Real estate companies in churn mode after GST & Rera

The real estate sector is slowly catching up after being affected by the goods and services tax (GST) and Real Estate Regulation And Development Act (Rera). It has, however, seen a lot of churning among senior management roles, especially in finance roles.

At least half a dozen senior executives, including chief executive officers (CEOs) and chief finance officers (CFOs), have quit and joined rivals or started as independent professionals in the last couple of weeks.

“After the GST and Rera, finance, compliance and legal roles have become very critical and are in great demand. Finance heads are also important today to make the right investment decisions,” said Shishir Baijal, chairman, at Knight Frank India, a property consultant.

Last month, Hari Prakash Pandey, senior vice-president (finance) and investor relations at Mumbai-based real estate company HDIL, quit and joined privately-held developer Runwal group in Mumbai as the CEO. Pushpamitra Das, group CFO at Bombay Dyeing, quit in the same month. Das now works as independent advisor to real estate companies.

Bengaluru-based Prestige Estate Projects recently promoted Venkat K Narayana as its CEO. Narayana was earlier executive director (finance) and CFO. VV B S Sarma was then named the new CFO.

Rera, which came into effect from May 1, talks about compulsory registration of projects with respective state authorities, makes it mandatory for developers to put 70 per cent of proceeds from a project in an escrow account and prohibits pre-sales, which is a popular way of raising initial funds, for developers. In short, Rera has hit cash flows of developers significantly.

On the other hand, the GST, which came into effect from July 1, has hit the sales of premium apartments.

R Suresh, former managing director of head-hunting company Stanton Chase India, said property developers were facing a lot of liquidity issues and needed to do equity infusion, get debt or monetise assets. “REIT (real estate investment trust) has also become a big opportunity. Besides, Rera has strict compliance rules that’s why they need experienced finance professionals,” Suresh said.

Suresh said that many realtors have bought land, built assets and now want to unlock the value. “They need senior people to do that,” he said.

Professionals agree with consultants. “Many promoters want to run their business professionally after Rera. So, there is a lot of demand for professionals. But one should wait and choose the right offer,” said Om Ahuja, who quit as CEO (residential) from Bengaluru-based Brigade group last month.