Consolidation Across Real-estate Verticals is Happening
Sunil Varrier, Chief Sales and Marketing Officer, ShapoorjiPallonji Real Estate while talking to Sapna Srivastava emphasized that amongst all the other transformations taking place in the real estate, technology is the biggest disruptor for sales & marketing of properties.
Do Indian real estate buyers still have a traditional mindset?
In Indian context, I would say real estate is one of the top three milestones of people’s lifetime. India is a young country where average home buyer age is almost 29 years. They are tech-savvy and favor online shopping but when it comes to real estate even though they research online they still go back to their elders for guidance or reference. This is because, home buying is still an emotional rather than a financial decision for Indians and it involves the entire family. Especially in high end real estate purchase, parents who have experienced the brand recommend the same to their children.
How are you reconciling your sales strategies?
ShapoorjiPallonji Real Estate has got three different categories of products – affordable housing, mid segment and the luxury residential. For the first category, digital marketing is the driver as the target audience is mainly the first time buyers in the bracket of 30-35 lakhs budget size. They do most of the research online before identifying the property.
The mid segment in Mumbai comprises buyers with 50 lakhs to One crore budget. They are also tech savvy and our digital initiatives are designed keeping in mind these clients. The traditional ATL (above the line) activities still is a requirement. One can’t launch a product unless someone sees an advertisement about it. So, we do paper advertisements, hoarding advertisements coinciding with the project launch and the digital campaign continues the journey for the rest of the year. Eventually over the next 2-3 years you will find digital actually overtaking the conventional.
On the other hand, the marketing for a luxury product above 5-10 crore, is not in your face because the customer is a more mature. He might already be owning a real estate, looking for an up-gradation of his lifestyle or adding another real estate in his/her portfolio to his real estate.
These customers want their conversations to be very discreet. By-invite is just one way of marketing to make sure they feel exclusive. Also, being a luxury offering, there is a limited inventory and word of mouth publicity is more crucial. If you have delivered the product and your customer is happy then a large percentage of the future sales would be coming from these happy customers. People are not really worried about appreciation because if you choose a product and a right brand in the right location the appreciation would come but people are more worried about wealth erosion that they don’t want their wealth to be eroded by investing in a wrong property.
In a typical marketing campaign around 30-35% is assigned towards digital. The rest goes towards improving customer experience centers and show flats that are the touch pointsfor the customer when he comes to the site.
For developers where do the revenues lie, Budget or Luxury segment?
If I have to cater to the younger generations then affordability becomes a big point. From that perspective if you look at the maximum number of homes which have been sold are in the 35 lakhs category. So yes affordable housing is going to be the focus area in the coming years. But, this sector is totally unorganized right now. Very few organized players have taken an active role in affordable housing as the land cost is quite high and continues to be high in most cities.
Infrastructure and connectivity are the major components that can make affordable housing a success. Moreover, developer needs faster clearances because in affordable housing if the project gets delayed due to compliance issues or lack of approval then the profit margin goes away because you play in a very limited margin there. So speed of approval, the cost of land and more importantly the availability of infrastructure in those locations where the affordable housing is being perceived as a preferred destination are determining factors.
ShapporjiPallonjiJoyville projects in Kolkata,and Virarnear Mumbai and now in Hinjewadi Pune are affordable housing projects. It is a joint initiative between ShapoorjiPallonji,International Finance Corporation and Asian Development Bank.
What are the future targets of the company?
Our construction business is still the largest business at the group entity level, design and build. This gives us a lot of understanding about how the market works, how the regulatory function works, what the engineering talent available is and what the labor pool available in a particular market is. So that learning obviously helps us to evaluate any business proposition which comes forward.
Presently, 85% of the real estate getting built across the country is residential. Balance 15% goes to office space, retail and hospitality. So if you ask, yes currently the focus is on residential but slowly we will be going into non-residential portfolios as well. I think from an overall perspective we would like to see in the next 3-5 years around 70 million square feet across multiple cities in the country. That will give us a substantial presence importantly knowledge from customers of various markets
Geographically, our projects are present in Mumbai, Pune, Kolkata, Bangalore and each has diverse markets. We are also exploring Delhi and NCR because that is a market we would like to be in.That’s where the strengths come from being a diversified group under ShahpoorjiPallonjiand having the ability to go and do projects in locations which may not be necessarily be our familiar territory.