CRISIL Rating Symbols For Real Estate Developers

Indian credit ratings agency CRISIL is reported to have launched a real estate ratings system for the industry which can hopefully guide common buyers to avoid builder-agent traps and cheats in real estate buying.

The variables used for rating are to be past record of the developer, the infrastructure he is erecting, finishing, timely completion, cost overruns, after-sales service, legal issues like title and project innovations such as green buildings. It can miss some important elements like feedback from REAL human buyers regarding value for money and common hassles before & after the purchase.

The report suggests that CRISIL has a strong track record as an independent and credible agency. Their evaluation process is rigorous and intensive incorporating detailed information on a number of project-related issues. The key parameters taken into account for the ratings are the quality of the sponsor, construction quality, legal background, financial strength, and innovation. The final ratings are arrived on the basis of stringent construction quality and execution norms prescribed by being met. Each star rated project will be under surveillance till the occupancy certificate is granted.

However, unlike the stock market manipulation and speculations, the ratings can do well only if done without bias and thoroughness. It can then claim to bring transparency to property purchasing system in this country. The government should also come up with regulatory body with provisions to monitor such a rating system and possibly create a public system for buyers to rate builders and projects.

Indicative CRISIL Rating Symbols (as published on crisil.com):
DA1. Excellent: The Developer's ability to execute real estate projects, as per specified quality level within the stipulated time schedule and the ability to transfer clean title is Excellent.
DA2. Very Good: The Developer's ability to execute real estate projects, as per specified quality level within the stipulated time schedule and the ability to transfer clean title is Very Good.
DA3. Good: The Developer's ability to execute real estate projects, as per specified quality level within the stipulated time schedule and the ability to transfer clean title is Good.
DA4. Below Average: The Developer's ability to execute real estate projects, as per specified quality level within the stipulated time schedule and the ability to transfer clean title is Below Average.
DA5. Poor: The Developer's ability to execute real estate projects, as per specified quality level within the stipulated time schedule and the ability to transfer clean title is Poor.