Tag Archives: Jackbastian K Nazareth

South Indian market in the election year-II

Posted on by Track2Realty

By: Jackbastian K. Nazareth, Group CEO, Puravankara Projects

Jackbastian K Nazareth, Purvankara, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyTrack2Realty Exclusive: The Tamil Nadu Government must be commended for its focus on infrastructure development; it is a key determinant of the state’s economic progress. So long as the commitment to infrastructure remains, the prognosis for real estate will be good.

Over the last few years, the residential market in Hyderabad has not sustained the growth trajectory of 2008, hampered as it was by the economic recession and certain government provisions, apart from political uncertainty in the region.

But the property market in the city has been rebounding, in the lead up to the Telangana decision. The fact that residential property in Hyderabad is relatively undervalued presents vast opportunity for end-users and investors alike.  Moreover the city is a key IT destination and offers great infrastructure, which augurs well for its prospects.

To put the Telangana issue in perspective, it must be recognized that businesses were driven to Hyderabad not because it was in AP, but because of factors such as infrastructure and industry-friendly government.  If the new government maintains law and order and assures industries that existing policies would remain, the city will continue to attract capital.            In the absence of political stability and such assurances, investors may become skittish and look for alternatives.

Attractive real estate prospects are not the sole bastion of the southern metros; tier II towns too hold considerable promise. Coimbatore, for example, is set to scale new heights as a preferred destination for businesses.  Relocation of multinationals is driving growth in retail, hospitality, entertainment and residential sectors in the city. Over the next 4-5 years, Coimbatore is projected to add nearly one lakh jobs, which will fuel the per capita income growth of the city.

Kochi too is benefiting from a surfeit on NRI investment on account of dollar appreciation. The upcoming Metro should enhance mobility in the city and expand its geographic boundaries. Improved connectivity will inspire developers to launch new projects in surrounding areas.

In retrospect, an underlying thread of real-estate market attractiveness in the South is accompanying social and infrastructure development. It is imperative that the elected government continues the good work of its predecessor and stays the course of planned development in these states. Political stability, progressive reforms and a conducive business environment will undoubtedly drive real estate and economic growth as a whole.  

Rationality dictates that a government propelled into office with the mandate of the electoral public would uphold the interests of the electorate as its foremost priority.   It goes without saying, that the macro-economic environment has rendered the economy top-of-mind for the public at large, irrespective of political affiliation. As such, restoring consumer and investor confidence, while fortifying the overarching India growth story, is incumbent upon the elected government.  

South Indian market in the election year-I

Posted on by Track2Realty

By: Jackbastian K. Nazareth, Group CEO, Puravankara Projects

Jackbastian K Nazareth, Purvankara, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyTrack2Realty Exclusive: The current economic environment is indeed one of the most challenging in recent history.  The headwinds of inflation, interest rates, construction costs, and subdued consumer demand have constrained real-estate growth in many micro-markets across the country. Economic volatility aside, I am optimistic about long-term real-estate sector prospects. My optimism is founded in irrefutable realities Рthe rapid urbanization of India, burgeoning segment of upwardly mobile Indians, limited availability of urban residential housing and unabated aspiration of home ownership.

A home ranks at the top of the hierarchy of purchase and remains an emblem of vocational success, for the majority of Indians. Ironically, home ownership is seen as a bankable security, in the face of economic uncertainty. 

While domestic housing demand remains largely stable, NRI demand is on the rise because of rupee-dollar fluctuations. The depreciating rupee has rendered properties in India almost 20 to 30 per cent cheaper for NRIs. Consequently, the value of NRI remittances has risen over the last 5 years, amounting to nearly $70 billion in 2012, 2 to 4 per cent of which was apportioned to real-estate purchase. The NRI market contributes around 35 to 40 per cent of the total real-estate investment in India; I expect that trend to continue in the coming years.

With that said, elections are a time of ambiguity and trepidation across many sectors. But housing is unique in that it is a long-term purchase, therefore consumer decision making is unlikely to be overly influenced by the near-term political scenario. As such, I envision stable growth of residential real-estate, irrespective of the election year.

On the other hand, the impending elections could have a bearing on business-planning and decision making of developers. Political stability and proactive reforms are pivotal to real-estate sector growth. Important regulations such as the Land Acquisition and Real-Estate Regulatory Bills which are yet to come into effect and could be impacted by the elections.

