Collection………….….……… 52 4.4.1 Primary data……….……...………... 52 4.4.2 Secondary data……….. 54 4.5 Sampling Procedure……….………... 54 4.5.1 Universe………..………..….………. 54 4.5.2 Sampling Unit………...…………...…….……….. 54 4.5.3 Sample Size………...……….………... 54 4.5.4 Sampling Method……….………….…... 54
4.6 Techniques of Data Analysis…….……….…...………… 55
4.7 Duration of the Study……….……….……….………… 55
4.8 Scope of the Study ……….………. 55
4.9 Limitations of the Study ……….……….……… 55
Chapter 5 Data Analysis and Interpretation 57-83 5.1 Introduction……….………….……….. 57
5.2 Percentage Analysis of the Data………..……….. ………... 58 - 71 5.2.1 Gender Classification………... 58
5.2.2 Age Classification………... 59
5.2.3 Qualification……….…….... 60
5.2.4 Profession……….… 61
5.2.5 Residential Status………. 62
5.2.6 Time Span with ABAD as Customer………. 63
5.2.7 Part of ABAD's apartment among total apartments………. 64
5.2.8 Effectiveness of marketing tools in creating brand awareness………. 65
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5.2.10 Time Taken for Decision Making………...……… 67
5.2.11 Comparison with competitors……… 68
5.2.12 Social Life in ABAD……….. 69
5.2.13 Willingness to recommend……… 70
5.2.14 Areas for Improvement………... 71
5.3 Testing of Hypotheses………...……… 72
5.3.1 Relation between Brand perception and Gender - T Test..………. 72
5.3.2 Relation between Brand Perception and Residential status – T Test... 73
5.3.3 Relation between Customer Satisfaction and Gender – T Test ....….. 74
5.3.4 Relation between Social Life and Gender - T Test ………... 75
5.3.5 Relation between Brand Perception and Age – ANOVA...……….. 76
5.3.6 Relation between Brand perception and education – ANOVA …… 77
5.3.7 Relation between Customer satisfaction and Age – ANOVA ……. 78
5.3.8 Relation between Customer Satisfaction and Brand Perception – Linear Regression………. 79
5.3.9 Relation between Customer Satisfaction and Effectiveness of Services - Multiple Regression………... 82
Chapter 6 Findings and Suggestions 84-86 6.1 Findings………..……… 84
6.1.1 Percentage analysis………..………… 84
6.1.2 Testing of Hypotheses………..………… 85
6.2 Suggestions and Recommendations……….………....…….. 85
Conclusion……….………..……… 86
Bibliography Annexure
5 Tables
Title Table Page No: Gender Classification 5.2.1 58 Age Classification 5.2.2 59 Qualification 5.2.3 60 Profession 5.2.4 61 Residential Status 5.2.5 62
Time Span with ABAD as Customer 5.2.6 63
Part of ABAD's apartment among total apartments 5.2.7 64 Effectiveness of marketing tools in creating brand awareness 5.2.8 65
Purpose of Purchase 5.2.9 66
Time Taken for Decision Making 5.2.10 67
Comaprison with competitors 5.2.11 68
Social Life in ABAD 5.2.12 69
Willingness to recommend 5.2.13 70
Areas for Improvement 5.2.14 71
Relationship between Gender and brand perception 5.3.1 72
Result of t test 5.3.2 72
Relation between Brand Perception and Residential status 5.3.3 73
Result of t test 5.3.4 73
Relation between Customer Satisfaction and Gender 5.3.5 74
Result of t test 5.3.6 74
Relation between Social Life and Gender 5.3.7 75
Result of t test 5.3.8 75
Relation between Brand Perception and Age 5.3.9 76
Result of ANOVA 5.3.10 76
Relation between Brand perception and education 5.3.11 77
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Relation between Customer satisfaction and Age 5.3.13 78
Result of ANOVA 5.3.14 78
Title Table Page No:
Result of ANOVA in Linear Regression 5.3.16 80
Coefficient Table in Linear Regression 5.3.17 81 Relation between Customer Satisfaction and Effectiveness of
Services 5.3.18 82
7 Charts
Title Chart Page No:
Awards and Achievements of the company 2.1 26
Core Marketing Concepts 3.1 33
Main Actors and forces in modern marketing system 3.2 34
Influences on and of Consume Behavior 3.3 38
Decision Making Process 3.4 40
Gender Classification 5.2.1 58
Age Classification 5.2.2 59
Qualification 5.2.3 60
Profession 5.2.4 61
Residential Status 5.2.5 62
Time Span with ABAD as Customer 5.2.6 63
Part of Abad‘s apartment among total apartments 5.2.7 64 Effectiveness of marketing tools in creating brand awareness 5.2.8 65
Purpose of Purchase 5.2.9 66
Time Taken for Decision Making 5.2.10 67
Comparison with competitors 5.2.11 68
Social Life in ABAD 5.2.12 69
Willingness to recommend 5.2.13 70
8 DECLARATION
I, hereby declare that the project titled ―A Study of Brand Perception of ABAD Builders Among the Customers‖ submitted to Mahatma Gandhi University is a record of the original work done by me and no part of it has been submitted earlier for any degree, Post graduation or similar of any other university or institution.
Place: Pathamuttom
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ACKNOWLEDGEMENT
“Success is not a destination, but a journey”. While I reach towards the end of this journey, I realize I may not have come this far without the guidance, help and support of people who acted as guides, friends and torch bearers along the way.
Working ABAD Builders was indeed been a pleasurable experience. It enabled me to bridge the gap between the practical aspect of the corporate world and the classroom sessions.
I profusely thank Mr. Prince Varghese, Mr. Mujib Hamza and Mrs Pretty Mariam Sijo, for allowing me to carry out the summer internship training at Abad Builders.
I express my sincere gratitude to Dr. (Col) P.S James, Ph.D, Dean, Saintgits Institute of Management for giving me an opportunity to do this project.
