Growth Nov, 27 2015

"India soon to be among the top three revenue contributors"

By Sunil Pol, TFW Bureau

India, which is one of the top three fastest growing markets after the US and Canada, is the favourite market place for every foreign brand. It is expected that India will be in the top three revenue contributors in the three years from now. In a candid conversation with Sunil Pol, Michael Fischer, COO, Coldwell Banker Real Estate LLC shares how the brand forayed in India and its expansion plans ahead via the franchise route.

What do you think of Indian real estate franchise industry?

Indian real estate is a very highly priced industry, franchisees,
processes, qualifications, level of brokers and specialists needs to
improve. There is a strong need of specialists, more structured and trusted
franchisee operators to guide the clients through the process and I am not
sure it’s there as an industry. There is a need of process to guide the
people through real estate. We are in India at the absolute right time with
the absolute right franchisees. Presently, India is similar with what
San Francisco was in 1906, it’s a completely unorganised market. We know
that with human nature it is going to drive to a more organised trusted
process and I think we are the right brands to do that. In five years
down the line, more certification and licensing of specialists will happen
in the industry. The new real estate law will bring the process of
licensing and that law is going to pass in the next few months or in a year.

What are the strategies Coldwell Banker is adopting to spread in India?

Our larger focus will be on cities where larger number of transactions are
happening and wherever there is big need for professional services. High
end market has a big need for professional services and the smart city
initiative has big need for consistent services so these two will be our
biggest contributors. Real estate is becoming like global and as a strategy
we want to be able to create that network around the globe for people to
transact in real estate. Indians are the biggest transactors in real estate
outside their home country. We know in the US there is a huge population of
Indians who are buying property there as well as they are looking to buy
property back here. If we look at top five countries that are investing in
the US then India is number three behind Canada and China. So, we know there is
a great interest in real estate of Indians in the US and back in India. We are
also opening a company in Great Briton with a new company there will be
a huge similar collaboration there. This is a great opportunity to use our
global networking to expose in India. That’s what we are working to follow
our network at global scale which can really drive investments across
countries including India. There will be no longer Coldwell Banker India,
Coldwell Banker Great Briton, Coldwell Banker US it will be just Coldwell

Advice to your franchisees to run their business smoothly?

It is very important for us that our franchisees understand smart
cities, trends, what’s the investment strategies and they can be better
advocate for clients those are interested in those areas. We love
everything that drive lifestyle changes and where is lifestyle change? Its
real estate. Certainly countries like China, India, the UK and developing
countries in Africa offer great interest to us. We don’t want to be in most
but best countries.

Which model suits you master franchisee, area developer or single unit?

We prefer single unit franchisee model with 80:20 profit sharing ratio.
Independent developers is a very good market for us, even if small
developers don’t have approvals market probably compete with Lodha and
Wadhwa when it comes to selling or marketing, so our franchisees are very
good help for them to provide that marketing capability. We have around 25
offices around the country and by the end of March 2016 we want to increase
it between 30 and 35 and by the end of 2017 we will have around 100
offices. With 25 offices we don’t have credible capability to give you an
idea of our current market share, but we want to grow our market share to
five to 10 per cent in the next five years.

Which are your most successful franchisees so far?

We have three big franchisees first two are in Andheri and Bandra in Mumbai
and third one is in Banglore respectively. Both and Andheri and Bandra
franchisees were never in real estate before but now they are contributing
pretty significant amount of revenue.

What are your five rules of choosing franchisees?

Entrepreneurship, ability to manage teams, ability to invest in their
business, willing to be involved in the business and not just do the
investment and willing to learn to adapt is the main criteria we follow
while choosing franchisees.

What kind of competition do you have in India?

We don’t have any competition in India because nobody is doing franchising
in India at our scale. Outside of franchising there is competition with
some of the other companies who want to become organise players themselves
and not necessarily through franchising. In future, there will be
competition from the brands from outside India which has very good
experience in franchising.

What are the challenges that you are facing and how do you overcome them?

The biggest challenge is people don’t really still understand that what
value franchisees can bring to a independent broker. Independent broker has
never actually met anybody who is willing to help him everybody is always
trying to take business away from them. We are actually there to help the
independent broker and not to take their business away. Transparency is the
other challenge when we are doing transactions because regulation is not
strong we still have to do lot of work, we are doing due diligence and we
are helping buyer and sellers to do the transactions. Another challenge is
far saturated development in Indian metros, the quality life is not there
for the price they pay. Creating infrastructure outside the major metros is
something that the government should be doing and it will truly bring
difference in people’s life. Smart city initiative is long overdue. In the
current time even the people want to do the right things they may not have
the tools, technology and the training to be able to provide a level of
service and that are what we have come. So we believe that the organisation
with or without regulation is equally important.

Do you think governments planning of setting up a regulator for real
estate sector will improve the franchise scenario?

As the regulator comes in, it will make it harder for people to follow the
unethical practices.

When prices of real estate in India are sky rocketing, how do you see your
franchise growth ahead?

As long as there is a property with higher demand and supply we will keep
growing. I can see here the supply is growing because there is so much
demand. I think there is no point the price will go up from here. It may
not go up in significant amount but more and more supply will come. There
will up and downs but there will be enough opportunities.

What will be your larger focus- residential or commercial?

Primarily, always our focus will be on residential. It is less organised
than the commercial market. We have a commercial brand also we do
commercial business as well. But commercial is more about the global
network. Residential is about organizing in the sector.

How optimistic you are of Indian market for future growth?

Outside of the US and Canada, India is one of the top three fastest growing
markets. Hopefully, in the three years from now, India will be in the top
three revenue contributors. And in five years down the line we expect that
India will be the number one market for us. People in India actually
perceive a home to be higher priced based on the brand thus franchisees
gives us opportunity to improve our position in the market a broker can be
more successful through franchising. The brand and the network is very
valuable for the broker to grow the business.

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