By: Ravi Sinha
Track2Realty Exclusive: At a time when the critics of Mumbai real estate were busy with the conspiracy theory and prophets of doomsday were writing the obituary, with the report suggesting the city market sitting over 48 months of inventory lending credence to such conspiracy theory, there has been an under-current in the Mumbai property market where some of the smart developers were devising new strategies to beat the slowdown.
Other developers too soon started following and hence the city’s property that is an aspiration to one and all, irrespective of one sleeps on streets or silk sheets, was gearing up to weather the new emerging challenges.
Prima facie it is not easy to resist the temptation of criticising the Mumbai city which has extreme statistics in general and realty market in particular. But the inherent resilience of Mumbai real estate has survived all odds, be it poor transport links, or highest population density or low rise by the global standards. However, few can deny that Mumbai real estate still ranks among the top of the global wish list.
Moreover, statistics only tell half the story and one of the reasons why inventory has been high in the last few years is the fact that the new business model of Mumbai realty has been that developers are entering into joint ventures with the land owners, since buying too much land can squeeze the resources for execution.
So, instead of flaunting the millions of square feet of land bank the focus has now been on the completion of the projects. The rising inventory story, however, fails to notice this and neither does talk about this new strategy of the developers.
Pranay Vakil, Chairman of Praron Consultancy agrees that this model allows the realtor more flexibility as the developer is not paying interest on loans taken to buy the land. “Since the developers’ all the resources has not been exhausted on buying the land, he can go about a project from scratch to finish without much bothering about the immediate sales figure. It also gives him more holding power in a bad economy. At least half the projects under construction now follow this model.”
Hence, amidst the wishful thinking of distress sale in the Mumbai market, the property index has not lost its sheen. A section of analysts believe the rising inventory is also due to the lessening investor activity due to the overall macro-economic reasons. That does not mean fundamentals of Mumbai property are not indicating a turnaround in due course of time. Had that been not the case the rentals would not have been rising steadily across the micro markets of Mumbai.
This school of thought believes Mumbai with its high GDP compared to the rest of the country will continue to command more premium over property prices, notwithstanding huge inventory or no inventory. It is generally believed that the right answer to dealing with the rising inventory is to devise the right kind of sells strategy. Market watchers maintain if developers like Lodha and Omkar are selling some of the premium projects in today’s market, so can others provided they have right answer to the right kind of buyers.
Bharat Dhuppar, CMO of Omkar Realtors & Developers agrees that it is time for out-of-box thinking to attract customers since the sentiments are subdued. He says the marketing strategy adopted for Omkar Alta Monte project located at Malad East, Mumbai was a well perceived and implemented 360-degree thought process.
“To pick any one specific component would not do justice to other components which contributed in unison for a highly successful project launch. Yes, we did go an extra mile with our promotion experimentation adding the radio platform to print and OOH. This apart, the campaign and the product managed a strong positive buzz owing to positioning and customer servicing components. In case of Alta Monte, whereby 85% of the inventory in Tower A & C stands sold, since its launch in October 2012, we are now launching Tower B. We realised that the demand for 2 BHK in Goregaon-Malad belt particularly has been strong,” says Dhuppar.
…to be continued
