THEME-BASED REALTY! DOES IT EVEN WORK?

For most part of the year gone by, realtors harped over the affordable housing strategy to lure consumers. But builders now are now trying to lure buyers through theme-based dreams! Do they even stand a chance?

Of he few structures that would be hard to miss while sauntering along Dubai’s Business Bay, the Boris Becker Business Tower, which is increasingly becoming an emerging commercial hub of the city, forms the key. The 19-storey tower standing tall above the water-level, is the third and final offering of the ‘Sports Legends Trilogy’ built by Germany’s ACI Real Estate Developer, which has also built the Niki Lauda Twin Tower and Michael Schumacher Business Avenue. Moving beyond the city of gold, even countries like UK and Jordon have developed a state of the art Media City to promote the media industry of their respective countries. In India too, the development of Cyberabad in the city of Hyderabad, marks the coming together of several Fortune 500 companies from the IT/ITeS sectors. But these aforementioned projects are all commercial, relatively easy to sell and more so, when you have a theme associated with the structures. And while this trend of marketing commercial real estate projects (either by associating a personality or attaching a theme with the project) has for long been in vogue, the ‘theme’ proposition is steamrolling itself into the residential property space in India. Apparently, this would help real estate developers boost sales by spamming the nouveau rich segment. Umm, does this even work?

The success of Bollywood superstar Shah Rukh Khan’s maiden real estate venture – Shah Rukh Khan Boulevard – in Dubai is an example of how aspirational the global consumer has become when it comes to buying a house. But then, isn’t the Indian customer a beast with an undefined nature? With the commercial real estate still growing at a sluggish pace in the Indian market, all hopes of most of the developers are pinned on their residential projects. Currently, the market scenario is such that around 40% of the property being purchased is for investment purposes and the remaining 60% is bought for actual residential use. To that extent, developing theme-based housing projects does seem – on the face of it – to be a high risk high return proposition.

But Vivek Mittal, CEO, Realty Stocks, disagrees with us, “The last 18-24 months saw a huge dip in the realty sector, with both residential and commercial space suffering from a lack of demand. Affordable housing helped the realtors gain some ground by selling houses in the range of Rs.20-30 lakh. However, it is time that realtors offer more than just affordable houses to their consumers. Launching theme-based houses is a step in that direction.” It is accepted that with more and more educated consumers coming into the picture, there is a dire need for proper marketing of the projects. But wouldn’t theme-based projects end up being too costly for the consumer?

As if to prove our conjecture wrong, the Italian-style Tuscan City developed by TDI International in Haryana with a starting price point of Rs.21.5 lakhs is targeted at the middle class mass-market. Says Kamal Taneja, Managing Director, TDI Group, “A judicial mix of mid and low-rise units offered at such competitive rates would definitely induce customers to come forward and own houses that suits their requirements.” Then there is CHD Developers’ Active Senior Lifestyle Township, which is marketing the project to people over 55-years of age. CHD Developers also launched a residential project near Vrindavan (Uttar Pradesh) with a unique architectural design of Sri Krishnalok capturing the spirit of the holy city of Vrindavan. Says Ravi Saund, Marketing Head, CHD Developers, “40% of the occupants who have purchased our Vrindavan projects, are localites. Interestingly, a lot of buyers from Gujarat and Chandigarh have invested in the project thereby signifying its success.”

And to our surprise, we found a few positive consumer sets too. Nitin Tiwari, a 39-year-old MNC executive and his wife Ritu, were hunting for a home for the past seven months (“House is a once-in-a-lifetime investment for working couples like us and we did not want to settle in for just anything. We were waiting for that ‘something’,” says Nitin). And that ‘something’ came in the form of a Jaypee Greens Sports City billboard that, Nitin says, caught his eyes. Complete with motor racing tracks, go-karting facilities, golf course and stadia and courts for other sports, the thought of buying and staying in such a complex sounded far too appealing to the couple, more so as Nitin had been a great sports enthusiast during his heydays. The case is somewhat similar for 35-year-old Jasmeet Virk who heads the Northern Sales division of a leading paints company. A career-oriented single woman, Jasmeet says to us that she celebrates womanhood and is proud to have made a mark for herself in a male-dominated corporate world. When hunting for a house, Jasmeet settled for Meriton Groups’ La Femme, as “buying a house in La Femme instilled into me a sense of solidarity toward woman-hood.” And that’s what the residential real estate marketers talk about today, as one real estate developer lets on – “If you’ve got an ego to massage, we’ve got a home that does just that!”

In the last one year, most residential projects were marketed by playing purely upon the price factor. In realty, pricing of a project primarily depended upon the location (still does!), as ultimate profits take place only if the location is acceptable. However, by properly marketing the projects in the name of themes, the marketer takes a leeway with pricing. Theme-based residential projects – even the ones targetted at the middle income community – are therefore priced slightly higher than the conventional affordable houses as they are targeted to a niche. “A real estate product is just like any other product or service. Buying a house is a high-involvement purchase and the marketer has to convince the customer of a value-purchase. Negotiating on price points becomes easier for marketers then,” says Neeta Walia, Director, Brand Talk. She adds that developers have very strategically themed their housing projects. For instance, a housing project for senior citizens will attract newly-retired people who have just got their Provident Fund and are looking for investment options.

But what about the illiquidity of it all? “The money that senior citizens, for example, will invest in buying property, can be recovered to some extent by taking reverse mortgage loans,” explains Mittal of Realty Stocks.

Female buyers on the other hand enjoy lower stamp duty rates and higher tax rebate as compared to male buyers. Emergence of career-oriented women with a desire to secure their future has also led to an increase in women buying houses, and banks too are not too worried about doling out loans to females as compared to menfolk. As a tactic to lure female buyers and boost sales over a short period, Meriton Group, for example, even decided to share registration charges (if the purchase of the flat was made before December 31, 2009).

Well, star-studded residential complexes like the Shahrukh Khan Boulevard in Dubai may still be a distant dream in India, but it’s now evident that one cannot summarily reject this new concept – and it might even work!