Understanding the reality in RealT – Generic Real Estate Value Chain

As soon as I sat down to pen the first post for RealT Horizon, I was bombarded with several areas of concern which need to be addressed here. To start with, I decided to go with the basics. So let’s look at the overview of the Value Chain of this sector.

Real Estate Value Chain typically comprises of 5 broad levels:

Figure 1: Broad levels of Real Estate Value Chain

These 5 steps more-or-less comprise all the possible activities that one can associate with the development and transaction of a property. Of course some of the blocks shown above do interchange their positions sometimes, depending on the usage category. I will try to touch on that aspect later, or in the following posts. But before that, the usage categories:

Whether the 5 levels shown in figure 1 will remain intact or some of them will get merged or eliminated depends totally on the 3 usage categories. If, for instance, the category is ‘Residential’ and that too for single housing, probably the ‘Transactions’ level can be skipped.

Let me dig a little deeper in the value chain. If expanded, the chain will take the following shape:

Figure 2: Detailed Generic Real Estate Value Chain

As can be seen in the above figure, each level can be further fragmented into several components. This is the multiplicity that results in all the complexities that this sector is facing currently in India and probably in various other developing nations.

This sector needs treatment, and it will be possible only if there is a subtle understanding of its basics ingrained in all the investors. I will cover all the components individually in my future posts. So stay tuned and pour in your comments & suggestions to help me analyze RealT Sector more effectively!

Forward detailed links to each level:

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