By: Shajai Jacob, Head – Marketing, Jones Lang LaSalle India
Despite the market slowdown and high competitiveness among the ‘Big Boys’ in the Indian residential real estate business, smaller builders of residential projects can still corner a healthy market share. It is all a matter of knowing which league to play in, and how to play.
For starters, such developers should build at the best location within their means. Often, smaller builders do not have the luxury of picking and choosing locations for their projects. When they are stuck with a less-than-optimum location, they can compensate by making their project a landmark in the area. This means beefing up its saleability with better amenities and sweetening the deal with competitive rates. If one cannot get into Big League, one can still strive to be the best in Little League. Buyers always look for the best available in every budget range.
Brand Clout
It is difficult to compete with high profile ‘brand’ names. Without a doubt, a developer derives numerous advantages from his brand name and brand image. He is automatically clubbed among the most reputable professionals in the field, wields greater clout with financial institutions, and can attach higher rates to his residential projects. However, a brand name does not come from nowhere – a reputed developer’s projects sell well on the basis of reliable construction, imaginative design, the provision of desirable amenities, good project locations and honesty in dealings.
In the light of this, a smaller developer should focus on incorporating into his projects as many elements of the brand formula without getting fixated on building an ‘brand’. It should be borne in mind that in the residential real estate arena, a developer’s image is often based on how well his projects sell. To begin with, that should be the primary focus.
Rather than aiming to take on the Big Boys on their own turf, a smaller developer can build an image that stands for good quality at competitive rates. Initially, this may mean offering lower rates on first projects rather than losing customers. It may mean agreeing to payment terms that are more oriented to the customer’s convenience than those of the builder.
While established developers have an advantage with selling their projects, a smaller, new developer can beat the odds even if his project shares the same locality with that of a major name. He can do so by offering a degree of service that most other builders would not even consider rendering. This might mean cutting down on the time it takes to complete legal formalities of a purchase and offering innovative payment schemes.
Creative Pricing Strategies
Innovative financial structuring schemes are tailored to suit the needs of clients, and are a valid and effective method of adding real value in a changing world of residential property market dynamics. Some of the schemes that have worked well in the past are:
- Offering buyers the option of renting a flat at a minimum monthly rent, along with a specified deposit and a three-year lock-in period, with the option of buying the rented flat at a later date. If the purchase happens, the payments made are then treated as down-payments. This allows the flat’s occupier to either continue on a rental basis or to buy a flat they have grown familiar with at a date when the rates would conceivably have sunk to more rational levels.
- Taking a down payment on under-constructions flats in the builder’s on-going projects and offering to pay back the difference in the current and future market rates should the market correct at a later stage.
- Offering to shoulder part of the interest rate on the buyer’s home loan for a year, subject to a lock-in period of three years.
Such innovative financial structuring offers have proved effective in encouraging the absorption of existing ready inventory and increasing bookings in under-construction projects.
The Personal Touch
On a more general note, a smaller developer benefits considerably by extending a personal touch. Rather than delegating inquiries to underlings, he can personally take telephone calls, use his personal email ID to answer mail and take time off to explain some of the technicalities of the property market to prospective customers. Buyers respond very favourably to such personal attention by a developer.
There is no sure-fire, catchall modus operandi as far as success on the residential real estate market is concerned. It might work that way some of the time, but not always. Special situations call for special measures. In every critical marketing situation, the solution lies in ‘lateral thinking’ – taking a chance with uniquely different approaches.
Professional Marketing
When no formulas of promotion and sale prove effective, professional real estate consultants can turn around the fortunes of smaller developers by virtue of creative and innovative ideas. Once the concept of ‘thinking out of the box’ is understood, effective ideas to tackle most market contingencies can be conceived and implemented – often with dramatic results.
