Evaluation of the real estate brands has never been as challenging in India as it is now. After all, the large & listed real estate developers across the country are exhibiting identical patterns with their performance. Nearly all of them are witness to their best-ever fiscal topline as well as stock performance. The combined market share, fiscal performance and market cap of some 20-0dd listed real estate companies would be more than half the revenue of Indian real estate.
Real estate, often referred to as localized business, has taken a tectonic shift in recent times as the large & listed players have acceptance beyond their core geographies. The fiscal year 2023-24 has been the defining moment for the bigger brands in the business.
Facts speak for themselves:
Nearly all the leading national brands are listed ones
The market share of national brands is more than 50% now
Nearly all the leading brands are witness to their best-ever fiscal performance in 2023-24
Stock performance of large & listed players is in sync with their fiscal topline
Nearly all the large & listed players have ventured out of their core geographies in the fiscal year 2023-24
National brands are commanding premium in the range of 12-20%
Launch to sales ratio of large & listed players way too higher than others
Client acquisition cost of large & listed players is lowest
National brands are attracting quality funds at competitive rates
Source: Track2Realty BrandXReport 2023-24
It hence raises a fundamental question as to what differentiates the standing of the large & listed players in the market. If they are all at the peak of their business cycle, how are they competing against each other in the given micro markets? More importantly, how would a property buyer evaluate their brand ranking & market standing to understand the justified premium that each brand is commanding?
The answer lies with the consumer connect. Consumer touch points are nevertheless sensitive zones for the real estate companies. It is here that most of the sincere corporate philosophy at the boardroom level is crushed. Even the well-intentioned corporate conglomerates, otherwise respectable brands, wonder why their overall brand goodwill doesn’t get translated into the business of real estate.
Industry voices
Abhishek Kapoor, Group CEO, Puravankara Limited points out that the consolidation within the real estate sector has benefitted large developers. With stricter regulations under RERA (Real Estate Regulatory Authority), only credible players with robust financials and compliance capabilities have thrived, thereby increasing market share and trust among buyers. The shift towards branded developers who can assure on-time project delivery and international quality has also been significant. The fiscal topline and stock performance increase reflect this market consolidation and the enhanced confidence in listed developers.
“Expanding beyond core geographies presents both opportunities and risks. The previous experiences during the market slowdown have taught several critical lessons, like the need for market research & due diligence; phased development; partnerships & joint ventures; diversified portfolio; organizational structure; operational efficiency; cost management; brand trust; and customer service. By leveraging these strategies, large developers are better equipped to manage the complexities of expanding into new territories, capitalizing on growth opportunities while mitigating potential risks,” says Kapoor.
The question is whether the sector in its collective consciousness is mindful of the ground realities. Certain questions that need to be delved deeper is:
Expansion beyond core geographies had earlier hit many large developers in the wake of slowdown. Now that they are again expanding their geographical footprint, what are the lessons learnt and what is the hedge strategy?
Can a handful of large & listed players serve the pan-India housing demand?
Vimal Nadar, Senior Director & Head, Research at Colliers India believes although the leading national developers have been expanding to Tier II and III cities, regional and local developers are uniquely positioned in catering to end-user preferences in these growing real estate hotspots. Moreover, with demand-supply gap persisting across all housing categories and markets, it is imperative that national, regional and local real estate developers continue to co-exist, strengthening their core competencies and product offerings.
“With leading real estate developers expanding their geographical footprint beyond the Tier-I cities, one must be constantly aware of local end-user preferences and curate their product offerings in line with real estate trends in these smaller cities. Size of individual houses/units in apartments, floor plans, amenities on offer and pricing strategy should be devised keeping in mind the purchasing power of local communities in catchment areas of residential projects. Moreover, rather than an all-out expansion strategy, future portfolio diversification should be carefully planned on the basis of success of pilot projects,” says Nadar.
Public perception
A pan-India survey for Track2Realty BrandXReport 2023-24 finds that what is driving the large & listed developers is the trust of the home buyers. In other words, there is a visible lack of trust with the smaller developers with no brand reputation. Most of these buyers believe that the legacy brands that are mostly, but not limited to, large & listed ones have better consumer connect and processes to deal with.
“My property purchase in Gurugram with a local builder was no less than a nightmare. All the sweet sales talk turned into hostile talk once I made the initial payment. Thereafter, I was subjected to delay in possession, default with the specifications and amenities, with unfair contract coercing me to sign on the dotted line at each and every stage and what not. Poor maintenance post possession was adding insult to the injury. I had no choice but to dispose of that property. This time I bought with a reputed builder with a sizable market cap and reputation. Yes, I had to pay the premium but that is worth it,” says Naveen Jaiswal, an engineer.
Only big brands play?
This also raises a pertinent question: Whether the success of large & listed real estate developers commanding consumer goodwill is a threat to regional developers with limited footprint? Empirical evidence doesn’t seem to support this argument. Many of the regional brands, often non-listed ones, are giving a threat to the national brands in their core geographies.
The other side of brands with limited footprint
Ambuja Neotia is a giant in Kolkata Market
Panchshil Realty is a giant in Pune market
County Group is a giant in Noida market
This success of these strong regional brands also puts to rest the critical question as to whether there is an ecosystem issue for the brands to perform. After all, most of the top national brands are coming out of the Bengaluru and Mumbai market. But then these regional brands in not-so-conducive markets, like say Noida, prove that the consumer-centric brands have higher C-SAT (Consumer Satisfaction) score, irrespective of the ecosystem.
Ravi Sinha
X : RaviTrack2Media
Ravi Sinha is a journalist with over two decades of cross-discipline media exposure. He is the CEO of real estate thinktank group Track2Realty. He has been writing extensively on the real estate sector for more than a decade now. Evaluation of real estate brand performance is his core domain expertise and he has immense insight into consumers’ psychograph. He has conceptualised Track2Realty BrandXReport as India’s 1st & only objective & non-paid brand rating journal that is industry-accepted benchmark of brand equity & ranking of the Indian real estate companies.
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
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