Bottom Line: It is time to debate whether the homegrown developers with real estate as core business are better brand performers or corporate conglomerates have outperformed them.
In a business that lacked the critical element of trust and transparency, forget brand equity, the entry of corporate conglomerates was widely perceived to be change of business outlook for the sector. The collective consciousness accepted the promise that the corporate giants would change the brand perception of the sector in no time. This load of trust & opportunity goaded many corporate houses into the non-core expertise area of real estate.
The last decade has been witness to the entry and consolidation of a number of corporate conglomerates. The giants in their core areas of expertise ā Godrej, Tata, Mahindra, Piramal, Shriram, Hero Group, Ambuja, Zandu-Emaami, phoenix Mills, L&T, Shapoorjee Pallonji – have found the real estate as a happy hunting ground. The very fact that they are credible players in their areas of expertise and command corporate goodwill has earned them seal of trust in real estate.
A homebuyer who has been cheated, harassed and humiliated by the petty developers obviously finds the corporate giants more professional and trustworthy. A perception has hence gained ground in the last few years that these corporate groups are going to be the brand leaders in Indian real estate.
However, now that many of these corporate giants have spent years in the business of real estate and delivered some of the projects, it is pertinent to take stock of the performance of the brand. The debate needs to be shifted to not their brand legacy but brand performance. The larger issue today is whether these corporate groups have replicated the consumer satisfaction index of core areas of expertise into the real estate business.
Even more pertinent question is whether the corporate conglomerates have finally arrived as the brand leaders of the Indian real estate. And it is here that the issue of brand optimism versus the brand performance on the ground comes into play. The fact of the matter is that many of these corporate groups have either failed to live up to the consumer satisfaction or yet to deliver a sizeable inventory to be awarded the leadership mantle.
Godrej properties is the only exception that has continuously scaled up the brand leadership with both the delivery performance as well as the consumer satisfaction with the delivered projects. Tata Housing, on the contrary, fails to live up to the brand promise. The company is sitting over piles of consumer grievances and the chart is growing northward with their brand leadership chart moving to southward. If they still manage to be in the top leadership chart the credit, or the lack of it, goes to other bigger defaulters in the business. The brand study is, after all, relative study of the performance of the brands.
In the fifth edition of Track2Realty Brand X Report 2016-17 it has been noted that the performance of the homegrown developers with core expertise in the business of real estate has a slight edge over the corporate conglomerates who donāt have real estate as a core business. Most of these corporate giants are actually leveraging their brand goodwill and financial clout to the distressed small developers.
The Joint Development (JD) model or the Joint Venture (JV) partnership between corporate giants and small time builders may be a boon for the cash strapped developers and bring the hope back to the distressed buyers, the trend is not enough for these established business houses to be elevated as the top performers of Indian real estate.
Track2Realty study finds that going forward the leadership race is set among the homegrown Davids versus the corporate Goliaths. Who will win the brand leadership race? Well, for the corporate conglomerates there is a long way to go before they can claim to have earned the same kind of trust and goodwill of the buyers that they otherwise command. On the contrary, while the track record of real estate developers in general might be bad, a handful of them nevertheless command better brand equity than these corporate houses.
For this year brand leadership also, the race has been pretty close between the real estate focused group Sobha Limited and Godrej Properties. As a matter of fact, Godrej Properties has been way ahead of Sobha on some of the metrics, like financial performance among others, but in the end it is the vote of consumer confidence that has elevated Sobha Limited as the brand leader of the year. As a matter of fact, Sobha creates a history by becoming the first real estate developer to make a hat trick of brand leadership this time around.
It is not the brand leadership of Sobha alone that makes the turf more promising for the developers who have real estate as core business. The performance of Prestige Group or Purvankara this year is also testimony to the fact that the developers with core expertise in real estate have an edge over the corporates who are by and large yet to turn their promise into performance.
By: Ravi Sinha