How CREDAI can lead the Indian real estate sector into the future
Jaxay Shah, MD, Savvy Group, and chairman, CREDAI, is a self-starter who has now set his sights on bringing in integrity and policy reforms into the real estate sector that seemed elusive for some time now
People who are self-starters are not afraid to create and innovate. They take initiative to implement cutting-edge practices and are usually highly motivated, proactive and action-oriented people. Most often, they jump in and solve problems, even if they are not asked. Thinking outside the box and proposing new ideas that have not been tried before is always well-appreciated by people around. Jaxay Shah, MD of Savvy Group and chairman of CREDAI is one such person. The energetic go-getter needs no prodding and it’s no surprise that he has quickly climbed the rungs of the ladder to be the youngest chairman of CREDAI, the apex body of private real estate developers representing 12,500 developers across 23 State level Chapters and 205 City level Chapters.
Hailing from the Tier-II city of Ahmedabad, Shah admits that his passion for real estate began at a young age. “It was the permanent nature of buildings that fascinated me. The idea of giving something to a city that I have grown up in, not to forget creating employment and revenue generation. The tangible factor of buildings offers a charm that dealing in stocks or an employment cannot give,” he says with gusto.
The ebullient Shah was not alone in his venture. Along with his peers from his Civil Engineering batch, Sameer Sinha and Jigish Shah, he took the bold step into real estate at a time “when no one in my family even had the remotest brush with real estate development”. That was in the year 1996. His only experience was the brief stint he had when he took up an employment opportunity and learnt the business from the ground up.
A point that he likes to stress on and insists that youngsters today must take heed of is not to give the learning curve a miss. Throughout his career, he says, the rule has been to move forward one rung at a time before reaching the pinnacle of success. It’s probably this precept that convinced an entire body of developers at CREDAI to nominate him chairman.
There are two sides to him: One is his role as a renowned developer based out of Ahmedabad and, in the near future, Mumbai. The other, and now more critical considering his recent elevation, is his role as chairman of CREDAI. Both are played with equal fervour and Shah leaves no stone unturned to ensure that they deserve the same merit.
Recounting his life-changing experience with the business, Shah says that those days were tough. With little experience then, scouting for the right parcel of land was not a challenge he would like to face now. Money was not easy to come by. Having lost a considerable sum of his father’s money in the stock market, it was obvious that there would be little help forthcoming from him. He, however, found an ally in his grandfather who was willing to fund his venture. In his words, “There were few things he taught me on celebrating success and tolerating failures. A golden rule I learnt from him was learning to fail better, making new mistakes but not giving up if one finds themselves to be subject matter experts.”
Having identified a 900-acre land, Shah and his colleagues felt emboldened to build Savvy Kensville Golf Living, which today houses some of the most popular residential developments in Bavla, a neighbourhood in Ahmedabad. Shah says, “The idea was to infuse novelty in every project that we execute. Today we are known for being a progressive construction company that believes in changing the paradigm of the construction business by adopting innovative technologies. Our methods have earned us an ISO 9001:2008 certification and we are the first construction company in Gujarat to have a CRISIL rating.”
But commercial buildings is where Shah struck gold. He says, “Gujaratis, by nature, are entrepreneurs. In spite of this, there were few commercial buildings with ready infrastructure at people’s disposal. We saw an opportunity.”
Two years into the business and Savvy Group completed its first commercial development, Shapath-I. By 2012, this had increased to five within the same location. Shapath-5 was the first tallest building in Gujarat. Somewhere along the way, Shah had foreseen that the city would expand and his idea was to create a central business district (CBD).
Similarly, Savvy Group then expanded to GIFT City where it’s constructing an SEZ comprising residential and commercial buildings.
In all this, what matters to the Savvy Group is the way developments are constructed. Sustainability is an important parameter for the company. For instance, Shapath-V has been constructed using green building norms. Built using fly ash bricks, it has ensured top soil conservation while the flushed water goes to the water treatment plant where waste water is reused to a great extent for other purposes. With 100 solar panels with a capacity of 15,000 litre hot water everyday, the offices here use water-based air conditioned systems.
Shah is emulating much of these across residential buildings and other commercial properties.
At the centre of things
While personally, Shah and his team found themselves scaling up in business, the constant disruption in the industry often compelled the team to approach the local association for help. Shah recalls that the largeness of an unorganised market in those days gave him the distinct impression of being a persona non grata. That led him to change a few things.
The crusader in him shepherded him to be a member of CREDAI Ahmedabad Chapter and slowly he rose up the ranks to become CREDAI president (Gujarat). Channelising energies across the board, Shah resolved several issues at the local level before being noticed at the national level. His enthusiasm soon ushered him to be vice-president for the two terms required before being appointed president and now chairman.