I express my deepest and most sincere thanks to Ms Jeena Kuruvilla my faculty guide, who acted as a continuous source of motivation and encouragement. I am thankful for all the guidance provided by her in completing the project successfully.
It’s been very kind of all the employees of the Company for having helped me with the project and in the process of learning.
I do remember with a filled heart the blessings of the Almighty, who strengthened and led me to the successful completion of this project. I place on record my sincere thanks to my family friends and all those who directly and indirectly helped me in this Endeavour.
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Executive Summary
The Project title ―A Study of the Brand Perception of ABAD Builders among the Customers‘‘ helps to understand the important factor that influences an investor in making his investment decision. For the study customers of ABAD from different projects are selected. The primary data were collected using the scheduled questionnaire and telephonic interview and the secondary data was collected from books, websites, previous project reports, company brochures and journals. Collected data were analyzed through Percentage Analysis, ANOVAs, t-test, Regression and Multiple Regression. The objective of this study is to find out the brand perception of ABAD Builders among the customer of ABAD builders. Real Estate is a sector which involves both product and services. In this sector buildings are made for commercial purpose and residential purpose. The real estate companies built not only houses and residential apartments but also markets, shopping malls and retail hubs. Here, these constructions are the products, but the activity of building and offering these premises to the customers are the services. So, Real Estate Branding requires development of a business model which can ensure tailored products and customized services. Some Real Estate Companies want to build their Brand Image on a real basis, while some try to create their Brand Identity according to their activities. There are many real estate companies who have established their Brand Name in the commercial real estate sector. The starting points of addressing property branding are through the use of customer perception followed by a customer satisfaction test. The approach used in this study is through development of a model using several metrics to test the qualitative aspects of branding through Brand Loyalty, Service Quality, Brand image and Customer satisfaction of a brand and there by evaluating the Customer Perception about the Brand. Also the study reveals the correlation between brand perception and customer satisfaction, where customer satisfaction is the dependent variable to the independent variable, brand perception. The study also revealed the role of reference group in case of property purchase. The approach used in this study is through development of a model using several metrics to test the qualitative aspects of branding through Brand Loyalty, Service Quality, Brand image and Customer satisfaction of a brand and there by evaluating the Customer Perception about the Brand.
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CHAPTER 1
INTRODUCTION
12 1.1 Introduction
Branding in consumer products goes way back in history. However, the theory on branding was first introduced in marketing of consumer products in the 1990‘s. In the past few decades, branding has become increasingly popular as a main strategic tool to differentiate competitive products. Branding has impacted the way marketers market as well as design and conceptualizes their products. More and more companies are doing market research to help them address the branding issue correctly. The real estate property sector has not been spared from the branding phenomena either. This paper seeks to research the role that branding plays in affecting buyers‘ purchasing decision of products in general and properties in particular. In conducting the research, several characteristics of branding will be identified using questionnaires. The association and reaction of property purchase towards these brand characteristics will then be examined.
Real Estate is a sector which offers both products and services to its customers. So, in order to develop a successful real estate branding, every real estate company need to ensure physical quality, operational functionality and value stability of their products and services. Real Estate Branding refers to the activity of establishing of Brand Name by the Real Estate Companies. Real Estate is a sector which involves both product and services. In this sector buildings are made for commercial purpose and residential purpose. The real estate companies built not only houses and residential apartments but also markets, shopping malls and retail hubs. Here, these constructions are the products, but the activity of building and offering these premises to the customers are the services. So, Real Estate Branding requires development of a business model which can ensure tailored products and customized services. Some Real Estate Companies want to build their Brand Image on a real basis, while some try to create their Brand Identity according to their activities. There are many real estate companies who have established their Brand Name in the commercial real estate sector. Although the most popular real estate brands, which dominate the world real estate market, are the commercial real estate brands, there are residential real estate brands too. In case of Real Estate Branding, the Branding Strategy does not only include development of Logos and campaigning programs for the real estate projects. As the customers of any real estate company are the occupiers of the buildings and premises built by the
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real estate brand, the companies need to be extra careful in ensuring the quality and value of the real estate product. The physical quality and operational functionality of any real estate project actually build up the Brand Image of the real estate company in the minds of the customers. The customers of the real estate companies evaluate the product of real estate sector after occupying the premises. So, any shortcoming in quality of service and product may change the customers' perceptions about a particular real estate brand.
Unquestionably, the biggest challenge builders face in establishing a recognizable brand is the buying cycle. It is a lot easier for Starbucks to connect with customers who make a daily purchase than for a builder who might work with a customer only once. That's all the more reason to make that one transaction count. With such limited opportunities to make an impression on consumers when they're in the market for a home, it makes tremendous sense for builders to look for ways to partner with other well-known brands to increase their name recognition. While builders have a long history of effectively linking their brands with those of building products, such as windows, appliances, bath fixtures, and flooring, co-branding with well-known names in other industries is an emerging trend in housing.
1.2 Statement of the Problem
Even though there are studies conducted on brand perception of builders, it is not clearly defined the gap in real estate branding, the strategies in real estate should be formed in a customized manner, since the projects, target market and market value are different to one another. Good branding strategies, Quality control measures, Transparent Dealings and Reliability and Credibility of the builder make the customers satisfied. Also the customer perception about the brand plays a significant role in maintaining customer satisfaction. This study is undertaken to measure the brand perception and customer satisfaction of ABAD Builders and also to analyze whether the factors like age, gender, residential status, purpose of purchase and qualification of a customer have any significant relationship in the brand perception. With this study the researcher also needs to analyze the correlation between customer satisfaction and brand perception where
customer satisfaction is the dependent variable and brand perception is the independent variable.
