By: Vinay Phadnis, CMD, Phadnis Properties
Track2Realty Exclusive: The demand for real estate has been consistent despite the impending slowdown. Every geographical regions shows its own trend because of different contributing factor, and in the developing areas demand has continued to show an upward trend considering the fact that these are affordable by the middle income groups.
While the property prices have remained pretty much constant or shown slight increase, real estate companies are affected because the operating costs have increased, regulatory compliances have to be met, interest rates are high and land prices are very high. And since real estate is a booming venture every person or vendor wants to encash which affects the profit margins considerably. It is very important that the costs are monitored at every level to reduce the operating and administrative cost.
There is a massive surge in real estate advertising and promotions which is an indication that real estate companies are making most of the current economic situation to attract buyers to purchase property in a slow market. Simultaneously, through advertising the developers are targeting and reaching out to the larger segment countering competition and establishing brand positioning, while emphasizing on the brand image to build trust and credibility of the customers.
Real estate companies keep coming up with festive offers which are often criticized by industry experts that it does not woo the buyers. However, in terms of closure of the deal if the buyer has shortlisted your project it does play a vital element and influence decision making.
The deliverables for a real estate company remains constant despite any economic condition. Projects mostly are launched phase wise making it easier for the developer to meet expenses and buyers expectations in terms of timely possession, construction quality, setting new benchmarks, delivery or regulatory. Phase wise project execution limits the contractual liabilities due to the limited number of inventory.
It is important to bring about change; adapt to the situation to initiate change and set new benchmarks. As a builder we need to ensure that we keep our values intact and ensure we do not divert focus from our vision, as our biggest challenge is to keep the trust of our customers intact, and meet the expectations with good delivery. The demand patterns change, we need to ensure our company and our construction values are adapted to the changing patterns.
Being futuristic in approach, innovation and adapting technology will always keep a developer ahead of competition, be it using the latest technology in construction to even smaller aspects of incorporating the latest fixtures or finishes. The key deliverable remains the quality of the end product, the right product offering a great value proposition.
From land acquisitions, to necessary clearances, legal compliances, launching the product, managing work force, etc gets taxing and hence various infrastructure companies and real estate developers are outsourcing the projects. From managing the overall construction process and all associated vendors/suppliers/workforce involved in the project, right from the inception to the completion, the handover to an outsourced firm allows the company to focus on the operations by taking over the responsibilities by managing all the responsibilities of the construction requirements.
By taking on the role of an integral support system the need of internal commitment and micromanagement is reduced allowing the company to focus on other important aspects like design, innovation, technology, delivering quality product to the end user and setting new benchmarks. Reducing the managementâ€™s responsibilities by eliminating the cumbersome process of day-to-day operation allows them to concentrate on strategic decision makings, strategic thinking, managing business associations, customer experience, executing best practices.
Outsourcing a project has innumerable value add-ons. Through a constant management fees a builder can get access to experienced professionals having specialized skills, consultation, and increase business network gaining a competitive edge.Â Minimized operational costs, overheads, capital expenditures, and optimum utilization by a specialized team will lead to a higher profit margin.