afaqs! Round Table Conference: Realty bytes: Political apathy unites, while low cost housing still debatable

The panel discussion dealt with a gamut of issues related to the real-estate industry. The esteemed gathering discussed trends, debated on thoughts, analysed policies and devised best practices to make the industry an ideal playground for healthy business opportunities.

The afaqs! Roundtable Conference held on February 23 at The Park, Kolkata, focussed on the branding and marketing strategies of the real-estate industry in India.

The panel of speakers comprised of Harshvardhan Neotia, managing director, Bengal Ambuja Housing Development; Sunil Mohta, director, Merlin Group; Jitendra Khaitan, director, Pioneer Property Management; Biswadeep Gupta, general manager, Eden City Group; Gautam Ganguli, director - client leadership, Mindshare; and Mahesh Motwani, senior vice-president, Lintas Media Group. Bitan Chakraborty, assistant general manager, Highland Group, moderated the sessions.

The panel deliberated at length on various issues: Marketing - is it a conundrum for the realty business? Are Indian property developers setting global standards, whether real estate players do enough to gain the customer's trust and credibility, and how can the industry increase its presence in the mind of the buyers. Social issues like affordable housing were also discussed and various ways and approaches suggested.

Real estate in Eastern India: From infancy to taking flight

The points highlighted in the panel discussion brought to fore one common fact, agreed upon by everybody, that real estate projects in the Eastern parts of India are not as big and advanced as in the other regions of the country like Gurgaon, Greater Mumbai and Bengaluru. "Retail is considered high-risk in Kolkata and there are few FDI (Foreign Direct Investment) compliant," was the common refrain.

There were two important points discussed in support of the above. Firstly, the middle class waking up late to its latent purchasing power in Kolkata, and secondly, the innate aversion to risk-taking by the region's salaried class.

Real-estate in Kolkata and other eastern territories have started taking baby-steps towards modernity and advancement, in tandem with what's happening in the rest of the country, today. Urbanisation, it was agreed, was helping the city modernise, change its character and evolve with time.

Solving the marketing riddle

How important is marketing for the realty sector? With increased competition, does marketing become as important for real-estate as it is for other industries? How well can concepts like state-of-the-art, modern, world-class, and value for money, help in marketing? "These are words used by everybody to indicate aspiration, but at the same time one should also understand that what the customer believes can be markedly different from what we (the seller) perceive," Neotia said.

The question of how to retain customer confidence rose multiple points of views and gave way to an animated discussion. Biswadeep Gupta, general manager of Eden City Group opined that retaining customer trust was a continuous process and could not happen in a day. "Organised real-estate has just started happening in Eastern India, and is growing now. The only way to generate customer's trust and loyalty is through excellent after-sales service," he said.

Adding on to Gupta's mention of after-sales services, Motwani cautioned against neglecting the customer and followed it up with a question: "Isn't it that once the project is ready, you conveniently forget the customer and move on? Do you still believe and strive to keep the customer?"

While agreeing with both Gupta and Motwani, Mohta went a step further and said that utmost care should be exercised regarding customer delight, even when rejecting a project booking. Bringing in a smart analogy of Bollywood movies, Neotia asked the gathering why Aamir Khan's movies were awaited with great anticipation? According to him, it was so because the actor had given hits in the past. "That he would deliver a dud tomorrow is not impossible, but highly unlikely. That's how real-estate development has to be seen," he said. If a property developer's track record is good, irrespective of marketing, he will be able to deliver as per customer expectations again.

On the question of the feasibility of using celebrities to endorse real-estate projects, the consensus was that nothing works better than positive word-of-mouth. Gupta said and reiterated with some examples that since real-estate management is a service, nothing could beat references and word-of-mouth as the best marketing and publicity tools. Traditional media of communication (print, television, radio, and out of home) are also used by many players across the country, but that was not a priority any longer. Best quality, on-time delivery, and notable after-sales services have no substitute, the panel concluded.

"Realty development is a very important subject. If you don't like a soap, you throw it; if a car is not liked, it's changed, but a home before it is bought, is visited multiple times to see if it is liked by every family member; sometimes even the opinion of relatives is considered. Exceeding customer expectation is the best marketing for a real-estate developer," said Mohta.

Challenges and policy issues

From tricky policy issues to the standardisation of business practices, from use and advantage of trade fairs to industry lobbies, a lot of challenges and hurdles ailing the real-estate sector were discussed and ruminated upon. Some of the challenges discussed in the session included low construction costs in India, as compared to other Asian countries, that translate into lower margins for the developers. Comparing the paltry costs of construction prevailing in India, Mohta highlighted that only $35 per sq. ft was being spent in India, as compared to $150 per sq. ft in Singapore, $100 per sq. ft in China, and $70 per sq. ft in Indonesia. Motwani added that countries like Malaysia had thriving real-estate, only because they marketed the twin Petronas Towers well.

The scale of real-estate projects was also a c¬ontention for some panel members. Khaitan highlighted the fact that the scale of projects in India, especially in the eastern regions, remained small and thus high on operative costs and low on revenues. "Large projects attract big contractors, better quality execution through automation and pre-designed fixtures, thereby leading to enhanced profits," he said.

As far as policy matters were concerned, putting a real-estate project was much more difficult than even setting up a factory. "To set up a factory, the state government might offer you subsidies (through SEZs and rural development initiatives), but they won't for a realty project," Mohta said. According to Ganguli, that was true because in real-estate, since there was no product ready in hand, it was difficult to qualify for governmental subsidies.

Triple taxation in terms of VAT (Value Added Tax), Service Tax and stamp duty was a hot topic for all and sundry. The pros and cons of lobbying and sector representation through trade fairs and property melas was also weighed. The panel agreed collectively that industry bodies like CREDAI (Confederation of Real Estate Developers' Associations of India) help bring developers together in working towards better practices, improved customer service, and a stronger industry.

Affordable housing - a social need

While most of the panel members agreed that there was scope for improvement in the matter of affordable housing, few were non-committal and blamed the government for not doing enough. The panel highlighted upon the fact that West Bengal was the pioneer among various Indian states in providing public-private partnership in housing. "I agree with the concept of affordable housing being a social need, but am not sure how the semantics can be worked out," said Neotia. On the matter of most Indians residing in rented accommodations and ineligible people misusing facilities meant for the economically weaker section (EWS), Neotia said, supporting government initiatives, "When you open a window, mosquitoes too come in, along with the fresh air."

"We can't throw the baby out just because the bath water is dirty," he said referring to inadequate governmental impetus on low-cost housing for people who fall in the EWS category.

Summing up the session, Chakraborty, who moderated the session, said, "A lot needs to be done before the real-estate sector can take pride in contributing more than 6 per cent to the gross domestic product."

(Held in Kolkata on February 23, the Round Table Conference on The Challenges In Marketing For Real Estate Industry was sponsored by STAR News).