The reports of Adani Realty merger with DB Realty has taken market analysts by surprise. According to the sources close to the developments, this is Adani’s bid to get into listed realty companies’ portfolio. However, the larger question that only Adani Realty can answer is that to what extent would the giant carry over the baggage of the tainted DB Realty. The memories of Godrej Properties announcement to join hands and getting market backlash of shareholders are still fresh in public memory. A Track2Realty analysis.
Who would have thought that the National Brand Leader of Indian real estate (as per Track2Realty BrandXReport), Godrej Properties, would be humbled by the minority shareholders? The otherwise silent voices roared aloud on the Dalal Street when the over-confident developer ignored the red flags with DB Realty and announced its decision to invest with a shady brand in collective consciousness.
The stock prices of Godrej Properties nosedived and most of the analysts were forced to reevaluate the brand and its vision. The brand too soon realized its mistake but the damage was done by then. Godrej Properties could never recover its lost high price point at the stock market.
It’s not just the crash of stock price that proved to be red alert for the brand; rather the voices of dissent grew to the extent that many question marks appeared in the public domain like never before. Issues like Godrej Properties’ brand strategy, monologue culture; overzeal to grow inorganic, and baggage of its local partners in many other parts of the country put the brand in the spotlight of analysts for all the wrong reasons. The news also had the potential to make average home buyers pretty apprehensive with the brand.
Godrej Properties is not the first corporate conglomerate in the Indian real estate that has been witness to the crash landing of its brand worth. Tata Housing has also tasted this a few years back, when controversies leading to the exit of its then CEO had put many question marks over the long-term roadmap of the brand. Many of those questions still remain unanswered and Tata could never manage to be among the Top 10 National Brands since then.
Then there is the case study of Lodha; once the most bullish & emerging brand of Indian real estate. Lodha did everything right on brand building front but didn’t give equal focus on the project execution. While many of the grounded real estate brands in India have failed with strategic image management, Lodha stands out as a case study in contrast. Focus had been more on brand building than the product.
A few failed attempts with the IPO lent credence to poor perception & projection as well. Eventually with a successful IPO, and acceptance of going wrong with business portfolio, Lodha too realized that it is better to be grounded by choice than being forced by the market to ground.
In contrast, Embassy Group proved to be lucky to takeover Indiabulls Real Estate when the latter was not in the news for all the right reasons. Through this route, Embassy got into the listed bouquet of realty players. Will Adani be as lucky as Embassy is a question that is at the moment in past indefinite tense.
Last two-three years have anyway been very interesting from the standpoint of study of brand. The Indian real estate has been pretty uneventful for someone tracking the brand index. Not much developments on the surface have always been challenging for the evaluation of brands. However, in the post Covid era, one significant development is the way market is responding to the top brands’ ability to weather the storm. The industry has been a witness to K-Shaped recovery and the growth curve is not uniform even among the top ranked players.
The market definitely knows when, why, and how to humble a brand. First, it was with the Sobha Limited that lost its National Brands Leadership with Track2Realty BrandXReport. Sobha didn’t do anything significantly wrong; but its over-leveraged balance sheet didn’t go down well with the collective consciousness. The home buyers had many question marks over the project execution of the then National Brand Leader. As a result, the brand lost its National Leadership with Track2Realty BrandXReport after having been undisputed Top Brand for the preceding 5 years.
Godrej Properties emerged as the new National Brand Leader of Indian real estate in 2019-20 for the first time and kept the momentum going in its favour for the second consecutive times. However, while the brand perception of Godrej Properties suddenly hit southwards this fiscal year, Sobha Limited regained quite a bit during this phase. From the depth of fiscal trust deficit post Covid, the brand has not only gained acceptance but has also bounced back on many of the key metrics of brand evaluation. Sobha has also rewarded handsomely to its investors at Dalal Street.
The elevation of Sobha Limited as the National Brand Leader is a case study in itself. It is a learning for many of the so near & yet so far brands that when the market humbles you with disapproval, it is better to get back to the basics. There is hardly any room for complacency, forget brand arrogance. Acceptance of the fault lines are journey towards brand goodwill. If complacency and brand arrogance had dethroned Sobha Limited as the National Brand Leader, Godrej Properties too has been forced to some serious soul searching on the issue.
I would also take the case study of Sunteck Realty that has emerged as a credible brand, of late. Didn’t Sunteck make mistakes? Yes, it did! But then the brand had a public acceptance and took the corrective measures. How many real estate brands would put it in the investor presentation that the brand has made the mistake? Sunteck Realty goes to the extent of putting on record the learning, that the developer would henceforth do a thorough due diligence for future alliances. A potential partner’s past track record, compliance and ethics would be key criterion for selection.
The bottom line is that for the top brands the margin of error gets narrower. It takes years of hard work to make a brand and one silly error of judgment to destroy it. After all, the market forces are cruel and ruthless. They take no time to humble a brand. More importantly, Brand Leadership is an eternal journey towards excellence, and never a destination to sit with the laurels. Adani’s reported merger with DB Realty would be another interesting case study ahead.
Ravi Sinha
#RaviTrack2Media
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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