Description
This is a presentation explaining the real estate marketing during recession.
Real Estate in India Marketing Strategies During Recession
Real Estate in India
• Second largest employer in India trailing to Agriculture Sector • Contribution to GDP is 5% • 100% FDI allowed in the sector • Major players: DLF,UNITECH,PARSAVNATH,SUNCITY PROJECTS
Key demand drivers (Pre Recession)
Residential
Office Space
Retail • Entry of global brands
Hotels
• Increase in urbanization & • India accepted as most working population attractive destination for • High disposable incomes IT & BPO services & aspiration levels • Easier access to finance • Fiscal incentives on house loans
• Increased business travel – both domestic & foreign • Organized retailing only due to buoyant economic 5% of total retail industry growth & growing FDI • India ranked as second • 2004 saw record tourist arrivals of 3 mn. most attractive retail destination by AT Kearney
? Opening up of sector to foreign investment up to 100% in 2005 ? Improved environment for debt funding ? Increasing institutionalization of real estate investment market
SWOT Analysis
STRENGTHS •Development primarily based on strong realistic demand. •Political “will” to take RE to the future •Relaxation of FDI. •Repeal of Laws. OPPORTUNITIES •Development of SEZs. •Demand for Hotel industry in the long run. •Overseas investor e.g. EMAAR, Hilton WEAKNESSES •Liquidity Crunch to finance projects. •Consumers following a wait and watch policy. •Largely an unorganized market with dominance of local players THREATS •Pace of infrastructure not consistent with real estate development pace. •Demand may remain sluggish for extended time period.
Effect of Recession on the Real Estate Sector
• Banks reluctant to fund real estate companies due to liquidity crunch • Deflation raising concerns, reducing the customer willingness to spend even further • 53% of houses remain unsold in metros • Share prices of companies has gone down substantially • Customers employing a wait & watch strategy
Delhi Leasing and Finance DLF Ltd.
• Founded by Chaudhary Raghuvendra Singh in 1946 • Headed by Kushal Pal Singh, 8th richest man in the world • In the year ended 31st March 2008, Consolidated Revenue- Rs. 14,494 crore EBIDTA- 10,117 crore Net Profit- 7856 crore EPS- Rs. 46.08 • Over 500 million sq. ft. of existing developed projects comprising of homes, offices, shopping mall segments, plots in townships and Special Economic Zones (“SEZs”) with another 738 million sq. ft. in the pipe line for other planned projects • Recently added three more divisions to its core business, viz., hotels, infrastructure and development of SEZs
Source: www.dlf.in
Effect of recession on DLF
• Funding through consortium has become difficult to achieve • Individual lenders are not in a position to supply at a favorable rate • Increase in home loan rates caused a slump in housing demand and hence many projects are put on hold • Difficulty in getting short term loans • Share prices fell by 76% in one year • IT SEZ slowdown has also affected its revenues • 2008 Q3 Profits fell by Rs. 670 crore • CRISIL, ICRA downgraded their rating from AA- / Stable to A+/Negative • Layoffs done to cut costs
DLF Share movement
Financial Data
For Nine Months Ended 31.12.07-Nine Months Ended 31.12.08 • Sales declined by 10.08% • EBDITA decreased by 25.65% • Net Profit decreased by 27.02%
Steps taken by DLF to counter Recession
• Aggressive pricing, planning to build a number of apartments and keep the price 20-25% below the market price • Instilling new zeal in realtors by raising incentive to 3% from 2% which is the market rate • Raising money by selling off surplus land • Coming up with projects in tier 2 cities & focusing more on mid income homes • Recently added three more divisions: Hospitality, Infrastructure & SEZs
Contd..
