Realtors’ New Business Strategy-Luxury Homes

As home sales continuously going downward, real estate developers are changing their strategy and showing more interest in luxury home segment by targeting non-resident Indians and high net worth individuals keen on buying that exclusive villa in India. Such business strategy also seems to be supported by market as demand in the luxury home segment is growing sharply. Sobha Developers, DLF, Kalpataru, Nitesh Estates, Unitech, Omaxe, Royal Palms, Lodha Developers and Marvell Realtors are developing projects in cities such as Mumbai, Delhi Pune, Goa, Bangalore and Kerala, with the price tags of average luxury homes varying between Rs 3 crore and Rs 50 crore.

Mr. Nitesh Shetty, chairman of Nitesh Estates, said, “Our customers typically belong to the top management in various corporate firms while some are overseas Indians”. Mr. Shetty has priced its luxury home products in Goa, Bangalore and Chennai in the range between Rs 5 crore and Rs 8 crore. Like Nitesh Estates, many real estate firms have started marketing their projects in the overseas market by organizing property exhibitions and floating sales offices in the countries like the UK and US and UAE.

The Bangalore-based firm is marketing its projects in the overseas market by hiring sales executives and participating in property exhibitions. While it has been there for some time now, the luxury home segment in India is estimated at Rs 2,000 crore with around 30 million potential buyers.

Such homes are typically located on private roads that are fenced off with an exclusive private gate and state-of-the-art security systems including cameras. The amenities could also include a spa, multi purpose court, climate controlled swimming pool, gymnasium and a business lounge.

2 Comments

  1. Posted March 19, 2008 at 6:37 am | Permalink

    But i read some diff. statement
    i read some statement given by Rohtas Goel…

    Omaxe will be investing Rs 5,000 crore to develop low cost or affordable houses in tier II and III cities. “The price of these houses will be around Rs 20 lakh. The time has come for developers to foray into affordable housing segment where the demand is significant,” said Omaxe CMD Rohtas Goel. The company is yet to acquire land for these projects.

    Source:
    http://www.propertywala.com/news/real_estate.html

  2. Posted March 20, 2008 at 4:18 am | Permalink

    Selling a luxury home isn’t about the space, it is about the lifestyle

    Dressed for the occasion, you face a group of equally polished people across the negotiating table. They grill you on your background, your career, your income and your prospects. Satisfied with your replies, they sit back and smile. You are in.

    Is this a job interview? A visa application? Perhaps a matrimonial enquiry? Actually, it’s “none of the above”. This is a potential luxury homeowner being vetted before his purchase is approved.

    If you thought the only differences between luxury homes and their middle-class counterparts were the price tags and the frills, think again. Posh houses collectively worth more than Rs 30,000 crore are coming up across the country and builders and developers are fast realising that if they are to get buyers to willingly part with eight-figure sums, they need selling strategies that are significantly different from what they follow for more affordable housing.

    So whether it is brochures that could pass off for coffee-table books or conducting a series of “personal interactions” to determine whether a buyer is worthy of an upscale apartment complex, they’re willing to try it all. And then some.

    That’s because even within the fast-growing luxury segment, property is quite distinct. Unlike other luxury goods, such as fashion, automobiles, jewellery and accessories, the price of top-end real estate differs drastically depending on where you buy it. A crore would fetch you a minuscule, bare four-walls in a Mumbai suburb, where the same amount or a little over could buy you a decent deal in another metro, and a posh flat in smaller towns.

    Of course, “luxury” costs extra. Multi-layered security, water and power backup, Wi-Fi, modular kitchens and marble flooring are becoming hygiene factors in most new mid- to high-end residential projects. Which means property developers need to constantly offer their demanding, deep-pocketed customers something more.

    Here is how they do it.

    Less is more
    “It’s not about selling a commodity like other homes, but a lifestyle,” declares Anuj Puri, chairman of property consulting firm, Jones Lang LaSalle Meghraj. Adds Pranay Vakil, chairman, Knight Frank, “You will almost never find large-scale advertisements for luxury homes. Publicity is done mainly through word-of-mouth or by select property consultancies.” The subtle approach helps the developer discourage window shoppers and zero in on the serious buyer.