Retail and commercial real-estate sectors may also become circumspect, in view of the political climate.  As an illustrative example, the government has liberalized FDI norms, but foreign retailers have deferred their India plans due to looming elections, among other considerations.

But residential real-estate, which accounts for over 80 per cent of sector revenues, should be relatively indemnified from the unfolding political dynamic.

The southern Indian states, specifically Andhra Pradesh, Tamil Nadu and Karnataka, have been the major drivers of economic growth over the last decade. These three states collectively account for about 22 per cent of India’s GDP.

Despite the economic downturn, residential real-estate in the south has been relatively stable. The market is predominantly end-use driven, mitigating the incidence of re-sale and enabling steady price appreciation. Furthermore, the south is an affordability-driven market, developers having adopted cautious pricing strategies following the economic slowdown of 2008.  Over 80 per cent of new launches in the last two years were priced below Rs. 4000/sqft.   Prudent pricing and streamlined supply have led to a steady rise in absorption rates. As a result, the south has been relatively resilient compared to markets such as Mumbai and Delhi-NCR.

The Bangalore market has resisted the impact of the global turmoil and remains stable, with ticket sizes ranging from Rs 50 lakh to 2 crore. Evidently, demand for mid-end homes is the popular trend, with a slew of launches in the Rs. 25-50 lakh price band.

On a parallel path, the upper mid-end and premium housing markets in the city have gained momentum. Several new project launches are priced upwards of Rs. 7.5 crore, fuelled by demand from first generation entrepreneurs, IT/ITeS sector honchos and NRIs. Higher ticket prices, despite macro-economic sluggishness, bear testament to the vitality of the Bangalore market.

Similarly, the Chennai market is dominated by end customers rather than speculative investors. Therefore, residential prices in the city have kept pace with sales. Significantly, the city has witnessed an upsurge in infrastructure development, which bodes well for residential and commercial real-estate.

Branding strategy for a regional player with pan-India ambitions

Posted on by Track2Realty

By: Jackbastian K. Nazareth, Group CEO, Puravankara Projects

Jackbastian K Nazareth, Purvankara, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyTrack2Realty Exclusive: The real-estate category has taken the product-led path to brand building. Products occupy centre-stage in advertising campaigns; properties serve as brand emblems. Developers build properties, showcase them through advertisements, customers experience drives word-of-mouth, which in turn generates additional customers and on it goes. Through this iterative process, a brand is built. In other words, the brand identity is inherent in the developer’s real-estate footprint.

This path has served the category well thus far. But now, the landscape is changing‚Äď the market is increasingly getting crowded; new players are entering the fray.¬†¬† With liberalization of FDI norms, foreign entities too will stake out market share. Developers are no longer content to operate as regional players and nurture pan India ambitions. Against this milieu, the conventional brand building path may not suffice. The old ways of brand building may not serve those who aspire to scale-up quickly and expand into new geographies.¬†

Trust is the biggest impediments to market entry, particularly for a category with a legacy of perception issues. Delays in project approvals and clearances exacerbate negative perceptions. Variances and vagaries of regulation across markets compound the challenge for a new entrant. Whereas the South is relatively conservative and developers await clearances prior to project launch, many in the North commence pre-launch sales without approvals in place.  In these cases, the ability to generate sales hinges on the developer’s reputation and brand equity. Relatively unknown entities would be at a distinct disadvantage. Mitigating the brunt of delays while protecting brand reputation is the singular challenge for real-estate developers seeking pan-India expansion. The ability to absorb the impact of delays requires financial fortitude.

Brand-building is imperative in light of our category nuances, because at its core, a brand denotes quality and trust. Buying a home is a complex and highly involved process; consumers are willing to pay a premium for trusted, quality brands. As such, consistent, concerted brand-building activities will enable developers to command a market premium, overtime. One of the best arguments for brand-building is that it accelerates business growth ‚Äď when you are well-known, when you symbolize quality, when you are trusted, you enable sales.¬†

Competition has thrown up a plethora of product offerings, so that the consumer is riddled with choice.  Faced with a sea of indistinct choices, how does the consumer distinguish one product from the other?  Evidently, it is necessary to establish a differentiated brand positioning, and communicate it with resonance to the end-user.

