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Why UrSqFt ?

UrSqFt is created with a purpose and a passion.

The purpose is to create an ethical environment for investors and divestors in real estate – no matter the frequency. The passion is an attempt to bring transparency in a world filled with ambiguity. Living by the strong principles of ethics, efficiency and intellect, the team at UrSqFt is all about creating and delivering dynamic solutions.

Story behind UrSqFt… 

We initiated three areas for research in India:

-       Is reliable, independent and analytical advisory available for real estate?

-       Is transparent medium for transactions (especially exit) available in real estate?

-       What are the prime concerns for investors when investing remotely?  

Advisory

“Out of the five consultants we visited, not a single one can show us the trends of past performance: they did say their property will double in next 2 years” ... An Investor 

Research revealed that the advice (from consultant/contact) is always regarding a particulat asset, is always time bound and often referred to an opportunity which is below market price. The fourth most appeared word in the research was double the money in a very short time frame.

Our take: Unfortunately, all of these terms are standard terms used by majority of ‘real estate consultants’ while selling a property that they have ‘underwritten’ (bought in bulk). Alternatively, the consultants and ‘well wishers’ are associated with the builder or the underwriter.  No wonder their property eventually is the best property in the market!

To understand the perspective of investors, the founders of UrSqFt visited atleast 100 local dealers and consultants during a span of 12 months. Since, both the founders were living abroad at the time, they visited India atleast 8-9 times during this tenure. The advice was simple, ‘Our property is a gold mine, and everything else (outside their cont(r)acts) is not good’. A property (and builder) while on one hand is the most innovative with high specifications from one consultant’s perspective, yet on the other hand has bad construction quality and poor management from other consultant’s perspective.

Our take: Is there a professional firm who takes time to understand my requirement, can conduct research for me, synthesize data and help me make an investment decision? No.

Transactions

The most dominant finding was the low realization of value at an exit of a real estate asset. While buying is still systematic, the variance in target v/s realized value at exit could be up to 25%. This means that when an investor is exiting a property, they are quoted rates up to 25% below the market price and transaction takes place at 10% -15% below the market price.

Our take: This in our understanding is far beyond the normal variance of 2% - 5% that is inherent in every typical transaction e.g. commodity or foreign exchange. This exceptionally low realization can be explained by presence of ‘investors’ (typically a group of dealers) who buy at a low price, hold for a few weeks and sell it close to market price. Surprisingly though, over 60% of such transactions were carried out after consulting local friends, family and in 35% of cases actually using the known channel of local contacts. 

Digging deeper into this data, the basic assumption and principles of Indian society came into question! Is it the friends and relatives who are ‘helping you realize a lower value’ than you can otherwise? Shockingly ‘Yes’. Well, we do not want to compare one society from another and the merits and demerits a society are not within the scope of our research. Yet, one thing was evident: When it comes to serious money professional advice and help shall be sought and the savings (or profits) far outweigh the strain in your ‘trusted relationships’.

Remote Assets

The above problems multiplies manifold when it comes to investing or divesting in remote assets. The choices are limited, information is vague, and transparency can be best qualified as translucent, if not opaque. As per investor perception, research revealed that 6 out of every 10 investments made in a remote asset lead to an underperforming return. Interestingly, 9 out of these 10 assets are secured using ‘local contacts’ or through reference of ‘well wishers’.

Analyzing the data for concerns of remote investment, the following stands out:

-       investors are reluctant to buy in a city unless they know someone in that city

-       investors are reluctant to buy a property unless they know someone very well living within 10km of the property

-       70% of investors exit an investment before it comes to possession to avoid possession related and after formalities

-       90% of investors typically ask their friends, relatives or even acquaintances to update them on their investment at least once a month

-       of investors possessing rental assets, 80% ask their local contacts for favours at least 3 times a month

-       last but not the least, investors expressed sadness that they cannot invest in an area because of unavailability of a local care taker    

Our take: With our exposure of developed countries, we find it uncomfortable that there are no professional management services on the likes of US or UK, where you can be in any part of the world while your asset is managed professionally and effectively by a team that can be trusted. In spite of the local nuances of Indian real estate, we feel, there still is a scope of professionalism to help profile the tenants, manage the tenancy and take care of the asset to prepare for the next move.  

A service that enable you to buy intelligently, manage efficiently and when desired exit profitably – while having complete control and transparency on all aspects of your asset.

So, UrSqFt was conceptualized. To provide independent and intellect based advisory. To provide ethical and transparent medium for transactions. To provide comprehensive and efficient property management service to look after the assets.