Time for a realty check
Business Line, Brand Line, May 28, 2009, Page 1
Hit by the slowdown, the realty sector sees some innovative thinking as marketing budgets are cut.
Anjana Chandramouly Swetha Kannan
If you thought buy-one-get-one free offers were limited to trousers, shoes and other small-ticket items, think again. You could get houses too for free, thanks to Orange Properties, which came out with a ‘buy-one-flat-get-one-free’ offer recently for its Orange Resorts in Devanahalli, in Bangalore.
Sales didn’t quite skyrocket and the advertising campaign across print and outdoor met with mixed response, but given the current market conditions perhaps that’s understandable.
With real estate being struck badly in the slowdown, real estate developers, who were once riding a high, have now tightened advertising and marketing expenses. They have also had to think out of the box even while operating on leaner budgets. They have been forced to rework their marketing strategies to woo consumers at a time when the propensity to buy is not very high. Marketing initiatives may be fewer but they are becoming more focussed, specific and project-based, using direct and candid communication. And pricing is obviously the key premise around which the initiatives revolve.
Sandeep Trivedi, National Head, Development Consulting, Cushman & Wakefield, a real estate services firm, analyses the scene. He says, “Developers have definitely reduced the cost expenditure on marketing and advertising initiatives. The conventional forms of advertising, such as hoardings, advertisements in newspaper/magazines, participation in property exhibitions and sponsoring events have come down drastically and given way to more direct marketing initiatives. These include one-to-one meetings with prospective clients, more business development and sales calls. Even in the event of print advertising, the media is focusing on the price component and are willing to provide large area units at discounted prices. Developers have also been conservative in launching new projects in the current scenario and are, instead, focusing on selling existing projects.”
Innovation is the need of the hour to capture attention. Sridhar G. Kulkarni, Head - Marketing (Karnataka and Andhra Pradesh), Shriram Properties, says its marketing efforts are focused on activities that have a direct connect and reach with potential customers. “Our response to the economic slowdown is to focus on marketing initiatives that would be productive. There have been more initiatives targeted at specific groups which are result-oriented.”
Beat the blues
The realty sector has been the worst affected due to the slowdown. And ironically it is this very theme - recession - that real estate developers hope to bank on while selling their properties. Price is the main appeal.
The ’buy one flat, get one free’ scheme for the Orange Resorts project was devised obviously to beat the recession as no one had ever thought of offering a flat free with the purchase of a flat, says Pericho Prabhu, Vice-President, Orange Properties, which has cut down ad spends by nearly 30 per cent. The rationale, he says, was “instead of giving discounts and slashing the prices like other builders, we offer a 700-sq-ft flat free on the purchase of any flat. The flats in the project start from 900 sq ft upwards and cost Rs 26 lakh and above. The booking amount was Rs 2 lakh along with a down payment of 15 per cent of the total cost of the flat. Once these were paid in total, we got into an agreement with the buyer for the 700-sq-ft free flat. But in the second flat, the customer has to bear the cost of the car park and other statutory charges such as power and water.”
Although realty is one of the worst hit sectors in the economy, recession is not all bad, says Bangalore-based property developer Value Designbuild. In fact, it thanks the ‘recession’ for softening borrowing rates and stamp duty. In its radio and print ad campaign – ‘Thank God It’s Recession!’ - to promote its residential complex in an upmarket neighbourhood, the builder urges people to hurry because “nothing lasts forever. Not even a recession.”
Says Koshy Varghese, Managing Director, Value Designbuild, “The dreaded word seems to be there every day. It seems as if recession is a ‘death sentence’ passed on our country. It is not so. We would like people to seize the moment and understand what the opportunity is. Many companies grew during recessionary periods. We hope to promote a general feeling of optimism rather than the continued negativity that prevails. We are focussing on the benefits of recession. We have had programmes on radio where we have called in for listeners’ comments on the positives they see in the recession and the best answers have got goodie bags from us.”
The campaign was also targeted at trying to get people out of a negative mindset “as we believe that every situation presents an opportunity and we just need to grab it and try and benefit from it.”
While many developers are still marketing through above-the-line initiatives, Sobha Developers has decided to look below. The company is now looking at events to promote its projects. The first such event, Sobha Home Mela, was organised in February this year in Bangalore with about 1,500 units on display across 18 projects including villas, row houses, luxury apartments, semi-luxury apartments and plots.
