India Real Estate

The potential home buyers’ concern about market stability is quite apparent as sales dip as high as 85 per cent in some markets this year, say experienced developers. To drive sales marketing companies are coming up with offers that are out-of-the-box and, sometimes, confusing too! It is common to spot ads and hoardings offering freebies such as latest luxury cars, gift vouchers for gold and housing plots on purchase of apartments.

But would these really result in growing the sales for these companies?

“Such marketing gimmicks work when the market is up. Not when it is down.” In these difficult financial times, buyers typically view such offers as a form of discount lacking transparency, says Mr Harish Bijoor, Brand-strategy specialist and CEO, Harish Bijoor Consults Inc. Customers are likely to confront real-estate marketers and asking them to reduce the per sq.ft price instead of these sops that promise the sky, he adds.
Budget matters

According to Mr Koshy Varghese, Managing Director, Value Designbuild, a Bangalore-based real-estate company, if these offers “un-burden the consumer in money terms, then those would be of interest to them.” But beyond that, it doesn’t make too much of an impact. In fact, it confuses people more, he says.

A new marketing initiative from Golden Gate Properties Ltd and development manager Asipac Projects saw six units being sold in three-and-a-half days. It is significant considering that only 8-10 units a month were sold in the last six months. The aim was to assist home-buyers in purchasing the condominiums at Golden Grand, the project in North-West Bangalore exclusively marketed by Asipac. Under the scheme, home-buyers need to pay only 75 per cent of the property value to take possession of a unit costing Rs 60 lakh to about Rs 1 crore . The balance is paid over five years, with no interest charged. “They only have to pay a rent of Re 1 per sq.ft for the unpaid area of their home,” says Parag Sen, Vice-President — Sales and Marketing, Golden Gate Properties Ltd.

“Even though we sold 400 of the 790 condominiums quite fast, sales have slowed down in the past six months due to general market conditions. We spoke with 81 potential buyers who had not bought a home with us and 64 of them told us that they did not buy because the price was above their budget," says Mr Amit Bagaria, Chairman, Asipac Projects.

When asked if such a scheme would interest them, most of them were positive. With this initiative, “we are only deferring our profits. In fact, the customer makes his profit before we make ours,” he says .

Besides, home-buyers are also offered a ‘surety’ that the prices would not go down in the future and “in the unlikely event that there is a drop, the developer would compensate the buyer with 1.25 times the difference in the price,” says Mr Bagaria.
Upfront payment

Mr Varghese points to a scheme that Value Designbuild offered recently for a limited period with HDFC, which resulted in 10-12 per cent sale of the 66 units available. The scheme, available only on upfront payment, offered 1 per cent interest for the entire loan tenure being waived off.

For example, on a Rs 40-lakh loan spread over 20 years, the 1 per cent interest that the company would absorb from the customer would work out to about Rs 250 per sq.ft, “which is about Rs 3.5 lakh,” says Varghese. “When the bank disburses the amount to us, we would get Rs 36.5 lakh only, as the 1 per cent interest for the whole tenure would be deducted up front.” This scheme was to woo genuine buyers, for whom “the main problem was high interest rates,” he says.
Exchange offer

Similarly, Bangalore-based Alliance Group saw over 20 deals finalised from about 700 enquiries for its ‘exchange offer’ — old flats for new villas — for 100 villas, priced between Rs 1.25 crore and Rs 7.3 crore, in its El Dorado Park integrated township project in Bangalore. “In fact, the response is much better than what we have projected,” says Mr Manoj Namburu, Chairman and Managing Director, Alliance Group.

The offer, he says, is “for those who want to upgrade their living conditions without having to go through the hassle of selling their existing owned dwelling.”

The best marketing tool to get buyers back into the market, according to Mr Bijoor, is transparency in operations. In times such as these, real-estate as a category must use it . to secure the consumer’s trust, he says.