• Looking into making small ‘pure’ investments in nonreal estate businesses, with target ROI of more than 20% • Mitigating the risk by tie-ups with international players such as WSP and Laing O'Rourke which would enable DLF outsource a chunk of the design and construction activity. • Converting Short term loans to long term borrowings • Hospitality sector: Current projects stalled except Hilton Group • Retail sector: Plans to bring International brands to India
Marketing Strategies
• Price cut to woo customers • DLF’s new marketing mantra: “Sell a flat, decide price later” • To attract corporate customers, NASSCOM & DLF are organising the third exclusive Business Golf for IT CEOs • Tweaking its product mix to include affordable housing as demand for luxury housing and corporate offices has come down • Using newer ways of marketing like sms marketing (invertising) and Google ads (online marketing)
Associating with Sports
• Continuing relationship with Indian Premier League to be held in South Africa next month • Sponsoring Women’s Tennis(DLF Women’s India Open 2009) • Strategic Projects to gain visibility during Commonwealth Games-2010 to be held in New Delhi
Advertising
• Print Ads changing focus to Mid Income Housing from Luxury Housing • Pitching Product along with financial results. • Strategically designed Ads and their placement • Signing Amitabh Bachchan as Brand Ambassador
Pre - Recession
Changing Avenues..
• Focus shifting from Luxury to Comfort, Sense of Belonging & Happiness • Targeting women as the potential customers • Promoting DLF in tier 2 cities like Amritsar, Jalandhar, Coimbatore, Kochi, Vadodara, Rajkot, Surat, Nasik, Lucknow, Kanpur and Varanasi
Homes offered by DLF
Super Luxury
Super Luxury Luxury
Luxury
Mid Income
Mid Income
Before Recession
After Recession
Other initiatives..
• Expecting to rediscover the magic “Aa Gaya Manoranjan ka Baap- DLF Indian Premier League” • Entering new cities: “ Building India” • Advertising in realty shows on lifestyle channels such as NDTV Lifestyle
Steps taken by other companies
“In bad times, innovation is the key to success.” • City Corporation will be providing digital IT solutions such as e-governance, e-commerce, utility management, safety and security system in Amanora Park Town near Pune • Houses in the range of Rs 5-10 lakhs to be developed by Unitech in Gurgaon, Chennai & Kolkata • Unitech’s Uniworld Garden II in Gurgaon launched at 20-30% discount and sold nearly 80 of the 156 units launched
Contd..
• Jaypee Greens is giving a free BMW car to customers who buy its luxurious flats in Greater Noida Golf Course Complex • NCR is seeing developers quietly offer modular kitchens, free parking, and free interiors and even stamp duty relief to attract buyers • Parsvnath Developers and Parkwood Developers offer ‘EMI holiday’ schemes, while Ashiana has announced an ‘EMI-sharing’ scheme for its Bhiwadi project
• Orange Properties promised a Maruti SX4 free for every 1500 sq ft flat at Bannerghatta in India’s silicon city.
Contd..
• The First Orange Properties has launched Orange Club, a buyerowned, three-star, fully furnished service apartment at Munnar. Mr. Jose E. Alunkal, Managing Director, said that the property today would cost close to Rs 12 lakhs. As a special scheme, buyers can put an initial investment of Rs 2.40 lakh for the property and will be paid back Rs 17,500 a month by the First Orange Properties. This offer is applicable for the first 25 bookings, with effect from August 2010. • In the suburbs of Mumbai medium sized developers like Mantri, Lok and Nahar have started offering discounts and sweeteners ranging from stamp duty relief, free modular kitchens, free interiors free top of the line laptops and free parking to attract reticent buyers to their already launched projects.
Recommendations
• When there is euphoria, value takes a backseat and consumers indulge. When the going gets tough, consumers tighten their purse-strings and value takes the driving seat. ? The real estate companies shall focus on cutting costs wherever possible and focus on entering the tier 2 cities and target middle income segment. Offer the brand which offers the greatest value. • Replan the existing projects if necessary E.g. Mall of India in Gurgaon • Rather than decreasing marketing cost, invest in innovations & enhance brand portfolio • Focus on customer satisfaction, by providing easy finance options, etc. • Train the sales people more effectively
The Road Ahead
• • The future doesn’t seem bad because: 300 million Indians expected to have household income of over US $6,000 by 2015 India is among the world’s youngest nations with a median age of 25 yrs India is still growing at a rate of 6-7% and growing industrialization will raise demand for more homes, offices & malls India is a big tourist hub, and the approaching commonwealth games will increase the demand for hotel industry
•
•
doc_691743041.pptx
This is a presentation explaining the real estate marketing during recession.
