Sean Tompkins Chief Executive Officer RICS on India’s Progressive Built Environment Sector
We Can Achieve City Resilience Through Collaborative Approaches Alongside Policy Makers Believes Sean Tompkins Chief Executive Officer RICS
The built environment is large and diverse, what does it need to adapt for the future to survive climate change and enable people to live better.
From the global movement of people to cities and the urgent need to address the existential challenge of climate change, our clients face multiple new challenges on many different fronts, and the built environment needs to respond and anticipate these trends through sustainable transformation. Great as these challenges are, they present our industry with new business opportunities as the built and natural environment industry adapts and builds skills capacity. Building in resilience to real estate assets is now key to ensuring a strong future for the market, to counter the effects of climate change and enable people to live better. A city’s resilience can be calculated by the combined capability of its businesses, civic bodies, communities, and individual inhabitants to sustain economic and social growth in the face of adversity. Some of the prerequisites of a resilient city are transport systems that enable people to navigate the city quickly and affordably; a clean water supply; strong social structures; institutions that are predictable and effective; good public health; a well-educated workforce; and an environment that is conducive to strong economic performance. We can achieve city resilience through collaborative approaches alongside policymakers, urban planners, and finance agencies to implement Environmental, Social and Governance (ESG) standards.
How do you see the emergence of successful entrepreneurial ventures in the Built environment sector?
India’s rapid pace of urbanisation offers so many opportunities for its built environment sector to enact positive change. To support this change, the Government of India has introduced several initiatives to foster greater confidence within the built and natural environment sector. These include the establishment of the Real Estate Regulatory Authority, the development of affordable housing and the smart cities mission. Business-focussed campaigns such as ‘Make in India’ and ‘Digital India’, also demonstrate some of the reform measures which are helping to generate further confidence within the sector. India is currently on track to becoming a global leader in technology. The real estate & construction sector can be a part of that growth story, but to get there it must increase the rate that it is adopting new technologies and grow its professional skills base to implement them. This is why we set up the RICS Schools of Built Environment in Delhi and Mumbai, where we are teaching thousands of students about modern technological solutions being adopted by the sector. We are now seeing many of our graduates using those skills to start their own businesses from scratch, which is leading to a greater number of start-ups in the sector. To date, 25 of our SBE graduates are running successful start-ups across the built environment space.
How Technology is transforming the global scenario of the Built Environment sector? What is RICS as an organization doing towards digital transformation?
From the automotive and music sectors, we have already seen clear examples over the past decade where digital transformation processes have created new opportunities to increase productivity. While their initial journeys from analogue to digital were expensive, as each sector began to collect and use data, they were able to optimise business results, create new revenues and transform customer experiences. The built and natural environment sector is something of a late-comer to digitalisation. And yet, while still in the early stages of its digitalisation journey, in just the past few years the insurgent Proptech industry has grown by tens of billions of dollars. Already, we’ve seen snapshots – particularly within valuation – where digital solutions have connected real estate clients and customers at an otherwise unachievable scale.
There is a lot which RICS is doing to support professionals through digital transformation, and particularly so within digital construction. RICS is creating a globally applicable construction cost analytics and benchmarking system to enable professionals to build confidence and create transparency in the sector. It will help to improve the financial management of projects, standardising cost recording, cost predictions and control data, each of which will enhance the forensic analysis of construction costs. It will enable professionals to compare projects across jurisdictions, providing decision-makers and clients’ better tools to analyse the impact of investment in construction, and the full life-cycle of the built asset.
Our flagship thought-leadership programme, the World Built Environment Forum, supports the start-up ecosystem by sharing insight on emerging technologies and how to embrace them. We bring together world-leaders in the built and natural environment, providing them with the platform to collaborate on innovations that will future-proof our profession and generate better outcomes for our clients and their customers.
Do you think identifying such technologies will transform the development of social infrastructure and construction in India over the next few years as Smart Cities become standard for many countries around the world?
