Home buyers are still laggards. Across major cities, the mood in the property market continues to be subdued. With economy yet to wake up from the long slumber and interest rates still perched high, builders and banks are now looking at new ways and strategies to create a buzz around their inventory and kindle interest among homebuyers.
Take the case of Chennai-based Akshaya. It recently launched a residential project to be developed over 20 acres at Thaiyur, near Kelambakkam, the city’s peripheral area on OMR. The launch price of Rs 2,850 per sq ft, for the first three days, for a green project attracted enough attention. Besides the price, the company ran a 360 degree campaign covering all forms of media to generate hype around the launch.
Starting with the launch day, it organised a booking marathon, and by the end of the campaign, about 1,021 people had booked an apartment. From the fourth day, the price increased to Rs 3,000, and at present, it is ruling at Rs 3,250 per sq ft. A total of 1,260 bookings have been received so far.
Akshaya, which was keen not to let go off the hype built around the project launch, last week organised a Bhoomi Puja – with a puja area alone spread around 15,000 sq ft. It had also set up a 26,000 sq ft dining area in which nearly 3,000 guests feasted on a full spread south Indian vegetarian thali in batches of 500 people at a time. An adjudicator from the Limca Book of Records was around to witness and record the development.
Akshaya’s managing director and chief executive officer, T Chitty Babu, is a happy man. “More than aspiring for records, we wanted to thank our customers and create a sense of oneness, and what better way than to invite them all for puja,” he said, while refuting that this was a brand building exercise. “Akshaya as a brand is already established over the years and that is why over 1,000 people booked nearly one million sq ft of space in three days,” he points out.
If such was the buzz around a new launch, property developers are coming up with newer ways to generate buying interest in their existing stock or those under construction. For instance, SARE Homes, which has integrated township projects underway in seven cities including Gurgaon, Navi Mumbai and Chennai, has in association with ICICI Bank launched a unique campaign – ‘pay nothing until possession after initial 20 per cent’ to aggressively promote its Cresent ParC and Medowville expandable villa projects coming up respectively on OMR and GST Road near Chennai.
“As a customer-centric company, SARE Homes always scouts for opportunities to make home buying easy and hassle-free. The present scheme in association with ICICI Bank will further facilitate home buying for a large number of customers,” says David Walker, executive director, SARE Homes.
In the case of Prestige Group, one of the major players in the south, it did not need to go out of way to attract customer attention. “The calendar year (CY) 2012 has been a year of record milestones for the Prestige Group, where we began the year with the successful launch of our first residential project in Chennai. This positive momentum progressed through the year with a slew of launches and project completions across south India,” says Irfan Razack, CMD, Prestige Group. “It is pertinent to note that we have been instrumental in providing a much needed equilibrium in the real estate sector in terms of a healthy commercial leasing market, stable residential market and a growing retail market,” he added. And this move seems to have seen the company sail through what for most others have been a tough time.
Another Bangalore-based leading developer Puravankara, which is spreading its reach across cities, too seem to have done well despite the current market scenario. “One of the lessons learnt in recent years is the importance of judicious pricing. Properties that are priced correctly and launched at good locations continue to do well. Our brands are priced competitively – both Puravankara that operates in the premium segment and Provident that operates in the mid-income segment – are priced well. Consequently, all our new launches have done well,” says Jackbastian Nazareth, group CEO, Puravankara Projects.
“Residential property market is driven more by sentiments than economic rationale. While prices did not go down much despite shrinking sales, interest rates remained high. As a result, investors and buyers were playing a wait and watch game,” says Samantak Das, director — research and advisory services, Knight Frank India. “With the government taking a fresh look at pushing in economic reforms, sentiments are bound to improve. But a revival may not happen soon,” he adds.
On the other hand, developers had slowed down construction process and also held back new launches to prevent pile up of inventory. “Builders are trying to attract buying interests by tying up with brands for interiors and launching projects in affordable segments. For instance, a couple of builders in Mumbai have now launched new projects at a considerable discount to the existing market prices in the areas,” he points out.
“Residential property prices have breached affordability limits in cities like Mumbai. Nevertheless, developers will have to factor in the ground realities of the business while debating the lowering of prices to catalyse sales in 2013,” feels Anuj Puri, chairman and country head, Jones Lang Lasalle India.
According to him, it became evident in 2012 that homes in Mumbai and Delhi-NCR are not selling at the current price points, and developers do need to recalibrate their bottomlines while still remaining viable as businesses. It is extremely doubtful that the previously offered freebies and other such incentives will prove to be much of a sales booster for residential properties in the current environment. “Since the only way to catalyse healthier sales at this point is offering buyers tangible financial relief, we are likely to see drastic trimming of frills in projects to make them more marketable from a pricing point of view, and innovative payment schemes,” observes Puri.
Nazareth agrees. “The Provident proposition, for instance, denotes ‘premium affordable’ housing as opposed to low-cost housing. These are premium homes, including best in class amenities –gyms, clubhouses, swimming pools, et al, built to sell at affordable prices through a value engineering process that reins in costs. The project is priced 20-25 per cent below competitors. Given the success of the proposition, we intend to augment our presence in this segment going forward. In addition to an ongoing emphasis on delivering quality to customers, we have adopted innovative marketing strategies to reach out to potential buyers.”
“Instead of launching new projects, developers are now focusing on launching new units by renaming or rebranding some of their products within existing ones. To unlock value from existing land parcels, few developers are forming joint ventures with other developers, from the perspective of funding construction or sale of FSI (floor space index) to generate cash flows,” says Anshuman Magazine, CMD, CBRE South Asia.
Given the tough market scenario, developers are not only looking at the traditional media, but also at the emerging digital options of social media, like Facebook, Twitter and Linkedin, to connect to target customers. “Social media becomes an effective tool to connect with customers and understand the target segment more closely. Importance of social media as a marketing tool could be understood from the fact that big players of the industry now are hiring professional agencies to handle communication campaigns on social networking sites, as well as advertise new projects,” says Magazine. “Due to stable capital values over the past few months, developers are now focusing more towards end-users rather than investors,” he added. And that’s where social media is playing a prominent role.
According to Nazareth, digital marketing is proving to be an effective lead-generation and sales tool, which has indelibly carved a niche in our marketing mix. Social media is emerging as a powerful platform, not only to showcase products, but also to create engaged customer communities and build brand affinity.
Prestige Group too banks on digital media for getting closer to customers and also update key developments. “Prestige is one of the early movers in new age formats of marketing properties and we are also regularly acknowledged for our creative presence in the online space, through websites and social media in various forms. The Prestige Group today hosts individual portals for communication for most of their businesses varying from residential to commercial real estate, to hospitality to lifestyle to fine art and luxury,” says Uzma Irfan, director, Prestige Group.