1.3 Significance of the Study
It is very essential that the building and implementing a brand is a strategic matter for each developer. Studies have identified the significance of branding as 4 factors of real estate brand,
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i.e. the images evoked by the real estate, the premises themselves, their physical and operational functionality and their performance. These 4 factors form the basis on which a purchaser evaluates the branding of the developer. These perspectives view brands as perceptual entities, communicators, relationships and value enhancers. Property branding is a complex subject. The relevance of corporate branding affects the overall branding of the property that is to be developed by each developer. The brand is communicated effectively through many other strategies that a developer has adopted. The primary communication to form a brand will include the landscaping or amenities strategies, the infrastructure of the project being built, the organizational and administration structure of the developer, and finally the project behavior that encompasses the project vision and financial incentive provided. The secondary communication strategies on brand building include all forms of advertising, public relations, graphic design, the use of logo, etc. The scope and effectiveness of property marketing is largely determined by the selection and application of the appropriate combination of these measures.
1.4 Objectives of the Study
The physical quality and operational functionality of any real estate project actually build up the Brand Image of the real estate company in the minds of the customers. So it is very essential to find out the Brand Perception of ABAD Builders, so that the company can adopt various marketing strategies to manage it effectively.
The main objective of the study is ‗To Find out the Brand Perception of ABAD Builders among the customers‘.
In order to attain the main objective there are some sub objectives. They are to test ‗The Purpose Of purchase of Both NRI‘s and Indians ‘
‗The Time Taken For Decision Making‘ ‗The Effectiveness Of The Presales Activity‘
‗The Brand Image Of ABAD With Respect To Other Four Competitors‘ ‗The Service Quality of ABAD Builders‘
‗Their Interest In Future Purchase‘
‗Whether The Customers Refer ABAD For Friends And Relatives‘ ‗The Ultimate Satisfaction Of ABAD Builders‘
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The questions were divided into 3 main sections: Brand Perception, Customer Satisfaction and Service Quality Comparison. The results of the survey could provide some marketing implications to property developers on how the targeted property purchasers position and associate their brand.
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CHAPTER 2
PROFILES
17 2.1 Industry Profile
The construction industry in India is the second largest industry of the country after agriculture. Construction industry makes a significant contribution to nation‘s economy and provides employment to large number of people. The use of various new technologies and deployment of project management strategies has made it possible to undertake projects of mega scale. The construction industry has been divided into 3 major segments; Residential Construction, Non Residential Construction and Civil engineering Construction. The residential construction includes general building contractors who build residential buildings or apartments. Civil engineering construction includes roads, bridges…etc. Nonresidential construction includes construction of offices, other institutions, commercial and industrial complexes and buildings. Residential Construction practices, technologies and resources must conform to local building authority regulations and codes of practice.
2.1.1 Global Perspective
World Construction Industry is one of the biggest industries in the whole world. The contribution of this industry towards the global GDP revolves around one-tenth of the total amount. World Construction Industry is also a potential employment generator and provides work to almost seven percent of the total employed person in the whole world. The extent of this industry has become so vast that the energy, in the form of electricity or fuel, consumed by it hovers around two-fifth of the total energy consumed all over the globe. The resources that are utilized in World Construction Industry are also staggeringly high and itself consumes fifty percent of the total world resources. With the impact of globalization having run deep into many industries, more efficient methods have been introduced and implemented in order to survive the challenging market ahead. Every product has improved dramatically and been produced in a higher quality and at a lower cost but with the exception of houses and buildings. Whilst, other industries have been thriving in terms of technology application, only small improvement has been made in making building processes more efficient.
Industrialised Building System (IBS) can be defined as ―Construction technique in which the components are manufactured in a factory, on or off site, positioned and assembled into a structure with minimal additional site works.‖ The IBS concept is essentially the injection of a
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techno-based mindset into the construction industry ‗hardware‘ aspects and incorporation of the highly successful manufacturing concepts as the driving ‘software‘. In this respect, the construction industry has a great deal to learn from the manufacturing sectors that have long been emphasizing on quality and minimising defects. IBS will definitely among others reduce unskilled workers in the country, less wastage, less volume of building materials, increased site cleanliness and better quality control. In many parts of the world, IBS takes its forms in an initiative called open building concept. Open building is an approach to the design of buildings and said to be representing a new wave in architecture. Open building is defined as an innovative approach to design and construction that enhances the efficiency of the building process, while increasing the variety, flexibility and quality of the product. Houses of the future should be similar to products like cars or computers today. It is built mostly in a factory with parts that is easy to replace or maintain.
The construction industry can be transform by following what other sectors are already doing; standardize and accessorize. Developed countries such as Japan, Netherlands and USA to name a few, have already started to develop concept that is called ‗Open Source Building‘. The concept of the open source building is similar to what has happened in the ICT industry whereby through standardization of jointing parts such as USB ports, consumers can buy computer equipment such as mouse or scanner anywhere in the world. The equipment can then be easily installed by the users as the connection from the equipment to the computer has been internationally standardized. IBS gives the ability for companies from just being a simple plain brick contractor that is driven by projects to a component builder manufacturer that is driven by consumers. Modular components or also known as volumetric components can be configured into wide variety of end products and the design can be based on customer‘s individual needs through unique combinations of the modular components. Mass customization will allow companies to penetrate new markets and capture customers whose demands could not be met with standard products. Developers and contractors who embrace the IBS methodology can even upgrade their capability to export houses in countries that are in need of fast permanent shelters.
Construction Industry is one of the most booming industries in the whole world. This industry is mainly an urban based one which is concerned with preparation as well as construction of real estate properties. The repairing of any existing building or making certain alterations in the same also comes under Construction Industry. In the fields of architecture and civil engineering,
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construction is a process that consists of the building or assembling of infrastructure. Far from being a single activity, large scale construction is a feat of multitasking. Normally the job is managed by the project manager and supervised by the construction manager, design engineer, construction engineer or project architect. For the successful execution of a project, effective planning is essential. Those involved with the design and execution of the infrastructure in question must consider the environmental impact of the job, the successful scheduling, budgeting, site safety, availability of materials, logistics, inconvenience to the public caused by construction delays, preparing tender documents, etc.
