Do realty brands need the same level of brand-building as other industries? We examine.
While a real estate developer at Noida’s Sector 150 struggled to sell units at Rs 7,200 per sq ft, another national-level developer on the next piece of the plot had greater success, even at a higher price point of Rs 11,000 per sq ft. The costlier project was a newly-launched one, while the struggling project was mid-way into its construction cycle. Rather than the sales and marketing strategy, the difference lay in the brand value of the two developers in the given micro-market. As a result, the developer with a better brand reputation struggled less with sales.
What makes a real estate brand valuable?
This raises the question: What makes a brand valuable? Do realty brands need the same level of brand management, as other industries? Most analysts tend to agree that as real estate is often one of the costliest purchases of one’s life and due to the high emotional quotient associated with a purchase, brand value in real estate plays a greater role than, say, a perishable consumer durable.
The intrinsic value of a real estate brand is a complex combination of the developer’s performance over the years, its image among consumers, fickle asset-class preferences, management of market projections, evaluation of critical perceptions, demand and supply dynamics (as high-value brands are seldom volume game players) and last but not the least, expectations held by stakeholders.
Any given brand must be conscious of its return on investment (RoI) and real estate is no different. However, while the calculation of shareholder return is typically analyzed as the sum of price appreciation, in real estate, the critical metric is the livability index, along with the price appreciation.
The four layers of a realty brand
Fiscal efficiency: Fiscal efficiency is the ability of the builder to not let projects get delayed/stuck due to fiscal stress. Valuable brands factor in the financial closure of the project at the time of launch itself.
Execution efficiency: Execution efficiency is when the developer has maintained an impeccable track record of delivery, both, in terms of the timelines, as well as the quality of construction. It reflects in the developer’s high CSAT (consumer satisfaction) score and low litigation score.
Operational efficiency: The operational efficiency is measured in terms of creating brand value where the handover and post-possession upkeep are taken as a service and not just product delivery. Valuable brands also address the home buyers’ grievances in a manner that is intrinsic to the company’s setup.
Communication efficiency: Efficient communication is also an intrinsic part of valuable brands’ corporate philosophy. A brand’s worth is critically linked to its ability to communicate with stakeholders, including but not limited to the home buyers.
How real estate developers can build their brand image
Ashish Narain Agarwal, founder, and CEO, of PropertyPistol.com, believes the customer’s trust, faith, and confidence in the brand are the most important criteria to become a valuable brand, especially in real estate sector. Purchasing a house is one of the biggest and most important investments in an individual’s life and providing incomparable services to the buyers or looking into minute requirements ensures that the brand receives admiration and respect from home buyers, thereby, enabling it to gradually develop goodwill in the market.
“Undoubtedly, the brand also needs to make sure that their offerings are excellent, another key factor that can build brand value. Sales-centric mindset and brand building can be termed as two sides of the same coin. While aggressive sales are necessary for excellent business, brand building is important for a good reputation. Both the concepts are related to customer goodwill ultimately,” says Agarwal.
Amit Goenka, MD, and CEO at Nisus Finance point out that the value of a real estate brand is highest when the brand makes money for its buyers. Common features of such brands are a good track record of delivering on time, maintaining the asset beyond delivery, increase in prices due to enhanced demand for the project, and aesthetic design identity, a well-advertised brand awareness program, a strong payment record among channel partners, and a good return on investment on its listed shares (if any).
“A sales-centric mindset is a necessity in a cash flow-oriented business like real estate. However, the power of the brand lies in its ability to increase prices from launch to finish, without a drop in sales volume. A brand must deliver on what it promises and be responsible in its approach to the environment, sustainability and governance issues. Every brand has its own differentiation in its focus segment. For example, a luxury developer focuses on design and splendor in luxury, whereas an affordable housing player focuses on affordable homes without compromising on quality,” says Goenka.
Can brand value be calculated?
From a home buyer’s standpoint, a brand’s worth in real estate is a function of the living experiences of the occupants in the given building. Timely delivery and brand-focused customer initiatives enhance the goodwill for the brand, thus making it valuable. A section of home buyers also evaluates the brand in terms of its ability to appreciate over a period of time.
Brand value is a qualitative judgment of a given brand that is used as a metric to compare it with competing businesses. Nevertheless, brand value, in itself is intangible, as one can only calculate the advantages of brand value – like better premium, faster sales, more referrals, repeat buyers, and overall better perception among the masses.