As mentioned earlier, India is determined to establish itself as a leader in technological development. One of the prominent initiatives of the Government of India is the ‘Smart Cities Mission and ‘Digital India’. These projects showcase the intent of the Indian Government to encourage technology in social infrastructure and construction. We do see the built environment sector globally including India, undergoing a transformation due to disruptive technology. The resilient cities are an extension of a smart city. Sooner than later, the world will have to wake up and address social, environmental and economic sustainability issues to find the perfect balance across these three perspectives of sustainability. Once Environmental, Social and Governance (ESG) goals are implemented by the Government and related bodies, I am sure there will be a further advancement in this area.
Why should individuals look for a higher scope of success and opportunities that should tap the sector?
Globally, the built environment sector is one of the largest contributors to the GDP of a country’s economy and offers huge opportunities for people to venture into and build a successful career. In India, the built environment sector is the second-largest source of employment after agriculture and is expected to be worthUS$ 180 billion by 2020. The Government has designated100 cities under the ‘Smart Cities Mission which has led to tremendous job opportunities in infrastructure and facilities management. The sector offers a world of opportunities and fast track growth enabling faster career promotion, progression and prospects to start a new venture in a shorter period of time.But the sector faces a huge challenge in filling the gap of professional skills. Our RICS School of Built Environment (RICS SBE) endeavours to redress the skills shortage and focusses on building entry-level talent for the industry by bridging the gap through providing industry-led education to students and turning out industry-ready professionals.
•What is your outlook for the built environment sector In India? What is it that the RICS is doing or can support/advise the Government and Regulators on with respect to the current transformation in the regulatory framework in the country – be it RERA or IBBI, etc.
India’s built environment sector is typically the third-largest contributor to its total GDP. While the effects of the liquidity situation are still being felt, RICS is confident that things will move forward. The government’s structural reforms demonstrate, for instance, its growth ambitions and development priorities for the sector. Alongside regulators and authorities like RBI, SEBI, RERAs and IBBI, we are seeing that India is making progress in ensuring its real estate sector becomes a well-regulated financial market. RICS can help these stakeholders and the government through providing expertise in regulation to streamline and improve transparency, increase compliance with standards in order to bring confidence and trust to the market for the benefit of investors and customers alike.
We have put forward a detailed set of proposals to help optimise the existing RERA framework and its implementation. We are glad to note that the open common platform, as per the proposed framework of the RICS, has been widely advocated by the Ministry of Housing and Urban Affairs. Also, there are some key recommendations that we are proposing to overcome the financial challenges that the sector is currently grappling with. Just yesterday at the 1st National RERA Conclave that took place in Lucknow, the RICS has unveiled a report on “Breaking the Barriers: Reinvigorating the Real Estate Finance Sector in India”, which details some radical solutions to the current liquidity challenge.
We have also been invited to advise the Ministry’s Committee of Experts, which has been formed to examine the need for an institutional framework for regulation and development of valuation professionals in India by the acting regulator, the Insolvency and Bankruptcy Board of India. RICS has already been in active dialogue with IBBI to promote the recognition of the RICS qualification, as all our accredited professionals practice valuations by the IVS compliant Red Book of Valuation Standards. RICS also has the capability and expertise to train, qualify and regulate valuation professionals within India. This is why we are also working with IBBI to promote International Ethical Standards and train all Insolvency Resolution Professionals and Valuers.
The Securities and Exchange Board of India recognizes RICS certified professionals specializing in valuation of fixed assets as competent professionals to perform the valuation of REIT assets (as valuers for technical asset valuation). In fact, India’s first successful REIT which was launched recently and has been extremely successful thus far, has been valued by RICS qualified professionals based on the Red Book (International Valuation Standards), which is considered the gold standard in valuation globally. The requirement for stronger regulation in the sector is also raising demand for skills and new talent to implement them. By providing a comprehensive set of education and training programmes RICS is helping to address the need to increase the supply of professional skills and to drive continuous development in the sector.