Building construction is the process of adding structure to real property. The vast majority of building construction projects is small renovations, such as addition of a room, or renovation of a bathroom. Often, the owner of the property acts as labourer, paymaster, and design team for the entire project. However, all building construction projects include some elements in common - design, financial, and legal considerations. Many projects of varying sizes reach undesirable end results, such as structural collapse, cost overruns, and/or litigation reason; those with experience in the field make detailed plans and maintain careful oversight during the project to ensure a positive outcome. Building construction is procured privately or publicly utilizing various delivery methodologies, including hard bid, negotiated price, traditional, management contracting, construction management-at-risk, design & build and design-build bridging. Residential construction practices, technologies, and resources must conform to local building authority regulations and codes of practice. Materials readily available in the area generally dictate the construction materials used (e.g. brick versus stone, versus timber). Cost of construction on a per square metre (or per square foot) basis for houses can vary dramatically based on site conditions, local regulations, economies of scale (custom designed homes are always more expensive to build) and the availability of skilled trades people. As residential (as well as all other types of construction) can generate a lot of waste, careful planning again is needed here.
The most popular method of residential construction in the United States is wood framed construction. As efficiency codes have come into effect in recent years, new construction technologies and methods have emerged. University Construction Management departments are on the cutting edge of the newest methods of construction intended to improve efficiency, performance and reduce construction waste. In the modern industrialized world, construction
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usually involves the translation of paper or computer based designs into reality. A formal design team may be assembled to plan the physical proceedings, and to integrate those proceedings with the other parts. The design usually consists of drawings and specifications, usually prepared by a design team including the client architects, landscape architects, interior designers, surveyors, civil engineers, cost engineers (or quantity surveyors), mechanical engineers, electrical engineers, structural engineers, and fire protection engineers. The design team is most commonly employed by (i.e. in contract with) the property owner. Under this system, once the design is completed by the design team, a number of construction companies or construction management companies may then be asked to make a bid for the work, either based directly on the design, or on the basis of drawings and a bill of quantities provided by a quantity surveyor. Following evaluation of bids, the owner will typically award a contract to the most cost efficient bidder. Modern Trends in Construction Industry
The modern trend in design is toward integration of previously separated specialties, especially among large firms. In the past, architects, interior designers, engineers, developers, construction managers, and general contractors were more likely to be entirely separate companies, even in the larger firms. Presently, a firm that is nominally ―architecture" or "construction management" firm may have experts from all related fields as employees, or to have an associated company that provides each necessary skill. Thus, each such firm may offer itself as "one-stop shopping" for a construction project, from beginning to end. This is designated as a "design Build" contract where the contractor is given a performance specification, and must undertake the project from design to construction, while adhering to the performance specifications. Several project structures can assist the owner in this integration, including design-build, partnering, and construction management. In general, each of these project structures allows the owner to integrate the services of architects, interior designers, engineers, and constructors throughout design and construction. In response, many companies are growing beyond traditional offerings of design or construction services alone, and are placing more emphasis on establishing relationships with other necessary participants through the design-build process. The increasing complexity of construction projects creates the need for design professionals trained in all phases of the project's life-cycle and develop an appreciation of the building as an advanced technological system requiring close integration of many sub-systems and their individual
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components, including sustainability. Building engineering is an emerging discipline that attempts to meet this new challenge.
Construction Industry Trends all over the world show a rise in its rate of growth. This industry is composed of many components including construction of heavy and civil engineering (highways, bridges, railway tracks, airports etc), real estate (both residential as well as commercial) development, and specialized construction products (such as architectural products, electrical connections, decorative items etc). All these segments cannot be expected to show similar trends and in fact are showing differential growth pattern all over the world.
1. Construction industry contributes a huge chunk to the world GDP amounting to1/10th of the same.
2. This industry has immense potential in generating huge amount of employment. it has been found out that construction industry offers employment to around7% to the total employed workforce around the globe.
3. Construction industry is the largest sector in respect of consumption of energy. It consumes around 2/5th of the total consumed energy throughout the world.
4. Resource utilization in case of construction industry amounts to half of the total resource used all over the world.
The most significant aspect associated with the construction industry trends is increased use of the latest IT technologies for pacing up the work. Cutting edge technology is being adopted by world‘s one of the biggest industries for leveraging purposes and is mainly being used in raising the efficiency level of engineering and deigning of construction industry. It has been found out that the paper oriented format of operation in the construction industry is not at all cost effective approach because it eats around sixteen billion US Dollars in US real estate sector only. Construction industry trends shows that the utilization of information technology has helped the industry to save a lot of fund. This could be channelized in more fruitful directions. One of the latest technologies used in the construction industry is Building Information Model (BIM).This technology helps all the factors of a project to work in a collaborative and concentrated manner solely based on platform of Information Technology.BIM helps different members of the project to communicate information among themselves which consecutively leverages the productivity
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and at the same time minimizes the error with cost. Construction industry trends can be stratified in accordance with the different segments and countries.
2.1.2 Indian Perspective
The evolution of Indian construction industry was almost similar to the construction industry in other countries: founded by government and slowly taken over by enterprises. After Independence the need for industrial and infrastructural developments in India laid the foundation stone of construction, architectural and engineering services. The period from 1950‘s to mid 60‘s witnessed the government playing an active role in the development of these services and most of the construction activities during this time were carried out by state owned enterprises and supported by government departments. In the first five year plan, construction of civil works was allotted nearly 50% of the total capital outlay. The first professional constancy company, National Industrial Development Corporation (NIDC),was set up in the public sector in 1954.Subsequently many architectural, design engineering and construction companies were set up in the public sector(Indian Railways Construction Limited (IRCON),National Building s Construction Corporation (NBCC) Rail Indian Transportation and Engineering Services(RITES),Engineers India Limited(EIL).etc) and private sector (M.N Dastur and Co., Hindustan Construction Company(HCC).etc.). In the late 1960s government started encouraging foreign collaborations in these services. The guidelines for Foreign Collaboration, first issued in 1968, started that local consultant would be the prime contractor in such collaboration. The objective of such an imposition was to develop local design capabilities parallel with the inflow of imported technology and skills. This measure encouraged international construction and consultancy organizations to set up joint ventures and register their presence in India.
