Realty likely to miss out Diwali dazzle despite marketing fireworks
Reeling under a slump in sales and sitting on huge unsold inventories, real estate developers are using every possible marketing trick in their arsenal to excite indifferent buyers to come out and invest during this festive season.
Some desperate developers have reduced the booking amount to as low as Rs 20,000 and upfront payment as low as 2-5 percent of property value with no EMI till possession. Besides standard freebies like cars, white goods, modular kitchens, gold coins, foreign holidays and car parking, there are perks that include waiver of stamp duty and registration charges and lucky draw. Developers like Tata Housing are making mega offer of a complimentary extra room on buying a 2-room flat. And there is this innovative offer By a Mumbai developer of a Rs 6 lakh home in a suburb with job offer for a female member of the family. The broad real estate marketing themes of this festive season include online home selling, ready-to-move-in homes, discounted property, attractive payment plans, interest waiver, assured returns and no new launches.
Online Home Selling: What started as an innovative concept in 2013, with Tata Housing selling their homes in Google’s Great Online Shopping Festival, has now caught up with other developers. Realising the huge potential of online marketing in reaching out to prospective buyers in a faster and cost-effective manner, developers have not just partnered with property portals but also with leading e-commerce portals to launch Diwali home sale festivals. So much so that even the apex body of developers – MCHI- CREDAI – has partnered with property portal Housing.com for a 25-day-long Virtual Property Expo, showcasing 300 projects across India. First time, the all-new concept of ‘Social Sell’ is being tried out as Tata Housing has tied up with Facebook to sell leisure homes in Goa.
Ready-to-move homes: With home buyers fighting shy of investing in under-construction property due to large-scale delivery defaults, a number of real estate developers and brokers with large unsold inventory have been focusing on marketing ready-to-move-in homes. Buyers are being lured to invest in such properties as there is no fear of delivery delays.
Discounted properties: With slow growth in salaries in comparison to rise in property prices, coupled with a poor job market, leading to low affordability, developers have realized that key to home sales lies in making property affordable. But breaking the price barrier has not been easy for most developers in view of low margins and as such price discounts are far and few and not substantial to woo buyers. But some developers have hit upon the idea of reducing unit sizes with varied sizes to make homes affordable. In one of the worst hit markets of Gurgaon, developers are offering independent floors for less than Rs.2,500 per sq ft. Several developers availing Haryana government’s ‘Affordable Housing Policy’, are able to offer 1BHK/2BHK homes at Sohna and Gurgaon, for as low as Rs.13 lakh and Rs.18 lakh respectively. At the pan-India level, developers are also taking to innovative marketing concepts of ‘All Inclusive pricing’ and ‘One Nation. One Price’ to woo buyers.
Attractive payment plans: To lessen the impact of high EMIs, developers have been offering attractive payment plans to push sales. But since these subvention plans could not create much impact,some developers have gone to the extent of offering a 2:98 plan (just two percent down payment with no EMI till possession). Some developers are further sweetening the subvention deals by offering 10 percent discount and lease guarantee. One has come up with free club membership, zero PLC charges free car parking while another is offering an assured exit plan @ 15 percent per annum.
Interest waiver: Since most developers are not providing relief on property prices, some of them have taken to home loan waiver to lessen the burden of home buyers.They have tied up with lenders to offer subsidised home loans one as low as five percent p.a against the average existing rate of about 9.5 percent p.a.
Assured returns: Fund-starved real estate developers are luring property buyers with assured returns (9-14 percent) as this is the easiest and cheapest source of fund raising for them without any collateral. However, for property developers, there is the risk about the safety of their investment as they have to pay full or a substantial part of property value up-front and they can’t approach any regulator in case of defaults by the developers.
No new launches: It has always been a practice with property developers to launch new projects at attractive prices during festive season to increase home sales. But this time, the cash- strapped developers, as part of their marketing strategy, are avoiding this as home buyers are refraining from investing in under-construction projects to safeguard their investments in view of massive delivery defaults by developers.
All these high-pitched marketing initiatives are unlikely to light up Diwali this year as demand is not translating into sales due to unaffordable property prices, high interest rates, economic instability amidst high inflation,job insecurity, stagnant salaries and, above all, buyers’ fear about safety of their investment in view of long delays in the delivery of property.