Bullish consumer sentiment may buoy real estate media spends
Although the sector is optimistic over the new government and spends might increase, the final decision would vary from player to player depending on the number of projects they have under them
Published - 06-June-2014
The real estate sector is generally considered to be an un-organised sector in the country. The sector is unique because the target group is categorised in unique ways: One invests to buy a home for himself; the other invests on a property to make money, by renting it off or holding a property to sell at a higher price.
With the Narendra Modi-led NDA Government taking charge at the Centre, there is a surge in consumer sentiment as the “affordable housing for everyone” is among the prime agendas for the new Government. The real estate players believe that essential bottlenecks like clearances, land acquisition, funding, delay in decision making, etc., should be addressed by the new Government and affirmative agendas are placed across the table.
Since the sentiment is positive, analysts believe that this should push up demand from the consumer side. The sector has been under the reel of consistent slowdown over the last one and half years. Coupled with this, high inflation, rupee devaluation, lack of one window policy has not only delayed many real estate projects, but also the existing properties have suffered a debacle from the judiciary end. The Supertech complex in Noida is a recent example. In addition to this, many real estate projects are lying unaccomplished despite the money invested by the buyer. Regulation in the sector is also minimal.
But since the consumer sentiment on ground has been bullish with the new government in place, some changes might be expected.
It is also believed that global investors will be robustly investing on the sector and spends are expected to increase by 100 per cent through FIIs. It is also believed that the Urban Development Ministry headed by Venkaiah Naidu, who is among the senior most ministers in the NDA cabinet, will allow 49 per cent investment without any conditions. This would help the sector liquidate itself and get ample funds to expand.
Infrastructure projects like the Delhi-Mumbai Industrial Corridor and Delhi Freight corridor is also under expansion, which would imply that under the grand project many sub-projects will be undertaken. The golden quadrilateral project was the poet project of the BJP in the earlier years, and many analyst had been betting on the fact if the NDA government comes at the centre there will be a change in the prospects of the sector. The Gujarat Government, till now le by the current PM, has been perceived as to handle the land issues very intelligently, but there are no confirmed facts or evidence to substantiate the same.
Will this affect media spends?
People involved in the day to day dealings of the sector opine that this would also affect the media spend from the sector. However, the spends would depend from brand to brand but since the expectation of demand has risen, this has also given hopes of expansions in marketing spends by the companies.
Sunil Barnawal, senior analyst at Equity research mentioned, “The sentiment is high and there is likely to be a surge in demand. But connecting this to media spends would not be even. Some players might increase their marketing budgets but that would depend on how many projects they have. Players having large number of projects are certain to expand their marketing budget. This trend is not universal.”
Ananta Singh Raghuvanshi, ED - Sales and Marketing, DLF said, “DLF advertises whenever there is a new property to be launched and we will continue doing so. Marketing involves sales promotion, advertising and publicity. There is no connection between a stable government at the centre and media spends.”
However, some marketers feel that media spends would considerably rise owing to the high consumer sentiment at the grassroots.
Rajeeb Dash, Head – Marketing, Tata Housing felt, “Firstly, since there is a stable government there will be a rise in demand from the consumer. The sentiment is high and this should drive the media spend. Secondly, the sector has been reeling under slowdown over the last one year. There are many projects in the pipeline within the sector. All these projects need marketing and therefore this should affect media spends. I believe that the sector will see a tremendous rise in spends.”
Taking the history of the sector into consideration there is a high possibility that spends might increase. The slowdown affects need to be curtailed and therefore the need for the sector to advertise heavily is inevitable at this stage. But consumer sentiment which is considered to be a driver in the sector has to be backed by robust decision making processes and regulatory norms.
Girsih Shah, EVP - Sales and Marketing, Godrej properties felt that there will be a 25 per cent increase in the media spends. “The stable mandate will give a clear direction to some policies. I think there will be an increase of 20-25% in the media spends. Nominal increase in media spends is around 10-15%, but now the consumer sentiment is optimistic, therefore, I expect an increase. Print, digital and radio spends are likely to go up. TV spends will remain as the way they are.”
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