All immovable properties including land, structures on it and all other natural resources can be classified as real estate. Realtors, builders, brokers, buyers and sellers are the major players of the real estate industry. All types of residential, commercial and industrial properties fall under its domain. With its huge growth potential it has emerged as a major field of business in recent time. The real estate sector in India is flourishing rapidly with a growth rate of 30 percent each year. About 80 percent of the real estate development in India has been in the field of residential housing. The remaining 20 percent of the real estate includes office, shopping malls,
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entertainment centres, hotels, multiplexes and hospitals. India‘s booming outsourcing business industry and consumption-led growth are contributing significantly to its real estate growth. The outsourcing business houses including call centres, technical consultancy services, and medical transcription units and programming houses constituted around 10 million square feet of real estate growth in India till 2010. In last couple of years the share of commercial sector in the overall real estate growth has been more prominent. Considering the advantages of significantly lower cost of operations in India, several multinational companies across the globe are expressing their willingness to shift their operations to India. According to a 2009 estimate, the demand for office space by the ever expanding IT and IT-enabled service sectors in India would be around 66 million square feet, in the next five years. These multinational companies have realized the fact that in order to flourish their business, the skilled Indian work force can be of great use to them. So they need to provide the Indian professionals with all the facilities of modern life starting from housing to entertainment, so that they can give their best in the work place and at the same time be happy with their standard of living. This trend has set off the development of world-class entertainment centres and business centres, across the country, thereby bringing a radical change in the lives of urban population in India. The growing demand of skyscrapers in all the metropolitan cities across the country has changed the image Indian skyline. The Indian economy has transformed substantively over the last two decades, growing consistently at an average of 8 per cent and is poised to take its place among the leading economies in the years to come. Strong performance of the economy can be particularly attributed to healthy growth in manufacturing and services sectors. The economic performance of India has provided strong impetus to the real estate sector, which has been witnessing heightened activity in the recent years. Substantial end user and investor interest, large scale investment in infrastructure and rapid urbanization have contributed to the growth trajectory of Indian real estate. The real estate growth story is clearly visible in urban centres such as Delhi, Mumbai and Bangalore which have acquired global character and recognition.
With property boom spreading in all directions, real estate in India is touching new heights. However, the growth also depends on the policies adopted by the government to facilitate investments mainly in the economic and industrial sector. The new stand adopted by Indian government regarding foreign direct investment (FDI) policies has encouraged an increasing number of countries to invest in Indian Properties. India has displaced US as the second-most
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favoured destination for FDI in the world. As the investment scenario in India changes, India which has attracted more than three times foreign investment at US$ 7.96 billion during the first half of 2005-06 fiscal, as against US$ 2.38 billion during the corresponding period of 2004-05, making India amongst the "dominant host countries" for FDI in Asia and the Pacific (APAC). The positive outlook of Indian government is the key factor behind the sudden rise of the Indian Real Estate sector - the second largest employer after agriculture in India. This budding sector is today witnessing development in all area such as - residential, retail and commercial in metros of India such as Mumbai, Delhi & NCR, Kolkata and Chennai. Easier access to bank loans and higher earnings are some of the pivotal reasons behind the sudden jump in Indian real estate. India leads the pack of top real estate investment markets in Asia for 2010, according to a study by PricewaterhouseCoopers (PwC) and Urban Land Institute, a global non-profit education and research institute, released in December 2009. The report, which provides an outlook on Asia-Pacific real estate investment and development trends, points out that India, in particular Mumbai and Delhi, are good real estate investment destinations. Residential properties are viewed as more promising than other sectors. While, Mumbai, Delhi and Bangalore top the pack in the hotel 'buy' prospects as well. The study is based on the opinions of over 270 international real estate professionals, including investors, developers, property company representatives, lenders, brokers and consultants. According to the data released by the Department of Industrial Policy and Promotion (DIPP), housing and real estate sector including Cineplex, multiplex, integrated townships and commercial complexes etc, attracted a cumulative foreign direct investment (FDI) worth US$ 8.4 billion from April 2000 to March 2010 wherein the real estate and the housing sector witnessed FDI amounting US$ 2.8 billion in the fiscal year 2009-10.
Major players in Indian Construction Industry 1. Hindustan Construction Company
2. Larsen & Toubro Ltd 3. GMR Infrastructure Ltd 4. Gammon India Ltd
5. IVRCL Infrastructure & Projects Ltd 6. Nagarjuna Construction Company
25 7. DLF
8. OMAXE
9. Punj Lloyd Ltd.
The strong fundamentals of the Indian economy are having a favourable impact on all asset classes of Indian real estate viz. housing, commercial – office space and retail and hospitality. In recent years, the growth has spread out to tier-II and III cities as well. High growth in services as well as manufacturing sector has resulted in high demand for commercial and industrial real estate. Further the economic growth has trickled down to the large Indian middle class increasing affordability and affluence. Improving living standards are driving the demand for better quality housing and urban infrastructure. In fact, housing in India is today moving from being viewed as a purely basic need to an inspirational purchase. Though high interest rates coupled with soaring property prices have temporarily impacted affordability of home buyers the demand-supply mismatch and low home loans to GDP ratio in India (a meagre 5 per cent as against more than 50 per cent in US, UK and Germany) are expected to fuel demand for housing in the medium long run. The growth of the sector has been complemented by favourable policy changes like liberalization of Foreign Direct Investment (FDI) guidelines and significant increase in investment on physical infrastructure. According to the Confederation of Real Estate Developers' Associations of India (CREDAI), the affordable housing segment is set to play an important role in India's real estate sector in 2010 on the back of substantial demand. "Affordable housing will be a key factor in driving the sector and we have already started working on progressive solutions in this area for effective and customized implementation of such projects," Confederation of Real Estate Developers' Associations of India (CREDAI) Chairman Kumar Gera said in January 2010. Moreover, 2010 is expected to be a positive year for the real estate sector. The revival is expected to be driven by infrastructure growth, which in turn, can accelerate real estate activities both in the residential as well as commercial spaces.