Walk-ins of about 1,800 during this mela encouraged the company to organise a three-day ‘Sobha Sunbeam Hungama’ in April to market its Sobha Sunbeam project in the Garden City, wherein the company offered a discount of about Rs 13 lakh over the February prices, and an on-the-spot booking offer of Rs 50,000. “In February, the company charged Rs 2, 970 per sq ft, which was slashed to Rs 2,254 per sq ft,” says Keshav Pandey, Executive Director - Sales, Marketing and Corporate Communications, Sobha Developers. About 78 units were on offer at the Hungama.
“More people would be willing to take up this offer as they would prefer to buy a ready-to-move-in apartment, as the project is nearing completion. Also, the apartment would be available at the ‘magic’ price of sub-Rs 50 lakh (Rs 49.77 lakh excluding registration and stamp duty charges),” Pandey said during the event.
As part of its branding exercise, Delhi-based DLF found a perfect match in the Indian Premier League. Apart from being the title sponsors of the event, the company ran ticker ads on TV during the matches. According to a DLF spokesperson, “With its tremendous visibility, DLF IPL has helped us become a household name across the world. The rationale behind the tickers was to highlight our projects in all the eight cities of India where DLF IPL was played last year.”
Newer target markets
Media and marketing activities apart, developers are now looking at newer markets to tap into, since the IT/BPO employees are not the favourites anymore. “We are targeting the middle-class community in the non-IT sphere which is actually a huge pie - PSUs, all working professionals such as bank employees, private sector employees and small and medium businessmen who have steady income to avail themselves of loans, and look at property as a long-term appreciating asset,” says Prabhu of Orange Properties.
For its Garrison property on Tumkur Road, near Bangalore, Sobha Developers has seen around 300-odd bookings from Army personnel. Targeting such a group or institution for its sales and offering exclusivity to them would bring in “concrete results”, says J.C. Sharma, Managing Director, Sobha Developers. “When the markets were booming, there were fewer enquiries, but higher sales. Now, enquiries are more, but don’t necessarily translate into sales. So we have to ensure aggressive marketing strategies to ensure conversion,” he adds.
“The current economic downturn and IT slowdown has definitely had a demand impact on the high-end residential sector. Till date developers had long ignored the middle income and lower income groups which account for the majority of the population, but fetch limited margins for developers. With the present market condition, added to dismal sectoral demand and their liquidity problems, developers have started exploring affordable housing projects,” says Trivedi of Cushman.
This is a growing trend with the launch of a few small-sized apartments (700 sq ft - 1,000 sq.ft.) from developers such as Golden Gate Properties, Shriram Properties, Puravankara and Nagarjuna Constructions. DLF too has increased focus on affordable housing to cater to mid-income segments.
Tata Housing has literally gone one step ahead to target the lower income groups with its Shubh Griha project that plans to offer “smart, value homes” to people across India. Shubh Griha will launch its property in the suburb of Boisar in Mumbai, followed by tier I and II cities across the country. The homes will be priced between Rs 3.9 lakh and Rs 6.7 lakh.
“We have a number of market activation plans. We plan to go out directly to our customers and communicate to them what we are offering and how it’s not just a price game but a lifestyle that we have to offer. We also have been advertising in publications relevant to the the low income bracket consumers to reach out to them with the right message,” says Brotin Banerjee, Managing Director and Chief Executive Officer of Tata Housing.
How successful have developers been with their recent marketing campaigns and newer target markets? Have they brought buyers back into the market? Though it cannot be denied that these initiatives have been successful in rekindling buyer interest in the real estate market, the real success of such ideas in terms of actual sales is still questionable. “The urban Indian consumer is intelligent. So while an ad can generate interest, it cannot guarantee a transaction. Customers should check the details of an offer before making an investment decision,” says Trivedi of Cushman & Wakefield.
Developers agree that the market remains challenging, but the good news is that the negativity could soon be a thing of the past. “There is no fear now that the market could collapse. The worst is over. We are now trying to tap the market,” says Sobha’s Sharma, adding that in the next two quarters things might fall back in place.
Varghese of Value Designbuild says some consumer confidence is returning to the market. “How much this has to do with pricing is debatable. However, what is encouraging is that enquiries are back in some form unlike the end of 2008 and early 2009. Frankly, there is nothing that can be done except for credit becoming easier to both the consumer and the developer. The developers must somehow be able to construct and complete the buildings. Responsible marketing coupled with some interest rate benefits and tax breaks can help revive consumer interest in housing.”
