Sales crunch might not hit real estate advertising

Decline in sales in the real estate sector has not dampened spirits as new launches and strategic tie-ups continue

e4m by Priyanka Mehra
Updated: Jul 5, 2012 7:59 PM
Sales crunch might not hit real estate advertising

According to a recent report for the first quarter of the calendar year by PropEquity, a Gurgaon-based real estate data analytics and research firm, the residential unit absorption numbers in the first quarter in the National Capital Region (NCR) and Mumbai Metropolitan Region (MMR) plunged over 50 per cent due to economic slowdown. Does this translate to a decrease in real estate advertising?

While marketing budgets have reduced across the board due to higher cost of inputs and cash flow issues, advertising would be expected to save the day and bolster sales.

“Going forward, we believe there is a possibility that there would be dip in real estate advertising spend if absorption figures do not improve significantly. We can also witness discounts, gifts, foreign vacation based advertising by real estate developers to revive housing demand in the country,” remarked Samir Jasuja, Founder and Chief Executive Officer, PropEquity.

Other marketers and industry experts held a more optimistic outlook; they believe like any industry, the real estate industry is going through its normal cycle of ups and downs, which can be attributed to a number of factors. The common consensus has also been that what may be perceived as a decline in advertising is revenue directed towards new launches.

“The real estate sector is also cyclical and its impact is often reflected first on the commercial capital of the country, that is, Mumbai. This is not a new phenomenon and has occurred in the past. To some extent, the current economic scenario in the country, which finds itself in the high interest-rate regime, has led to customers tightening their belts on all fronts,” said Manju Yagnik, Vice-Chairperson, Nahar Group.

Rajeeb Dash, Marketing Head, Tata Housing, which has not faced a decline in sales despite the recent slump, maintained an optimistic perspective when he said, “A challenging market is more often fertile platforms for groundbreaking ideas as media spends have to be cut down and impact needs to be increased. While Tata Housing’s sales and advertising have been stable and have not been impacted by market dynamics, there certainly has been a decline in the industry advertising.”

Talk of decline in sales in this sector is belied by a series of new launches and tie-ups. The more recent ones include Disney India, which recently tied up with Sunteck Realty, a Mumbai-based real estate company, to launch Disney Inspired Homes in Mumbai. The project is expected to generate a turnover of approx Rs 10,000 crore to the company. The company had earlier entered into an exclusive tie-up with Vertu to set up ‘Signature Conceirge’ services in its Signature Island at Mumbai’s Bandra Kurla Complex. Mantri Developers announced its Rs 2,000 crore expansion into commercial space and a theme park in Bangalore.

“Thanks to a host of reports, buyers are following the wait and watch policy. But this has not deterred real estate developers from launching new residential projects in Mumbai as is amply visible from the plethora of new launch advertisements in the media,” added Yagnik. A sentiment echoed by Girish Shah, VP, Marketing and Sales, Godrej Properties, who said, “We have optimised our advertising investments to result in improved and enhanced RoIs.”

On the whole, the industry maintains an overall optimistic view despite the projected decline in sales.

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