In his bestseller change management book “Who Moved My Cheese?” Spencer Johnson, through his story and characters convinces the readers to one important key conclusion: “If you do not change, you can become extinct.” If someone has to write a book on the Indian real estate post Coronavirus the story would probably argue with “Who Moved My Walk-in Buyers?”.
There is no denying that the world has changed for the real estate in this part of the market. Of course, there are acceptances with degree varying, denials and even reluctance to adapt to the new normal. However, what can’t be argued is the fact that the market forces are clearly signaling the paradigm shift from the existing denial & resistance to change.
Track2Realty has done a dipstick study of the market and after having spoken to an end number of industry stakeholders and the buyers, certain underlying message has been decoded as follows:
Technology is only an enabler: Proptech is the buzz word today across the built environment of the real estate world over. However, what the sector needs to understand is the fact that technology is just an enabler; no one is going to buy the life’s costliest purchase over the click of a button. All the Artificial Intelligence (AI), Augment Reality (AR) and the Virtual Tours (VT) are only initial interest and doesn’t necessarily substitute of walk-ins before final commitment. If the project visit is not pleasant for the prospective buyers and the product does not stand as the right property in the right market and at the right price point, then proptech is not a sales enabler on its own.
Create your own product and brand differentiator: Across the cities the property micro markets are a cut throat place and only the survival of the fittest is the mantra. It is high time for the serious & seasoned players to focus on creating its own product and brand differentiator. Gone are the days of luring with freebies and not-so-needed add-ons.
Understand your buyer: How well do you understand your buyers? Understanding only the demographic profile of the home buyers and his earning is not enough; the sales force has to understand the psychographic profile of the buyers as well. The average salaried class buyers, more often than not over-leveraged in home buying, is today either reeling with the salary cut and/or job losses. The buyers in the market on the lookout are the ones that have an added edge – either with more financial safety net or are immune to the slowdown. And hence, their choices, concerns, and more importantly, the bargaining power is highly under-rated by the market.
Communicate meaningfully: An average builder does not have the liberty of choice anymore as far as the marketing budget is concerned. With media houses equally stressed out, and many real estate supplements either closed or on the verge of closure, self-glory of the project or the brand won’t work. Talk straight and talk realistic with little or no room of being contradicted and/or caught on the wrong foot. Quality of media exposure and content and not quantity will lead to better ROI (Return on Investment).
Financial closure: Of course, not every developer in the Indian property market can afford the luxury of build & sale model. But then moving forward, launching projects with little internal accruals and banking on the buyers’ receivables would be recipe of disaster. Financial closure of the project is today the key to stay afloat in the business of real estate.
Urban sprawling vis-à-vis city center concentration: For long the top 10 cities of India have been suffering with the soda bottle syndrome with heavy concentration in and around the CBDs (Central Business District). Even though, it will take time before they move to periphery locations on an urban sprawling model, time has come for the market to evaluate wherever the infrastructure allows to opt for sprawling than city center concentration.
Redesign the project portfolio: Whether or not the Work From Home is a long-term reality the developers need to think of design innovations. It is not just with the additional study/office room in the apartments but also from holistic living and integrating the concept of wellness.
Affordable housing to be understood: Affordable housing is not a monolithic structure. Since demands and aspirations across the housing segment remains the same, ranging from amenities to new innovations and Work From Home & Wellness Realities, the geographical boundaries need to shift. Instead of reeling through consumer backlash with affordable homes near city centers, the better idea is to offer better product & amenities at periphery locations where pressure on margin is compensated with lower land values.
Industry Speak
JC Sharma, VC and MD of Sobha Limited admits that there are many learning. With the thought that we are doing good in the market, the Covid experience forced us to learn afresh. We had been doing the backward integration and now the focus on self-reliant helped us with lots of cash flows and stability for the company because the capex requirement is minimum.
“We paid full basic wages to our skilled workers during the lockdown. We also provided food to thousands of workers who had come to us through the contractors. We could also bring down certain cost which were fixed in nature. So, understanding the cost overhead that we took for granted had to be worked upon yet again. So, during the lockdown we could manage to work on the fixed cost with our internal cash flows. It shows the flexibility and the ability to manage the costs which otherwise was sacrosanct that you can’t touch. So, there has been greater understanding about the business that we are managing in the pre Covid period,” says Sharma.
Amit Modi, Director of ABA Corp admits that the biggest learning for him has been to cut down the business risk and have better financial planning. Focus on wellness, customizing projects with work from home in mind is the way forward for him.
Deepak Goradia, Vice Chairman and Managing Director Dosti Realty also believes that the crisis has managed to reaffirm one of the most significant basic principles, ‘Expect the unexpected’. According to him, the new world will come up with new demands consequent from the experiences gained during these challenging times. The gated community culture is going to gain more importance and residents would now prefer to live in areas that would give rise to increased growth in the residential segment.
“People will like to reside in developments which will offer them the best of amenities and also basic facilities that are easily available nearby. Systematized retail is likely to flourish with people trusting stores in the vicinity for their necessities. Making use of technological advancements like virtual site visits will enable the aspirant buyers to do the site visits virtually, and thus evading the need for them to visit the property site. This is likely to be especially popular among NRI Buyers.”
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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