With the implementation of the Real Estate (Regulation and Development) Act (RERA), the first casualty has been the adex. The act which was implemented in May 2017 has forced the real estate sector to lower its marketing budget in amajor way.
RERA has set out new guidelines for regulation and promotion of the real estate sector and to ensure sale of properties in an efficient and transparent manner. It has also imposed a new policy for advertisements. As per the new RERA guidelines, no promoter shall advertise, market, book, sell or offer for sale, or invite persons to purchase in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering the real estate project with the Real Estate Regulatory Authority established under this Act. Each advertisement has to carry the RERA registration number.
According to industry insiders, there has been a sharp dip inad spends across platforms. Speaking about the impact of RERA on print advertising, Sunil Wuthoo, Head - Business Strategy & Special Projects, Worldwide Media, a fully-owned subsidiary of Bennett Coleman & Co (BCCL), which publishes 13 magazines such as Femina, Filmfare, Lonely Planet, Top Gear, Good Homes, etc. said, “Currently, real estate players are in the midst of registering projects keeping RERA in mind, and hence the focus has shifted to complying to the new norms. Usually, when such a large act is passed, the period that immediately follows sees the respective industry and its stakeholders adapt to the new regulations, and this adjustment does not happen overnight. Being an important channel through which real estate projects are advertised, we are in a similar phase. There is a visible short-term impact on real estate advertising, but in the longer run, I believe the new regulations will bring in more transparency by positively benefiting brokers, homebuyers, publishers and other stakeholders in the industry.”
For Nandini Dias, CEO, Lodestar UM India, the dip in adex by real estate players will get reversed once the dust settles. “I think that as soon as a new rule is introduced by the government in any industry it takes time to readjust. Even the real estate industry will take time to readjust to the newly implemented RERA. However, they know that without advertising there is no way for them to target new customers, so once the new procedures are completed, I am sure that the adex will be back to normal.”
“In the wake of RERA, developers have become more cautious and prudent about their marketing activities. Advertising in real estate will revive after the initial precautionary and conservative approach. Most developers have set up special teams to ensure RERA compliance. This approach should be extended to cover marketing activities as well. In order to avoid mis-selling, standardization of sales pitch across channels is advisable. Written and digital representation of offerings should be preferred. Developers should look at working with RERA-sensitized partners and agencies. In addition to training internal teams, developers should begin due diligence of partners to reduce interruptions in project promotions,” stated Sohel I S, CEO, HDFC RED.
In a first case of penalty under the RERA, a Mumbai-based real estate consultant firm was recently fined Rs. 1.2 lakh for a misleading advertisement of an ongoing construction project. This has further cast a negative spell on the fraternity who do not want to take any risk before reworking their marketing strategy.
According to Rajesh Prajapati, Managing Director of Mumbai’s well-known real estate group, Prajapati Builders,“There is fear among developers and they are waiting for the three-month period to get over so that there is more clarity about the act. Moreover, given the huge penalty margins, no one is willing to take a risk since the builder community is already working on slender margins. Because of the RERA, there are hardly new customers for us and there is considerable reduction in newenquiries too.”
Accepting that there has been a marked dip in advertising post the implementation of RERA, Siva Prasad, Director Marketing, NoBroker.com, said, “Considering there is a window provided for effective implementation by the government, there would be a natural drop in advertising and marketing spends from a developer or a builder. The same will see a correction once the compliance period is over. Our industry information tells us that there is about 40% dip in print ad spends by developers due to RERA implementation.”
While the real estate players are adopting the wait-and-watch policy for the moment, Sunil Mishra, Chief Strategy Officer, Housing.com,PropTiger.com and Makaan.com believes that the de-prioritization of marketing activities in the real estate sector isa temporary phenomenon and it will bounce back eventually. “As of now, RERA is in force only in the state of Maharashtra, from May 1st. Even in Maharashtra, developers have been given a 90-day period to get their projects registered. Hence, there is no sharp fall in advertising as of now. However, developers are taking time to prepare more detailed project plans and to file registration papers. To that extent, there could be some de-prioritization of marketing activities temporarily. In the long run, when all states get their State RERAs in place, and all developers get their projects registered, advertising and marketing will revert in full force,” he said.