Government Initiatives
Favorable demographics, rising purchasing power, availability of cheap finance, professionalism in real estate and reforms initiated by the government are some of the major drivers of this spectacular growth. According to industry estimates, the real estate industry in India has been
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growing at 33 per cent CAGR (compound annual growth rate) and could be a $50 billion industry in the next four years. The upturn straddles all the major sectors of the industry such as commercial, residential, retail, industrial, hospitality and healthcare. The burgeoning outsourcing and IT/ITES industry have contributed to the demand for quality office space. With most of the blue-chip MNCs setting shop in the country, the estimated demand from IT/ITES sector alone is expected to be 150 million sq ft of space across the major cities by 2010. In the residential segment, availability of easy home finance and rising purchasing power has driven the growth. Builders are launching high-end, lifestyle residential products to cater to the growing bunch of high net worth individuals. In residential sector there is housing shortage of 19.4 million units out of which 6.7 million are in urban India. In the retail segment, the country has experienced mushrooming of retail projects across the cities. Specialized malls have become the order of the day. Gurgaon, on the suburbs of New Delhi will soon have an auto mall, while Bangalore is about to get an exclusive furniture mall. The sprawling skyscrapers, marvellously designed residence, awe-inspiring malls and promising infrastructure, along with exemplary acumen to designing and scheming have made India's real estate sector, one amongst the bustling and growing fields. With India being the most alluring destination for foreign investors, there is a huge market waiting to be splurged upon.
The government has introduced many progressive measures to unlock the potential of the sector and also to meet the increasing demand levels.
100 per cent FDI allowed in townships, housing, built-up infrastructure and construction development projects through the automatic route, subject to guidelines as prescribed by DIPP.
100 per cent FDI is allowed under the automatic route in development of Special Economic Zones (SEZ), subject to the provisions of Special Economic Zones Act 2005 and the SEZ Policy of the Department of Commerce.
FDI is not allowed in Real Estate Business. In the Union Budget 2010-11, the Finance Minister made the following announcements with regard to the real estate sector:
Allocation for housing and urban poverty alleviation were raised from US$ 183.4 million to US$ 215.8 million in 2010-11.
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Scheme of 1 per cent interest subvention on housing loan up to US$ 21,576 where the cost of the house does not exceed US$ 43,153 announced in the last Budget has been extended up to March 31, 2011 and US$ 151 million has been earmarked for this scheme for 2010-11. Flying high on the wings of booming real estate, property in India has become a dream for every potential investor looking forward to dig profits. All are eyeing Indian property market for a wide variety of reasons: It is ever growing economy which is on a continuous rise with 8.1 percent increase witnessed in the last financial year. The boom in economy increases purchasing power of its people and creates demand for real estate sector. India is going to produce an estimated 2 million new graduates from various Indian universities during this year, creating demand for 100 million square feet of office and industrial space. Presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational bases in India thus creating more demand for corporate space. Real estate investments in India yield huge dividends. 70 percent of foreign investors in India are making profits and another 12 percent are breaking even. Apart from IT, ITES and Business Process Outsourcing (BPO) India has shown its expertise in sectors like auto-components, chemicals, apparels, pharmaceuticals and jewellery where it can match the best in the world. These positive attributes of India is definitely going to attract more foreign investors in the near future. The relaxed FDI rules implemented by India last year has invited more foreign investors and real estate in India is seemingly the most lucrative ground at present. The revised investor friendly policies allowed foreigners to own property, and dropped the minimum size for housing estates built with foreign capital to 25 acres (10 hectares) from 100 acres (40 hectares). With this sudden change in investment policies, the overseas firms can now put up commercial buildings as long as the projects surpass 50,000 square meters (538,200 square feet) of floor space. Indian real estate sector is on boom and this is the right time to invest in property in India to reap the highest rewards.
Challenges in Construction Industry
The construction industry everywhere faces problems and challenges. However, in developing countries like India, these difficulties and challenges are present alongside a general socio economic stress, chronic resource shortages, institutional weaknesses and a general inability to
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deal with the key issues. There is also evidence that the problems have become greater in extent and severity in recent years. One of the charges levelled at the construction industry, as at the beginning of the 21st century, is that it as a poor record on innovation, when compared with manufacturing industries such as aerospace or electronics. Some of the areas where challenges are faced are given below:-
Housing: - As per 2006 census, the total number of houses in India is 249095869 of which only 233284677 are occupied; the rest were found unoccupied however, even today, a large segment of India‘s population is still houseless. Three major bottlenecks in the construction of houses are the constraints of taking to the common- man the know-how on making disaster resistant housing, constraints of taking to the common-man the know-how of effectively using local material in house construction and inadequate finances.
Environment:
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The preserving of environment is a greater challenge in a developing country like India, which has a fragile environment that is faced with high levels of land. The rapid urbanization alongside associated problems like pollution of air and pressure on existing infrastructure with regard to waste management, pose a race against time. Many countries, mainly industrialized ones, have taken steps to ensure that the reduced use of construction materials, techniques and practices, which result in operations and products that have lower environmental impact. Developing countries like India can derive valuable lessons from these steps. Some of the desirable steps includes the Government needs to enforce legislation and regulations on environmental performances. Licenses and approvals need to be regulated the transparency to ensure that all organizations in the industry operates in an environment friendly manner.Market forces: Project clients need to insist on better environmental performance of construction companies. Experience form other construction firms adopting or benefiting from good environmental practices need to be disseminated to all.
Institutional initiatives: Professional bodies need to take interest in providing support services to construction firms to function in an environment friendly manner.
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Operational environment: Pressure groups and informed users need to work continually to prevent deterioration of the environment. The practice of being engaged in a continuous search for inputs and ways of working which will minimize the negative impact of construction activity on the environment should be encouraged among construction companies and practitioners. Also openly discussing detailed case studies of good practices would be useful.