It may be time for the category to move beyond logos, symbols and other such visual markers, and embody differentiation in all customer touch-points. I envision a significant opportunity for category transformation through brand differentiation.  

It goes without saying, that brand promise must be embodied in the service delivery. Otherwise, it will ring hollow and brand equity will erode. Simply put, we must deliver what we promise and must not promise what we cannot deliver. By implication, the brand-building path must take cognizance of delivery constraints tied to the extraneous factors of clearances and approvals.  With that said, communicating to the customer through the project lifecycle, particularly in light of delays, is an important element in brand reputation management. 

Real-estate brands derive their equity from local connectedness. Credibility is a challenge for regional players in new markets. Showcasing accreditation to national bodies such as CREDAI is one way to gain credibility, providing the regional player is able to fulfil the pre-requisites of accreditation. Joint development with locally entrenched entities is an ingenious means to local connectedness-one that circumvents the bureaucratic challenges associated with market expansion.  

Local affiliations, sponsorships, co-branded associations would drive awareness and affinity for a relatively unknown brand. Celebrity endorsement is yet another clutter-breaking route to visibility and credibility.¬† The caveat with this tactic is that it generates eyeballs, but runs the risk that ‚Äėcelebrity-power‚Äô could overshadow brand-saliency.

Perhaps socially responsible community engagement initiatives are a more enduring way to establish local affinity.  Maintenance of local roads, parks and fire-stations, sponsorship of local arts, sports and environmental programs are evocative and effective conduits to brand-building.

The digital media is a boon for the realty sector in that it transcends geography. It opens up cost-effective customer acquisition avenues for regional players. Public relations activities also play a pivotal role in broadening the reach and reputation of regional players, through stories in the national media.  

It would be prudent for developers to sow the seeds of brand-building in new markets, ahead of product launches. Regional players aspiring to territorial enlargement ought to leverage PR, co-branding and sponsorship opportunities, so that the brand is already familiar at the time of product launch.  On a parallel path, shoring up word-of-mouth reputation in existing markets, is bound to permeate by osmosis into new markets.

While market differences may necessitate varied strategies, it is imperative that there is underlying synergy aligned to the brand and company vision. It must be underscored that brand-building is not a one-off activity‚Äďit is an ongoing, evolving process.¬† It requires a long-term commitment and patience.

In a final word, as ‚Äúlocation, location, location‚ÄĚ is to real-estate, ‚Äúconsistency, consistency, consistency‚ÄĚ is to effective branding.

Opportunity to introspect marketing formats in slowdown-III

Posted on by Track2Realty

By: Jackbastian K. Nazareth, Group CEO, Puravankara Projects

Jackbastian K Nazareth, Purvankara, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyTrack2Realty Exclusive: In the pre-2008 era, print spends were high. Since then the global economic recession and resultant decline in sales have compelled marketers to explore alternative channels. Subsequently, internet marketing which up till then meant having a website, morphed into a lead-generation and branding tool.

Jargon such as search-engine-optimization (SEO) and search-engine-marketing (SEM), entered the developer’s lexicon. Google emerged as the mantra for web success. Real-estate portals became pivotal to the marketing plan.

Targeted marketing tools such as direct mailers transitioned into the online world as electronic direct mailers, and were routinely used to update prospective buyers about upcoming projects and launches.

The effectiveness of online marketing has led to several advances in the space.  The medium has undergone a metamorphosis from web presence to real-time digital marketing.

Social media is emerging as a powerful platform, not only to showcase products but also to create engaged customer communities and build brand affinity.

Digital marketing which is proving to be a cost-effective tool to reach buyers across the world in real-time, has indelibly carved its place in the marketing mix. Budgets hither to allocated to traditional mediums, such as print and radio, are being redirected to online activity.

In addition to creative marketing, developers have embarked upon product innovation with great gusto. Theme-based projects, environment-friendly designs, intelligent living spaces equipped with cutting-edge gadgets and gizmos, world-class amenities and recreational features have become the norm, particularly in the luxury segment.

Moreover, developers are leveraging technology to incorporate best-in-class construction processes and practices.

To cater to a discerning clientele, some developers have introduced the concept of ‚Äėexperiential marketing‚Äô, effectively giving customers the opportunity to ‚Äėtrial‚Äô apartments, before purchase. Branded residences, conceived in partnership with international luxury hospitality brands, and even celebrities, are rapidly gaining popularity.