We are delivering entry-level skills in India. RICS’ Schools of Built Environment continue to provide industry-led and competency-based education to undergraduates and graduates. Our training programmes are designed around internationally benchmarked competency frameworks which are widely recognized. With India set to become the fastest-growing mega economy and poised to have a truly global influence, there is an urgent need for internationally benchmarked education to deliver proven internationally-recognised standards.
Given the lack of trust and confidence in the market, there has been a severe liquidity crunch in the sector, what needs to change for investors to once again pin their hopes on RE as an asset class?
The government needs to introduce reforms and regulations that deliver the necessary investor confidence into India’s real estate sector. The government’s focus on reforming the business environment, governance structure, as well as its broader agenda (e.g. Housing for All, Smart Cities etc.), are all indications of its intent to promote investment into the real estate sector. By taking a collaborative approach and consulting with key sector stakeholders on its policy and reform agenda, it is already making significant progress.
However, the introduction of these policy measures has highlighted just how unorganized and unstructured the sector has hitherto been. To deliver confidence for investors in the sector, it is imperative that the government introduces necessary associated changes in monetary policy, fiscal tools and macroprudential measures to handle the situation. The RICS has unveiled a report on “Breaking the Barriers: Reinvigorating the Real Estate Finance Sector in India”, which details some radical solutions to the current liquidity challenge, at the 1st National RERA Conclave that took place in Lucknow, on the 4thof November 2019. In our view, most of the issues in real estate can be addressed in a collaborative way between the government, regulators, financiers, developers and customers. Strong regulation and transparency between these stakeholders will be key in setting out the rules for the market.
How real estate valuations are being affected in the current scenario and what role do valuers or qualified professionals play?
One of the factors behind the current situation is suboptimal valuation due to the lack of regulation in the valuation sector. It is important to have a structure to monitor and assess valuations as estimating the accurate value of the real estate is necessary for a variety of endeavours, including financing, sales, investment analysis, property insurance, and taxation. SEBI recognizes RICS-accredited professionals as competent professionals to perform the valuation of REIT assets (as valuers for technical asset valuation). We are helping in creating a consistent level in the standard of implementation of the RERA regime, alongside guidance on technology and data, and continuing to accredit professionals who can carry out these valuations in the right manner.
Complied by Remona Divekar
Sean has been Chief Executive Officer of RICS since 1 September 2010. RICS is the world’s largest professional body covering land, real estate, construction and infrastructure. RICS operates out of 30 offices around the world and today over 100,000 people hold its professional qualifications. Sean has transformed RICS from a traditional, trusted UK mark of professionalism built on high standards and ethics to one of international recognition, influence and thought leadership. From governments to financial institutions, RICS’ standards, qualifications and thought leadership are respected and recognised.
As well as advancing RICS’ strategy and goals, Sean is also a passionate champion for greater diversity and inclusion within the profession.
As a responsible organisation, RICS has sought to advance thought leadership in real estate and the wider built environment. Sean recently presented RICS’ work at both the United Nations in support of its Sustainable Development Goals and at the Paris Climate Summit (COP21). Prior to becoming CEO, Sean was Chief Operating Officer of RICS, leading a sustained programme of change which resulted in the organisation becoming financially stable and capable of future investment, as well as global in its operational reach. Before joining RICS, Sean was a director at Prudential Group, where he headed up the company’s retail and corporate marketing strategy, including its digital propositions. He was also a leading media spokesman as well as having responsibility for shareholder briefings. Sean was also part of Prudential’s team which led a number of mergers and acquisitions. Sean holds external appointments. He is a Board Director of the Chartered Institute of Internal Auditors and an Independent Non-Executive Director of Broadland St Benedict’s Ltd. He has also recently been asked to advise on the UK Government’s Export Strategy for built environment professional services. He has previously advised the Chairman and Trustees of the International Valuation Standards Council (IVSC) on strategy and governance and supported the UK Prime Minister on trade opportunities with Brazil post the London 2012 Olympics. Sean is a Fellow of the Institute of Direct Marketing, a business leader of the Marketing Society, a Chartered Insurer, and a Companion of the Chartered Management Institute and a diploma holder of the Institute of Directors.
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