Transportation:- The National Highways Development Project (NHDP) aims at 4/6 lining of about 14,846 km of National Highways in the country between 1999 and 2007. Apart from the stringent physical targets, which are perhaps unparallel – about Rs.54, 000 crores at 1999 prices? This amount was required over a period of 9 years from 1999-2000 to 2007-08 with peaks reaching up to Rs.10, 000 Crores in mid- period. Historically, development of National Highways road infrastructure was finance from the budgetary allocations of the Government. But, these were of the order of only Rs.2, 000 Crores. Thus, financing of NHDP was not possible from budgetary source and some innovative financing mechanism was necessary. The project also required extensive transportation planning so that optimum benefit may be obtained from it. Since the project extends over the entire country, it will involve construction in extreme hot and cold climates as well in highly humid weather in different locations. Standardized materials and design mixes became necessary in the construction of these pavements, in stretches. In area regions of high temperatures, problems of bleeding and flowing of bitumen are common; which thereby leads to the routing of the pavements. Stringent quality control measures and R&D effort to enhance such locally available material for use in construction need to be stepped up. In many situations highway construction involves widening of existing roads. Strategic planning is required to ensure minimum disruption of traffic on the existing roads alongside enhancing the speed of construction. Equipments and procedures to measure the density of the finished
pavement layers are as important to be checked as the thickness of the pavement. Such facilities need to be put in place. Also, robust statistical quality control recommendations are also essential for the various on-site measurements.
Power:- As per the 2006 census, 57.3% houses in rural areas and 12.4% in urban areas of India do not have electricity and rely on other sources for lighting. Nowadays , large apartments and multiplexes in big cities are being built in captive power generating systems are being insisted by the Municipal Corporation at the time of providing clearance to such high budget projects.
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Natural Hazards: - India as a nation is quite susceptible to all forms of natural hazards. Off all these, floods happen to be the most frequent form of natural disaster faced by the company. Earthquake cause the most dangerous and most devastating natural disaster in India. Over 60% of the land area of the country is vulnerable to earthquake of moderate to severe seismic intensities. Also the Indian Ocean is considered to be the 6th most cyclone prone area of the world. This exposes the 8040 KM long coastline of the country of tropical cyclones. A natural hazard like earthquake, floods and cyclones always lead to immense damage and widespread destruction of civil engineering structures. The financial setback in such disaster is huge. Further the rehabitilisation work involve after any such hazard to bring life back to normalcy is itself a great challenge for the construction industry. This apart even the various equipment of the construction industry serve a great a purpose in the rescue and relief works succeeding any such calamities. Undertaking detailed damage investigation involving appropriate recapitalization techniques or even clearance of debris of destructed buildings requires use of specialized technology and equipments. It is there for imperative to attempt to make only disaster resistant constructions to begin with. Also the Government and the local bodies need to develop capacities to cope with the natural disaster to mitigate the effect of the natural disaster.
In the year ahead, the construction industry in India has to overcome various challenges – be it with respect to housing environment transportation, power or natural hazards. Technocrats associated with the Indian construction industry need to employ innovative technologies and skilled project handling strategies to overcome these challenges. The gains of large investment in the mega project eventually will feed back to the construction industry itself in the form of better economy and improved work construction.
2.1.3 Kerala Perspective
Kerala is a land which is rich in culture and heritage and in terms of the beauty added by never ending coconut palms, palm fringed and emerald backwaters which is connected with the blue ocean, serene beaches is one of the most amazing states of India. Kerala otherwise known as ‗God‘s Own Country‘ is an emerging and dynamic real estate arena with huge developments taking place in all sectors. More people from other parts of the country and the world are looking
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forward for their dream home in Kerala like never before. This attitude towards Kerala real estate has boosted the real estate industry and has paved for more real estate projects by new and
existing builders.
Builders in Kerala have been playing a crucial role in the development of the real estate property. The homebuilders in the state are aware of the latest market trends and are among the top
builders in India. Earlier the business of property dealing was limited to property dealers or the real estate agents in the state. However, with expertise in services from the builders and
developers the real estate market is tremendously growing on the path of success. Builders in Kerala involve innovative planning in business and construct flats/apartments, bungalows and cottages depending upon the requirement and affordability of the homebuyers. Besides this, such housing companies also develop both residential as well as commercial complexes. The
construction companies in Kerala undertake projects with excellence in services from the best home architects and interior decorators. They adopt a professional approach towards home dealing in the state. The Building contractors have altered conventional ways involved in sale or purchase of houses. These home contractors combine fragmented spaces and plots to form beautiful housing societies. The apartment Builders in Kerala work in accordance with the building plans and rules regulated by the Kerala State Housing Board . The Builders, housing companies are one stop destination for all the needs of the property buyers as they arrange for facilities like houses for rent, home loans and work in association with various insurance
companies that ensure security and safety of the buyers. Builders in Kerala and are contributing a lot in the all-round development of the real estate properties in the state and as a result many homebuyers as well as corporate companies are making huge investments in this business.
32 2.2 Company Profile
ABAD group is a leading business concern, which has established a strong presence in the business and industrial landscape of Kerala. With seven decades of experience ABAD group is engaged in a diversified range of business activities that encompasses, construction activities (ABAD Builders), seafood processing (ABAD seafood division) and hospitality services (ABAD group of hotels). ABAD Builders is a division of trusted ABAD GROUP, which has collared the economic landscape of Kerala for over seven decades. It has entered to the field of fisheries, hotels and constructions .ABAD Fisheries is one of the largest seafood exporters in India. The group is also a major player in Kerala‘s tourism and hospitality industry helping the country earn valuable foreign exchange.
2.2.1 Group Companies
1. ABAD Seafood Division
ABAD Fisheries is the flagship of ABAD Group. One of the largest processors of quality quick frozen seafood in India, the company has eight EU approved HACCP compliant factories. Their production capacity is 350 MTPD and the cold storage capacity is 10,000Mt. Abad Fisheries has fully panelised & air conditioned factories with in-house pre-processing facilities. We constantly introduce new technology to deliver best products. We are ever committed to keep the old values of quality and trust.