Shah says, “I have realised that the best results emerge when teams are well organised during a crisis. It’s not possible to keep everyone happy, but sometimes actions have to be taken to accrue benefits in the long term.”
The last two years have indeed been hectic. The CREDAI National team has been highly active meeting government officials and members across State Chapters to address issues related to GST, demonetisation, RERA, environment issues of construction, affordable housing, Budget recommendations, among other things.
The first task was to prepare a manifesto to last for the next two years while charting a new course for the industry. “Importantly, I realised that State and City Chapter secretaries had never before met. As president, I invited all of them for a meeting and laid out the agenda. It helped clear several pending matters. We roped in industry heads too and made a strong representation to the government and that is when several issues such as affordable housing and skill development started seeing progress,” he says with a smile.
For starters, the National CREDAI team and the numerous Chapters realised that prospective buyers had lost faith in developers. They needed to instil confidence in them if they were to do business. “We created a mandatory code of conduct that developers across the country need to follow and set up a consumer redressal forum to address grievances. Certain pockets of the country had dubious developers and we put their names up on the website. That was a radical move,” he says firmly.
Making up for lost time
Having covered much ground, Shah’s focus now turned to the business of real estate. “For long, the business of real estate was bleeding. Importantly, bringing in affordability, revenue generation, quick turnaround of projects, policy reforms and tax and land reforms is the need of the hour. The PMAY scheme is an excellent one and should create demand,” says Shah.
But he has a grouse. Although the real estate sector was awarded the infrastructure status, little seems to have worked out. For long, banks had disavowed developers and that consequently created a cash crunch, from which most are yet to recover. “The real estate sector supports over 300 industries and employs five crore people and despite this we are taxed heavily along every step of the way. So now we will create a growth story,” he says stoutly.
Shah is looking at support from the government to alleviate the tax burden so that the campaign of Housing for All can be fulfilled. He believes that development does not mean building cheap homes, but affordable ones that come with numerous benefits to the buyer as well as the developer. “How can one attract FDI if developers are left with inventory and a poor market? Similarly, we need to sensitise RBI to bringing in reforms that will push demand for homes,” he adds.
But within the developer community, he is also establishing certain norms they need to follow in terms of sustainability and compliance to environment. Developers are being tutored to adopt green strategies right from design to completion. CREDAI has tied up with Green Building Council to encourage this practice.
However, a major cause of concern for him that is that more often than not investments are stuck because of prolonged clearances. “Today, constructing a building takes up to 3-5 years, while the turnaround time in countries like Singapore and Sri Lanka is about 1.5 years. I educate our brethren to adopt technology that will speed up construction. If I were to construct a road, I can avail of cement cheaper than when building real estate,” he says with a vehemence.
It is the reason Savvy Group began to look outside Ahmedabad and swooped on locations in neighbouring areas like Bhavnagar and Mumbai.
As part of CSR, the team at CREDAI has also forayed into rural tourism. “Several places in India see an influx of tourists and it is only right that locals are taught numerous languages so that they can earn a livelihood. Skill India is a strong force today. We have developers across 200 cities and they will help implement programmes across. It is also for this reason that we encourage only industry people to be a part of CREDAI,” says Shah.
Flagship conventions like NATCON, CREDAI Conclave, Youthcon, New India Summit, are only some of the steps in this direction. Longstanding urban challenges such as housing especially for low-income population, infrastructure inadequacies and the constant struggle to deliver a variety of services including water, sanitation, education, and health are all being addressed through these meets.
Shah is excited about the prospect of Smart Cities too. He is sure that this will only propel cities across India to spruce up in terms of infrastructure and invite FDI into real estate. He is keen that if satellite towns emerge around metros, it will create opportunities and wean away some of the burden that they face. Urban planning must play a stronger role, he avers. “A doctor’s mistake can cost a patient his life, but wrong urban planning can cost a city its future,” offering a simile.
He says emphatically that regulations like RERA and GST might affect in the short term, but it will benefit everyone in the long term. The consolidation in the industry will retain genuine developers and that is the primary goal for him.
There’s a genuine sense of empathy he expresses for the young brigade who bring yearn to work for the betterment of humanity. “They rely only on their skills and have no inheritance in terms of land or money. They must be encouraged if the country is to see development.
He ends with a word of caution. “Properties must be developed based on the buying capacity of people. Mindless rates that are unaffordable that few can afford will not aid in overall development. There are developers who look for 100% profit, but that can affect cash flow and restrict development, while blocking land,” says Shah.
There’s much passion in the way he elucidates and points out facts. It would be safe to say that with Shah at the helm, all is not yet lost for the real estate industry.