With its localized nature of business, along with the fact that historically there had been information asymmetry, Indian real estate for quite some time lacked focus on brand goodwill. Size of the real estate companies for long was seen as synonymous with big brands. With the emergence of India as one of the five key global real estate markets post the introduction of FDI in 2005, with US, UK, China and Middle East being other four geographies, the focus shifted to brand building for the first time. Track2Realty analyses how brand equity has historically been a market-linked evolution.
The Indian real estate was shaping up as a happy hunting ground for the foreign funds. And to attract those funds, brand equity was a prerequisite. For the foreign funds bullish on Indian real estate post the FDI, there were only fiscal benchmarks to evaluate the brand worth of the respective Indian developers. The objective & scientific brand evaluation metrics were missing. Most of the funds were hence focused on the commercial real estate that was also offering better ROI.
For an average home buyer, the size & legacy of the real estate companies remained the only possible metric to evaluate the respective real estate brands. However, with more money flowing into the sector and white collared professionals joining the business to facilitate that, the first wave of brand consciousness started flowing across the sector. It was hence no surprise that around 2007-08 a number of Indian real estate developers got themselves listed on the bourses to be perceived as brands with better corporate governance, transparency and statutory compliances.
The idea nevertheless was more to attract the foreign funds than attracting the trust & goodwill of the home buyers. However, as the Indian housing market started slowing down around 2009-10, the focus of the Indian developers was yet again back to sales numbers rather than intangible brand perception. Every rupee spent on marketing was calculated in terms of its immediate ROI and not long term brand strategy.
A study by Track2Realty in 2011 noted that eight out of 10 home buyers across the Indian cities were sulking, with issues ranging from delays, defaults, unmet promises, and hidden cost. It was quite obvious even at that point of time that the Indian housing market was sitting on a potential bubble burst. What nevertheless arrested that potential bubble was the ROI of the housing market. With property consistently appreciating at double digit year on year, the developers had the upper hand. The buyer had little elbow room to complain.
The poor quality of construction and delayed possession was being compensated with better than expected appreciation. All that dream run of the Indian housing market came crashing by 2013 and the buyers too had by then realized the power of digital media to air the grievances. The digital media also created a level playing field for the smaller in size but higher in credibility developers. With opportunistic investors exiting the market and the end-users dealing directly in the primary market sales, the brand perception of the home buyers was no longer passive with ROI being the only benchmarking.
The bigger players in the market who were till recently seen as iconic brands were challenged by the vocal home buyers. Many of the erstwhile bigger brands by size that got too greedy soon realized that land bank could also turn out to be land liability. Many of them, some even large & listed ones, collapsed with over leveraged execution capabilities and/or fiscal bandwidth. The brand perception since then has always been shaped by timely delivery, quality and overall consumer experience.
Size or past legacy is no guarantee of brand goodwill anymore. It is not that only a few developers with national presence are being perceived as the top brands today. Rather, every key geography is having its own regional strong brands along with a few national brands that are commanding the premium as well as selling faster than peers. What is defining the brand goodwill for the developers today is the lower cost of client acquisition. Some of the regional brands command such strong goodwill that they get 30-40 per cent referral and/or repeat buyers.
Barring a few exceptions by the developers having pan-India footprint, most of the reputed brands are not leveraging beyond their fiscal limits & execution capabilities. Even for the developers with national footprint, major revenue is coming from the core geography. It clearly indicates that the home buyers prefer the localized brands. The home buyers have also learnt with past experiences that a thinly spread out developer without sound financial backing is a red flag.
The perception of the home buyers is also not uniform across the country. For example, in South Indian markets there is a bias towards listed developers and most of the leading names are listed ones. The same is true in Western India to a large extent. In North Indian markets, only half of the consumer endorsed brands are listed and the other half enjoy a similar level of buyer endorsement without being listed. In the Eastern zone, barring a couple of exceptions, all the developers enjoying C-SAT (Consumer Satisfaction) are non-listed.
The entry of corporate conglomerates was supposed to be a game changer of Indian real estate. But barring a couple of exceptions, it turned out to be more of brand promise than brand performance. The buzz word for the home buyers since then is fiscal efficiency, product efficiency and operational efficiency.
The digital media and social networking of the home buyers have not only given them a voice but also acting as a due diligence platform. What the home buyers are primarily looking for with a reliable real estate brand today is lesser litigation score; higher C-SAT (Consumer Satisfaction) score; track record of timely delivery; construction quality; handover experience; amenities & maintenance and ability to create landmarks.
Does this all mean that the Indian real estate has learnt its lessons in how to conduct as a brand? Well, your guess is as good as mine. For the records, the score of sulking home buyers (8 out of 10 in 2011) has not been any lesser as we conduct nationwide survey for Track2Realty BrandXReport 2023-24.
Ravi Sinha
#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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