Real estate rating systems to bring transparency for better deals

NEW DELHI, May 14 (Economic Times): The credit ratings agency Crisil recently launched real estate ratings in India, which will help end users make informed purchases. It is expected to bring in more transparency in real estate sector and will work on a project-specific basis. Rating will be assigned on a scale of one to seven stars after comparing units with alternatives available in the same city. Roopa Kudva, Crisil's MD and CEO, says: "A developer commissions the agency and gives us access to various details needed for assessment. We take into account our parameters and rate the project. Once the developer accepts the rating, we go public with the rating and project analysis which will be given to common buyers for free." The parameters include the record of the developer, the infrastructure he is erecting, finishings, timely completion, cost overruns, after sales service, legal issues like title, and project innovations like green buildings. The rating will be given midway through the project and will be under surveillance till project completion, during which it can be revised. Many rating agencies are coming up with real estate rating systems . On the international level, Fitch has been rating real estate projects for quite some years. Speaking about the need for such ratings and their viability, Samujjwal Ghosh, senior GM (marketing), Lodha Developers, says: "I believe that an all-round assessment of real estate projects will help buyers benchmark and identify quality projects within a city. Such ratings should ideally provide a comprehensive evaluation of all project specific risks which could impact the quality of the project. Such ratings, if done with thoroughness, definitely bring greater transparency in the system enabling the consumer to take a more informed decision. It also works in favour of the developers who focus on quality and gives them an opportunity to be seen in a different light. At an independent level, consumers face paucity of adequate information when acquiring property and such objective ratings definitely make life easier for them." Ashok Kumar, MD and principal partner, Cresa Partners, an international property consultant company also thinks it is a very good idea and a positive move towards bringing professionalism in real estate. "In fact,I remember Crisil starting this almost ten years ago. But it was not as successful then as I guess the industry was not mature enough to actually aspire for professionalism and global recognition. Now things are different and developers are going abroad and picking up projects elsewhere in the world too. In that case they would actually welcome it," he says, adding, "All over the world we have a third-party rating system and many years ago, Citibank had developed an elaborate rating system. The government too is to come up with a regulatory body and all these would be good for the health of the industry." However, Kaizad Hateria, GM (sales and customer relations) at Rustomjee, is a little doubtful about the viability of such a product. "Most reputed developers have their strict and very stringent system of quality checks. Today they are conscious of their reputation. At Rustomjee we are particular about our quality checks that we have developed scientifically, the land titles, the legal issues and everything that can affect the customer. I don't think a third-party rating system can match that," he says, as he asks," Do they have the expertise in real estate?