Real Estate in India Marketing Strategies During Recession
Real Estate in India
• Second largest employer in India trailing to Agriculture Sector • Contribution to GDP is 5% • 100% FDI allowed in the sector • Major players: DLF,UNITECH,PARSAVNATH,SUNCITY PROJECTS
Key demand drivers (Pre Recession)
Residential
Office Space
Retail • Entry of global brands
Hotels
• Increase in urbanization & • India accepted as most working population attractive destination for • High disposable incomes IT & BPO services & aspiration levels • Easier access to finance • Fiscal incentives on house loans
• Increased business travel – both domestic & foreign • Organized retailing only due to buoyant economic 5% of total retail industry growth & growing FDI • India ranked as second • 2004 saw record tourist arrivals of 3 mn. most attractive retail destination by AT Kearney
? Opening up of sector to foreign investment up to 100% in 2005 ? Improved environment for debt funding ? Increasing institutionalization of real estate investment market
SWOT Analysis
STRENGTHS •Development primarily based on strong realistic demand. •Political “will” to take RE to the future •Relaxation of FDI. •Repeal of Laws. OPPORTUNITIES •Development of SEZs. •Demand for Hotel industry in the long run. •Overseas investor e.g. EMAAR, Hilton WEAKNESSES •Liquidity Crunch to finance projects. •Consumers following a wait and watch policy. •Largely an unorganized market with dominance of local players THREATS •Pace of infrastructure not consistent with real estate development pace. •Demand may remain sluggish for extended time period.
Effect of Recession on the Real Estate Sector
• Banks reluctant to fund real estate companies due to liquidity crunch • Deflation raising concerns, reducing the customer willingness to spend even further • 53% of houses remain unsold in metros • Share prices of companies has gone down substantially • Customers employing a wait & watch strategy
Delhi Leasing and Finance DLF Ltd.
• Founded by Chaudhary Raghuvendra Singh in 1946 • Headed by Kushal Pal Singh, 8th richest man in the world • In the year ended 31st March 2008, Consolidated Revenue- Rs. 14,494 crore EBIDTA- 10,117 crore Net Profit- 7856 crore EPS- Rs. 46.08 • Over 500 million sq. ft. of existing developed projects comprising of homes, offices, shopping mall segments, plots in townships and Special Economic Zones (“SEZs”) with another 738 million sq. ft. in the pipe line for other planned projects • Recently added three more divisions to its core business, viz., hotels, infrastructure and development of SEZs
Source: www.dlf.in
Effect of recession on DLF
• Funding through consortium has become difficult to achieve • Individual lenders are not in a position to supply at a favorable rate • Increase in home loan rates caused a slump in housing demand and hence many projects are put on hold • Difficulty in getting short term loans • Share prices fell by 76% in one year • IT SEZ slowdown has also affected its revenues • 2008 Q3 Profits fell by Rs. 670 crore • CRISIL, ICRA downgraded their rating from AA- / Stable to A+/Negative • Layoffs done to cut costs
DLF Share movement
Financial Data
For Nine Months Ended 31.12.07-Nine Months Ended 31.12.08 • Sales declined by 10.08% • EBDITA decreased by 25.65% • Net Profit decreased by 27.02%
Steps taken by DLF to counter Recession
• Aggressive pricing, planning to build a number of apartments and keep the price 20-25% below the market price • Instilling new zeal in realtors by raising incentive to 3% from 2% which is the market rate • Raising money by selling off surplus land • Coming up with projects in tier 2 cities & focusing more on mid income homes • Recently added three more divisions: Hospitality, Infrastructure & SEZs
Contd..