Boutique residential projects and customized homes are making their way into the market, as developers are moving away from the assembly-line construction model. As customers become more discriminating and the market becomes more competitive, we should expect myriad innovations and out-of-the-box ideas in the years ahead.

Developers are extending their brand equity across geographies, markets and ancillary verticals. They are pursuing diverse customer segments in a bid for market share. Premium builders are entering the value segment and vice-versa. Metro-based developers are taking their products to tier I and II towns.

In the final analysis it should be acknowledged that marketing innovations, no matter how effective they are, have limited shelf-life. Marketing can never compensate for a poor quality product, particularly in a word-of-mouth reliant business. Ultimately, a developer’s reputation hinges on Quality. That, unequivocally, is the abiding legacy.

Indeed, marketing innovations are a necessary part of doing business, but an ongoing commitment to quality is the precept for long-term sustainability.

Build a great product, deliver a stellar customer experience, and marketing will be redundant. The product will sell itself, customer affinity will be established, and a great brand built by default. An oversimplification perhaps, but therein lies the kernel to enduring success.

Opportunity to introspect marketing formats in slowdown-II

Posted on by Track2Realty

By: Jackbastian K. Nazareth, Group CEO, Puravankara Projects

Jackbastian K Nazareth, Purvankara, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyTrack2Realty Exclusive: Subvention schemes have gained popularity with developers in the North India, particularly after the economic slowdown. The scheme conceived by developers in conjunction with banks, allows the home loan applicant to defer EMIs and interest payments, on a property under construction, for the first two years of the loan period.

All expenses are borne by the concerned builder.  In effect, the buyer enjoys an interest-free period for 24 months. Of late, banks have become more stringent, and are extending this form of financing only to reputed builders.

Several other financial schemes and sops have been rolled-out in a bid to woo customers. Assured return scheme (ARS) is one such offering. Consumers, having borne the brunt of stock-market volatilities, are increasingly seeking low-risk investment options.

As a result, ARS has made its way into the real-estate sector. Initially, it was offered by developers of commercial properties, but now the residential segment too has joined the fray.

Under the ARS construct, an investor enters into an agreement with a developer, which assures monthly returns until possession. This is a win-win proposition for both parties: the buyer benefits from the guaranteed return; the developer taps into an alternate source of credit, at a lower cost of capital than bank rates.

Another variant of this scheme, is allowing buyers to rent the apartment, for a stipulated monthly rent including deposit, for a three-year lock-in period, with the option to purchase at a later date. Should the buyer exercise the option, the rent is treated as down payment.

Collecting a down payment on under-construction flats in the builder’s on-going projects, with the pledge to repay the greater of current and future value when the market corrects, is one more ingenious proposition. So is partial payment of interest rates on the buyer’s home loan for a year, subject to a three year lock-in period.

Referrals, as illustrated earlier, are an effective marketing lever. As such, they are indispensible to the developer’s marketing arsenal.  The strategy is to draw buyers into the selling process via rewards/incentives. Obviously, a prolific referral program depends on a positive experience with the developer through the sales process and beyond. Therefore, investing in training and CRM is critical.

Whereas the North India has traditionally relied on broker databases and referral programs, in the South, marketing has largely been print-driven.  Print advertising has been the cornerstone of marketing campaigns, with radio serving as the reinforcement medium.

…to be continued

Opportunity to introspect marketing formats in slowdown-I

Posted on by Track2Realty

By: Jackbastian K. Nazareth, Group CEO, Puravankara Projects

Jackbastian K Nazareth, Purvankara, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyTrack2Realty Exclusive: The current environment necessitates greater discipline in marketing, steered by a well-conceived strategy. Absorption levels in many cities, both in the residential and commercial segments would indicate that developers are carrying surplus inventory on their balance-sheets.

While this trend is attributed to a lopsided demand-supply scenario, ad hoc marketing may have exacerbated it.  Indeed, bridging the gap between demand and supply is a marketing deliverable.

For many developers, marketing begins at project launch. There is limited investment in consumer, competitor and market research during the pre-launch phase. Application of market intelligence in product development, pricing, positioning and promotion strategy formulation could mitigate sales-related trepidations, during launch and beyond.

Furthermore, few developers have embraced the notion of brand-building.  Consequently, the market is inundated with a barrage of largely undifferentiated products that often confound customers. A commitment to brand-building and shoring up the customer experience would stand developers in good stead, through economic downturns.

