It’s Builders Vs Buyers in the Indian Real Estate Industry

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Sanjay Sharma, Managing Director of Gurgaon-based, Qubrex, a real estate brokerage and consultancy firm, was in for a shock on April 18. He saw 18 legal notices lying in his mailbox, served on him by the Delhi-based builder, Raheja Developers Ltd.

The legal notices were sent to Qubrex, asking the company to remove articles related to Raheja Developers on sites run by Qubrex such as http://www.GurgaonScoop.comhttp://www.BuilderScoop.org and
http://www.Qubrex.com.

Sharma is a worried man. He says this is a “brow-beating” tactic by Raheja, to silence any criticism of the company on the internet. “In a rapidly deteriorating real estate market for builders, many builders are crossing the line from ‘reputation management’ to ‘dis-reputation management’. And we expect, that given the potential drain of the legal proceedings on our limited financial and time resources, we will soon fall into silence due to sheer attrition,” he says.

The articles by Qubrex allege that Raheja has indulged in malpractices and violated buyer commitments in many of its projects. Sharma claims that all the articles on the company’s site are well researched.

But Raheja says Sharma’s published information is grossly offensive. “The stories published by him consist of defamatory allegations. The negative content authored by him is so vicious and damaging that it is invariably picked up as the top search results by all major search engines. Qubrex’s content pushes the positive content posted about Raheja to lower search results, which escapes the attention of net users,” says Dimple Bhardwaj, spokesperson for Raheja.

Sharma counter claims that Raheja is even silencing the voice of buyers, by inserting a clause in the ‘buyer agreement’ that forbids buyers from posting anything unfavorable about the builder online and the agreement says that the developer can claim damages from the buyer, in the event of a violation of the agreement.

Raheja explains it is not stopping buyers from sharing their problems or issues. “Instead, we are only asking people not to use defamatory, insulting, offensive language or material, which harms the reputation of both developer and owners association because there are other buyers, who have invested their money in the project and any defamation of the project can dent valuations of their investment,” says Bhardwaj.

Raheja says the clause in the agreement has been included to stop purchases from people who enter the project with “devious intentions” and later resort to blackmailing.

Anuj Puri, Chairman & Country Head, JLL India, says “given the fact that most aspiring  property buyers today tend to search the internet at some point, defamatory content related to builders or their projects has extremely high damage value.” He however adds that “the line between valid concerns of customers expressed online and defamatory content can sometimes be a thin one.”

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Online buyer forums took root around the time of the global economic slowdown in 2008, which hit the real estate sector in India badly. The industry went through a cash crunch, which led to delay in several projects. Aggrieved buyers formed online buyer forums on Yahoo and Google groups, to put up a united fight against builders. Surf the net for real estate projects in the NCR and chances are you will find a buyer forum for almost every prominent real estate project.

The real estate market in the NCR region hasn’t really picked up after the 2008 slowdown, except for a brief boom period in 2009-10. New launches have virtually stopped and demand is sluggish. Project delays are rampant in the NCR region, either because the builder doesn’t have the money to complete the project or because the project was launched without taking all the required government approvals. Either way, buying an apartment in the NCR, could mean a long wait for the buyer, to get possession.

It is not just Raheja, which is silencing critics. In a curious case, false FIR’s have been allegedly filed in Agra against five office bearers of Triveni Faridabad Allottees’ Association. It has been waging a legal battle against Triveni Infrastructure Development Co. Ltd. for the last three years asking for possession of flats in Triveni’s projects in Faridabad. Interestingly, none of the office bearers live in Agra.

Rajiv Verma, a Triveni home buyer based in the UK alleges that he has been threatened by the developer several times. “I run the online campaign for the Triveni Faridabad Allottees Association, which has 715 members,” says Verma. “Triveni has been threatening me. They called me and asked me to close Triveni buyers’ google group/facebook page. They said we have people in every part of the world and we will teach you a lesson.” Verma lodged a complaint against the builder in Bromley Police Station, UK. But, it didn’t stop there. He claims that his parents, who live in Faridabad, have received similar threatening calls.

In 2006, Triveni had advertised that they have Group Housing License (multi-storey flats) from the Govt. of Haryana, to build group housing projects in Sector 78 and 89 of Faridabad. More than 3000 people bought into the project. When the company failed to deliver the flats after 5 years, Triveni buyers formed the Triveni Faridabad Allottees Association in 2012. The association has filed a case against the builder in the Supreme Court.

Triveni’s official website gives no clue about the whereabouts of the promoters. There is a public notice on the website that talks about the resignation of the erstwhile management of the company, Sumit Mittal, Madhur Mittal and B.N. Gupta from the Board of Directors and the negative media coverage the company has received. I tried calling the office but  the phone number didn’t “exist.” Here is a link to the notice: http://www.triveni.net/#

Qubrex’s Sharma says one of the reasons for the slow demand in the NCR market is lack of trust in the developer. “Buyers are apprehensive about investing money in a property, because they fear a delay in the project or worse losing their entire investment,” he says.

Buyers do tend to check the reputation of a developer, before buying a property in their project, so it is natural for developers to be nervous about their online reputation. But, an easier way to regain the trust of the buyer would be through timely delivery of projects.

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