• Looking into making small ‘pure’ investments in nonreal estate businesses, with target ROI of more than 20% • Mitigating the risk by tie-ups with international players such as WSP and Laing O'Rourke which would enable DLF outsource a chunk of the design and construction activity. • Converting Short term loans to long term borrowings • Hospitality sector: Current projects stalled except Hilton Group • Retail sector: Plans to bring International brands to India
Marketing Strategies
• Price cut to woo customers • DLF’s new marketing mantra: “Sell a flat, decide price later” • To attract corporate customers, NASSCOM & DLF are organising the third exclusive Business Golf for IT CEOs • Tweaking its product mix to include affordable housing as demand for luxury housing and corporate offices has come down • Using newer ways of marketing like sms marketing (invertising) and Google ads (online marketing)
Associating with Sports
• Continuing relationship with Indian Premier League to be held in South Africa next month • Sponsoring Women’s Tennis(DLF Women’s India Open 2009) • Strategic Projects to gain visibility during Commonwealth Games-2010 to be held in New Delhi
Advertising
• Print Ads changing focus to Mid Income Housing from Luxury Housing • Pitching Product along with financial results. • Strategically designed Ads and their placement • Signing Amitabh Bachchan as Brand Ambassador
Pre - Recession
Changing Avenues..
• Focus shifting from Luxury to Comfort, Sense of Belonging & Happiness • Targeting women as the potential customers • Promoting DLF in tier 2 cities like Amritsar, Jalandhar, Coimbatore, Kochi, Vadodara, Rajkot, Surat, Nasik, Lucknow, Kanpur and Varanasi
Homes offered by DLF
Super Luxury
Super Luxury Luxury
Luxury
Mid Income
Mid Income
Before Recession
After Recession
Other initiatives..
• Expecting to rediscover the magic “Aa Gaya Manoranjan ka Baap- DLF Indian Premier League” • Entering new cities: “ Building India” • Advertising in realty shows on lifestyle channels such as NDTV Lifestyle
Steps taken by other companies
“In bad times, innovation is the key to success.” • City Corporation will be providing digital IT solutions such as e-governance, e-commerce, utility management, safety and security system in Amanora Park Town near Pune • Houses in the range of Rs 5-10 lakhs to be developed by Unitech in Gurgaon, Chennai & Kolkata • Unitech’s Uniworld Garden II in Gurgaon launched at 20-30% discount and sold nearly 80 of the 156 units launched
Contd..
• Jaypee Greens is giving a free BMW car to customers who buy its luxurious flats in Greater Noida Golf Course Complex • NCR is seeing developers quietly offer modular kitchens, free parking, and free interiors and even stamp duty relief to attract buyers • Parsvnath Developers and Parkwood Developers offer ‘EMI holiday’ schemes, while Ashiana has announced an ‘EMI-sharing’ scheme for its Bhiwadi project
• Orange Properties promised a Maruti SX4 free for every 1500 sq ft flat at Bannerghatta in India’s silicon city.
Contd..
• The First Orange Properties has launched Orange Club, a buyerowned, three-star, fully furnished service apartment at Munnar. Mr. Jose E. Alunkal, Managing Director, said that the property today would cost close to Rs 12 lakhs. As a special scheme, buyers can put an initial investment of Rs 2.40 lakh for the property and will be paid back Rs 17,500 a month by the First Orange Properties. This offer is applicable for the first 25 bookings, with effect from August 2010. • In the suburbs of Mumbai medium sized developers like Mantri, Lok and Nahar have started offering discounts and sweeteners ranging from stamp duty relief, free modular kitchens, free interiors free top of the line laptops and free parking to attract reticent buyers to their already launched projects.
Recommendations
• When there is euphoria, value takes a backseat and consumers indulge. When the going gets tough, consumers tighten their purse-strings and value takes the driving seat. ? The real estate companies shall focus on cutting costs wherever possible and focus on entering the tier 2 cities and target middle income segment. Offer the brand which offers the greatest value. • Replan the existing projects if necessary E.g. Mall of India in Gurgaon • Rather than decreasing marketing cost, invest in innovations & enhance brand portfolio • Focus on customer satisfaction, by providing easy finance options, etc. • Train the sales people more effectively
The Road Ahead
• • The future doesn’t seem bad because: 300 million Indians expected to have household income of over US $6,000 by 2015 India is among the world’s youngest nations with a median age of 25 yrs India is still growing at a rate of 6-7% and growing industrialization will raise demand for more homes, offices & malls India is a big tourist hub, and the approaching commonwealth games will increase the demand for hotel industry
•
•
doc_691743041.pptx