Business Line, Brand Line, May 28, 2009, Page 1
Hit by the slowdown, the realty sector sees some innovative thinking as marketing budgets are cut.
Anjana Chandramouly Swetha Kannan
If you thought buy-one-get-one free offers were limited to trousers, shoes and other small-ticket items, think again. You could get houses too for free, thanks to Orange Properties, which came out with a ‘buy-one-flat-get-one-free’ offer recently for its Orange Resorts in Devanahalli, in Bangalore.
Sales didn’t quite skyrocket and the advertising campaign across print and outdoor met with mixed response, but given the current market conditions perhaps that’s understandable.
With real estate being struck badly in the slowdown, real estate developers, who were once riding a high, have now tightened advertising and marketing expenses. They have also had to think out of the box even while operating on leaner budgets. They have been forced to rework their marketing strategies to woo consumers at a time when the propensity to buy is not very high. Marketing initiatives may be fewer but they are becoming more focussed, specific and project-based, using direct and candid communication. And pricing is obviously the key premise around which the initiatives revolve.
Sandeep Trivedi, National Head, Development Consulting, Cushman & Wakefield, a real estate services firm, analyses the scene. He says, “Developers have definitely reduced the cost expenditure on marketing and advertising initiatives. The conventional forms of advertising, such as hoardings, advertisements in newspaper/magazines, participation in property exhibitions and sponsoring events have come down drastically and given way to more direct marketing initiatives. These include one-to-one meetings with prospective clients, more business development and sales calls. Even in the event of print advertising, the media is focusing on the price component and are willing to provide large area units at discounted prices. Developers have also been conservative in launching new projects in the current scenario and are, instead, focusing on selling existing projects.”
Innovation is the need of the hour to capture attention. Sridhar G. Kulkarni, Head - Marketing (Karnataka and Andhra Pradesh), Shriram Properties, says its marketing efforts are focused on activities that have a direct connect and reach with potential customers. “Our response to the economic slowdown is to focus on marketing initiatives that would be productive. There have been more initiatives targeted at specific groups which are result-oriented.”
Beat the blues
The realty sector has been the worst affected due to the slowdown. And ironically it is this very theme - recession - that real estate developers hope to bank on while selling their properties. Price is the main appeal.
The ’buy one flat, get one free’ scheme for the Orange Resorts project was devised obviously to beat the recession as no one had ever thought of offering a flat free with the purchase of a flat, says Pericho Prabhu, Vice-President, Orange Properties, which has cut down ad spends by nearly 30 per cent. The rationale, he says, was “instead of giving discounts and slashing the prices like other builders, we offer a 700-sq-ft flat free on the purchase of any flat. The flats in the project start from 900 sq ft upwards and cost Rs 26 lakh and above. The booking amount was Rs 2 lakh along with a down payment of 15 per cent of the total cost of the flat. Once these were paid in total, we got into an agreement with the buyer for the 700-sq-ft free flat. But in the second flat, the customer has to bear the cost of the car park and other statutory charges such as power and water.”
Although realty is one of the worst hit sectors in the economy, recession is not all bad, says Bangalore-based property developer Value Designbuild. In fact, it thanks the ‘recession’ for softening borrowing rates and stamp duty. In its radio and print ad campaign – ‘Thank God It’s Recession!’ - to promote its residential complex in an upmarket neighbourhood, the builder urges people to hurry because “nothing lasts forever. Not even a recession.”
Says Koshy Varghese, Managing Director, Value Designbuild, “The dreaded word seems to be there every day. It seems as if recession is a ‘death sentence’ passed on our country. It is not so. We would like people to seize the moment and understand what the opportunity is. Many companies grew during recessionary periods. We hope to promote a general feeling of optimism rather than the continued negativity that prevails. We are focussing on the benefits of recession. We have had programmes on radio where we have called in for listeners’ comments on the positives they see in the recession and the best answers have got goodie bags from us.”
The campaign was also targeted at trying to get people out of a negative mindset “as we believe that every situation presents an opportunity and we just need to grab it and try and benefit from it.”
While many developers are still marketing through above-the-line initiatives, Sobha Developers has decided to look below. The company is now looking at events to promote its projects. The first such event, Sobha Home Mela, was organised in February this year in Bangalore with about 1,500 units on display across 18 projects including villas, row houses, luxury apartments, semi-luxury apartments and plots.