2. ABAD Group Of Hotels
ABAD group owns a chain of 8 Resorts and Hotels in the state asserting its colossal presence in Kerala‘s Tourism and Hospitality Scenario. Six hotels are located in Cochin including one at Cochin International Airport and the Resorts are located at Munnar, Kumarakom, Thekkady, Marari Beach and Kovalam.
3. ABAD Builders
ABAD Builders is a South Indian based real estate company, which offers a wide variety of homes that match needs of the people. Their projects are tastefully designed to suit requirements of buyers. Unlike other real estate developers who create hype, ABAD Builders are quietly
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building a reputation for itself for creating quality residential landmarks. The projects are coming at places that are conveniently located and with the best suitable prices. ABAD Builders was launched in the year 1992 to promote housing and real estate development in the State of Kerala. ABAD Builders is now one of the leading, home grown, realty brands of Kerala. Belonging to the renowned ABAD Group established at 1931, which has made a mark for itself in the hospitality and fisheries industries, ABAD Builders is following the same set of business principles; integrity, a flair for innovation and an abiding commitment to the customer. Since 2003, ABAD Builders has been focusing on real-estate development and has been actively involved in creating premium residential space for its discerning customers. ABAD is presently developing over 2 million sq. ft. of built up residential area.
ABAD caught the attention of prospective buyers with its path breaking SMART LIVING concept. ABAD SMART LIVING is actually a summation of five qualities; Spacious, Modern, Attractive, Relaxing and Timeless. Every ABAD project delivers these five virtues .The apartments are designed to suit a modern lifestyle, providing maximum space utilization, utmost privacy, elegant finishes, top quality fittings and fixtures and innumerable common amenities. Utmost care is taken using top quality materials to finish each apartment. All the projects are testimonials of quality construction and timely completion. The company‘s uncompromising attitude to quality, perfection, timely completion and after sales service has earned itself the trust and satisfaction of a growing clientele. Already hundreds of customers have opted for the SMART living experience offered by ABAD Builders. SMART is the summation of five qualities; belonging to the illustrious ABAD Group that has blazed trails of success in diverse business segments, ABAD Builders brings to the same set of values – commitment, integrity and flair of innovation. SMART PRACTICES involve the sourcing and usage of the very best construction inputs and materials, world - class brands and adherence to promised time - lines. In ABAD, discerning customers see a dependable brand, who matches deeds with words. A brand that is trusted with quality construction, timely deliveries and ethical practices.
With several years of experience in Real estate and Housing Development, ABAD offer budget, luxury and super luxury flats in various projects in Ernakulam to suit individual and institutional preferences. Away from the hype ABAD Builders is quietly building a reputation for itself for creating quality residential landmarks, at places that are conveniently located and at the prices
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that are hard to beat. To cater the growing needs and demands of the Non Resident Keralite population, the company has opened a representative office in Dubai and Ajman. This would help in increasing its marketing reach, ensure better and faster co ordination with its customers, and also developed its customers, and also increase the customer base. The company has developed its website which is maintained and updated on a regular basis providing information regarding all its activities. ABAD Builders have steadily improved and expanded the operating capacity and system. QUADRA, the total ERP software solution for construction industry has been implemented. In the current year the marketing wing of ABAD builders has concentrated in to international property portals a web base marketing strategy and also started an online chat program [outsource to BPO] for the customers to have more information‘s regarding ABAD Builders and its updated project.
2.2.2 Service Divisions in ABAD Builders
1. ABAD Property Management Services (APMS)
ABAD Property Management Services (APMS) was formed in March 2006 and has been managing the Bay Pride Mall and Towers since then. APMS is an independent business unit that operates under ABAD Group of companies. It provides facilities management services and delivering high quality common area maintenance. The services are provided by the APMS are After Sales Division, Home Care Division, Housekeeping facility management service, Maintenance division, Interior design and works division, Rental division and Payment of statutory charges. The functions are as follows
Management, maintenance & Repair service for residential and commercial properties. Landscape maintenance of the property
Internal maintenance of a property
Facilitate the payment of utility bills on behalf of the customer
Help in finding suitable Lessee/tenants for Residential and commercial properties and also assist in finalizing lease agreements with tenants for their property.
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For most clients, especially NRIs, overseeing the designing and creation of a building project that matches specific quality and fiscal parameters is a difficult task. Construction is a field of cut throat competitiveness; to stay one up on sector dynamics as well as safe and quality standards while dealing with consultants, contractors, and suppliers, metal, is a highly demanding exercise. ABAD Builders, with its years of experience in the real estate and construction industry, is poised just right to deliver all the care and expertise that project management requires and the company is offering just that through the ABAD Project Management Division, which is the complete solutions for delivering a first-rate product, customized to the needs of the client. In short, total peace of mind. The division offers Design level Services, which finalises the project design data, cost estimates and tentative project scheduling, and Execution Level Services, which finalises the quality contracts, allocates man power, schedules projects and evaluates processes.
2.2.3 Mission, Vision, Goal and Values
Corporate Vision: - To establish long lasting relationship with clients based on the foundation of trust, integrity and transparency
Mission: - To contribute to the overall growth of the state of Kerala by creating landmark residential and commercial properties maintaining a functional design, achieving architectural excellence and ensuring optimization of costs.
Goal: - To attain customer delight by exceeding customer satisfaction
Values: -Quality and integrity: the ABAD group has the right values for a business group that has diversified interests in industries as diverse as real estate, seafood processing and hospitality services, unstinting commitment to quality and customer satisfaction are de rigueur.
Quality Policy: - ABAD Builders is committed to developing and constructing ergonomically designed, aesthetically appealing, economically viable, environ-friendly residential and commercial buildings that confirms to international quality standards. ABAD‘s buildings should reflect engineering excellence that result in providing a holistic value proposition for our clients, and exceeding their expectations. ABAD builders are committed to provide broad spectrum of construction solutions by adopting suitable technologies for ensuring qualitative works and