The brand-building path should take cognizance of the constraints of the real-estate industry: historically, the category has been mired with perception issues predominantly because of project delays, on account of factors beyond the developer’s control, such as approval and clearance bottle-necks.

Therefore, it is imperative that the brand-promise be mapped to the delivery experience.  Simply put, the brand must deliver what it promises and promise only what it can deliver.

While project delays are beyond the developer’s control, managing the customer experience is within the developer’s purview. Customer communication through delays and downturns is crucial in cementing a longer-term relationship.

By implication, a robust customer -relationship management (CRM) program should be dovetailed with marketing activity. CRM is especially important during market downturns, because the developer is ever more reliant on customer referrals for new business.

Partnering with the broker community is another tried-and-tested marketing strategy. Leveraging broker networks and channel partners, rather than relying solely on the in-house sales team, allows builders to widen their marketing reach. This strategy has the added advantage of affording savings in advertising costs.

Many developers have chosen to hive-off units to corporate entities at bulk rates, in a ‚Äėpile-it-high and sell-it-cheap‚Äô approach. Priced approximately 25-30 per cent below market rates, this proposition is attractive to corporations.

…to be continued

Holistic growth necessary in realty

Posted on by Track2Realty

By: Jackbastian K. Nazareth, CEO Puravankara Projects

Jackbastian K Nazareth, Purvankara, India real estate news, Indian realty news, Property new, Home, Policy Advocacy, Activism, Mall, Retail, Office space, SEZ, IT/ITeS, Residential, Commercial, Hospitality, Project, Location, Regulation, FDI, Taxation, Investment, Banking, Property Management, Ravi Sinha, Track2Media, Track2RealtyTrack2Realty: The past decade has witnessed a period of economic transformation of the Indian real estate industry. After the global financial crisis, the pace at which the industry has bounced back is magnificent. Our real estate ecosystem typically comprises of architects, developers, Government & regulatory authorities, financial institutions, private equity players, other funding agencies, brokers, property consultants and of course most importantly the buyers. For such an ecosystem to remain successful over a long period, it is imperative that all the key industry participants are on a level playing ground despite the changing dynamics of the industry.

The dynamics of the real estate industry are governed by some extrinsic and some intrinsic factors. The extrinsic factors would be land, investment, innovation & technology, regulation and infrastructure, whereas the intrinsic factors would be transparency, affordability, sustainability, image and professionalism.

Over a period of time transparency of India’s real estate markets are improving and this is largely due to the data availability on market fundamentals, the regulatory and legal environment and governance of listed entities. The emergence of the Information Technology industry has also contributed significantly to the growth of the real estate industry in India, primarily South India.

Professional management of real estate companies encompass a gamut of services which includes positioning, zoning, promotions, marketing, facility management and finance management. In our business of developing and constructing real estate space, a developer’s constant endeavour should be to maximize value to all our key stakeholders for every living space delivered.

Towards this goal, a unique multifaceted delivery model should be followed that focuses on different aspects of execution that doggedly puts defined principles into practice and helps the organization achieve the best results in an integrated manner. The outcome of this unique concentrated effort is a happy customer, a satisfied employee, an assured long term investor and a hopeful community ‚Äď all sharing a common feeling of pride of association with the organization.

The sector has been developing the many strategies for profit improvement; creating new products & services; marketing & sales strategies and demonstrating strengths in technical expertise. However, it is equally important to have a value creation/ enhancement strategy. We have always believed in focusing on value creation, particularly design and innovation, figuring out which proposed solution needs to be nurtured in an organized manner, and thereby reinforcing the link between the performance of our organization and its valuation in the markets.

While the premium housing segment has built and maintained the momentum for Indian real estate sector in the decade gone by, it is the rise of lower middle class in metros as well as tier I & II cities that would drive its growth in current decade. Those who have spotted the trend will definitely have the first-movers advantage.

Moreover, experience suggests that developers with a strict control on their existing inventory and careful allocation to priority projects have not only managed to tide over the challenging situation of recession but also minimize the impact on their delivery schedules. To achieve the objective of holistic development, I feel it is better to be conservative than throwing caution to the wind. Of course, there is the challenge to take the sector to the next level of evolution and for that we have to focus on striving to push the frontiers and set the benchmark for the industry.