Walk-ins of about 1,800 during this mela encouraged the company to organise a three-day ‘Sobha Sunbeam Hungama’ in April to market its Sobha Sunbeam project in the Garden City, wherein the company offered a discount of about Rs 13 lakh over the February prices, and an on-the-spot booking offer of Rs 50,000. “In February, the company charged Rs 2, 970 per sq ft, which was slashed to Rs 2,254 per sq ft,” says Keshav Pandey, Executive Director - Sales, Marketing and Corporate Communications, Sobha Developers. About 78 units were on offer at the Hungama.
“More people would be willing to take up this offer as they would prefer to buy a ready-to-move-in apartment, as the project is nearing completion. Also, the apartment would be available at the ‘magic’ price of sub-Rs 50 lakh (Rs 49.77 lakh excluding registration and stamp duty charges),” Pandey said during the event.
As part of its branding exercise, Delhi-based DLF found a perfect match in the Indian Premier League. Apart from being the title sponsors of the event, the company ran ticker ads on TV during the matches. According to a DLF spokesperson, “With its tremendous visibility, DLF IPL has helped us become a household name across the world. The rationale behind the tickers was to highlight our projects in all the eight cities of India where DLF IPL was played last year.”
Newer target markets
Media and marketing activities apart, developers are now looking at newer markets to tap into, since the IT/BPO employees are not the favourites anymore. “We are targeting the middle-class community in the non-IT sphere which is actually a huge pie - PSUs, all working professionals such as bank employees, private sector employees and small and medium businessmen who have steady income to avail themselves of loans, and look at property as a long-term appreciating asset,” says Prabhu of Orange Properties.
For its Garrison property on Tumkur Road, near Bangalore, Sobha Developers has seen around 300-odd bookings from Army personnel. Targeting such a group or institution for its sales and offering exclusivity to them would bring in “concrete results”, says J.C. Sharma, Managing Director, Sobha Developers. “When the markets were booming, there were fewer enquiries, but higher sales. Now, enquiries are more, but don’t necessarily translate into sales. So we have to ensure aggressive marketing strategies to ensure conversion,” he adds.
“The current economic downturn and IT slowdown has definitely had a demand impact on the high-end residential sector. Till date developers had long ignored the middle income and lower income groups which account for the majority of the population, but fetch limited margins for developers. With the present market condition, added to dismal sectoral demand and their liquidity problems, developers have started exploring affordable housing projects,” says Trivedi of Cushman.
This is a growing trend with the launch of a few small-sized apartments (700 sq ft - 1,000 sq.ft.) from developers such as Golden Gate Properties, Shriram Properties, Puravankara and Nagarjuna Constructions. DLF too has increased focus on affordable housing to cater to mid-income segments.
Tata Housing has literally gone one step ahead to target the lower income groups with its Shubh Griha project that plans to offer “smart, value homes” to people across India. Shubh Griha will launch its property in the suburb of Boisar in Mumbai, followed by tier I and II cities across the country. The homes will be priced between Rs 3.9 lakh and Rs 6.7 lakh.
“We have a number of market activation plans. We plan to go out directly to our customers and communicate to them what we are offering and how it’s not just a price game but a lifestyle that we have to offer. We also have been advertising in publications relevant to the the low income bracket consumers to reach out to them with the right message,” says Brotin Banerjee, Managing Director and Chief Executive Officer of Tata Housing.
How successful have developers been with their recent marketing campaigns and newer target markets? Have they brought buyers back into the market? Though it cannot be denied that these initiatives have been successful in rekindling buyer interest in the real estate market, the real success of such ideas in terms of actual sales is still questionable. “The urban Indian consumer is intelligent. So while an ad can generate interest, it cannot guarantee a transaction. Customers should check the details of an offer before making an investment decision,” says Trivedi of Cushman & Wakefield.
Developers agree that the market remains challenging, but the good news is that the negativity could soon be a thing of the past. “There is no fear now that the market could collapse. The worst is over. We are now trying to tap the market,” says Sobha’s Sharma, adding that in the next two quarters things might fall back in place.
Varghese of Value Designbuild says some consumer confidence is returning to the market. “How much this has to do with pricing is debatable. However, what is encouraging is that enquiries are back in some form unlike the end of 2008 and early 2009. Frankly, there is nothing that can be done except for credit becoming easier to both the consumer and the developer. The developers must somehow be able to construct and complete the buildings. Responsible marketing coupled with some interest rate benefits and tax breaks can help revive consumer interest in housing.”
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