    Typically, new luxury housing projects target top-level professionals and executives. Which means developers need to speak to them in their language. It may be a while before Indian property developers take prospective buyers to site visits in stretch limos but, meanwhile, they aren’t holding back in organising the kind of dos that will appeal to their target clientele.

    The Lodha group, which builds high-end apartments in Mumbai, uses events as a marketing strategy. Rather than hard sell the group’s exclusive projects, select sets of prospective buyers are invited to events like art appreciation or wine and cheese sessions.

    The return on investment is intangible, but substantial: even if only 10-20 per cent of the invitees follow through and become customers, the remaining 80-90 per cent become worthwhile word-of-mouth ambassadors.

    “Events create a complete experience for prospective customers. It helps them understand our products better,” says Abhisheck Lodha, director, Lodha Developers.

    The Unitech group also opted for the subtle approach when it launched Grande, a 5,400 luxury apartment project in Noida, near Delhi. Instead of the usual brochures and flyers with covered with floor plans and details of proposed amenities, it created a two-part “book”.

    While book 1 is all about luxury, lifestyle, safety and the thought behind a township centred on a golf course, the other book provides the specifications of the apartments, the project layout and other details.

    “You cannot sell luxury products with simple brochures,” says R Nagraju, general manager, corporate planning and strategy, Unitech. He does not divulge details on the number of books in circulation or conversion rates.

    As for marketing costs, each flat in the Grande development will sell for over Rs 2 crore; realty consultants believe the coffee-table brochures will account for less than 1 per cent of sales.

    Not that advertising isn’t an option. But many developers believe an exclusive print campaign in niche publications may fit the bill better than broadbased television commercials.

    Nitesh Estates Vice President, marketing, Ashok Ganguly points out that his company advertises its Bangalore-based Canary Wharf project in select magazines as well as in-flight publications on certain domestic and international airlines.

    “This kind of advertising has given quality visibility with quality audience. The ads cater to intellectual mind space of prospective consumers and translating their aspirations into reality,” says Ganguly.

    Perhaps the most in-your-face marketing initiative was a couple of years ago for Sahara Group’s Aamby Valley.

    Television commercials, hoardings and full-colour advertisements featured celebrity brand ambassadors like Amitabh Bachchan, Aishwarya Rai, Boris Becker and Anna Kournikova, promoting the township in in Lonavla, Maharashtra.

    But that’s a one-off case, say experts. You won’t find too many multi-media campaigns for top-end housing projects. In fact, you won’t find them listed with your neighbourhood broker, either — a portfolio manager is a better bet for promoting these properties. Which is why building a strong network is the prime focus of developers.

    “We do a network campaign in three ways; through top end portfolio managers, housing finance companies and through customer reference,” says Ramashraya Yadav, head, finance and strategies, Orbit Corporation, the Mumbai-based developers of Villa Orb. That’s an 18-storey, eight-apartment building on Mumbai’s Nepeansea Road, each of which will sell at upward of Rs 42 crore.

    Others are developing “dealer” networks. “We have a network of 850 franchisees and dealers. We also participate in exhibitions both domestically and internationally to reach our target audience,” says Bipin Agarwal, executive director, Omaxe, a Delhi-based developer.

    Space splurge
    What is a luxury home buyer looking for? Most property dealers still can’t answer that with certainty, but they are taking no chances. They offer apartments and villas and exclusive floors that come fully loaded with every conceivable modcon and round-the-clock security.

    But what swings the deal for most high networth individuals is knowing who their neighbours will be and whether their privacy is adequately protected or not.

    “If you sell one flat to a managing director, you cannot sell remaining flats to lesser ranked executives,” agrees Raminder Grover, managing director, Sandalwood High Street Residential, a subsidiary of Jones Lang LaSalle Meghraj. Which is where the pre-purchase screening interviews come in.

    To make doubly sure the privacy angle is covered, builders offer more space. Even in prime, heart of town locations, luxury homebuilders offer fewer flats. On Nepeansea Road, Villa Orb and Lodha’s Solitaire offer just eight apartments each. In Bangalore, the Canary Wharf project — located close to the commercial heart of Brigade Road and MG Road — will host only eight exclusive buyers.

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