Developers bet on online platforms to woo customers
The Asian market is driving global economic growth and India is emerging as the world’s preferred outsourcing hub. According to the CBRE 2017 Asia Pacific Occupier Survey report released last week, multinational as well as Asia Pacific-based companies have aggressive expansion plans for India and China over the next three years. Interestingly, in the Asia Pacific region, more than 80% of Indian respondents plan to hire more people in the next three years. This reflects India’s growing economy, steady progress in enacting regulatory reforms and booming outsourcing and ITES sector.
The report took responses from over 450 multinational companies and real estate consultancies and suggests India’s commercial real estate will get a big boost with these expansion plans.the major sectors represented included banking and finance (32%), technology and telecommunications (14%), insurance (12%) and manufacturing (12%). “Multinationals’ relentless focus on driving down costs has fuelled Asia Pacific’s booming outsourcing sector,” says the survey.
Three quarters of Westernbased multinationals have already outsourced operations to the region, compared to well under a quarter of Asia Pacificbased multinationals the report says.
MORE OFFICE SPACE
Anuj Puri, chairman and country head, of JLL India says that India’s macroeconomic outlook has been resilient since 2014, leading to the entry of new foreign firms and expansion of existing firms.
All of this has resulted in a demand for office space. While 30 million square feet were absorbed annually from 2012 to 2014, the figure rose to 35 million in 2015.
Puri attributes the jump to the fact that many companies are adopting an aggressive expansion strategy, particularly after the slow pace of previous years. New players in e-commerce, healthcare and technology are driving the numbers up as well, he adds.
Vacant spaces are currently at a seven year-low of 13% - a perfect opportunity for rents to rise faster. Puri says the rise is particularly fast in lower vacancy markets such as Pune, Bengaluru and Hyderabad. “These markets are more preferred by the leasing giants within IT-ITES sector,” he explains. “Few other sub-markets such as Mumbai suburbs, Gurgaon in the National Capital Region and Chennai’s suburban business districts are also witnessing moderately higher increase in rents.”of all office leases, IT-ITES continues to be at the top with a 35-40% share. Experts say this dominance is likely to continue for some years. But Puri believes that with initiatives such as Make in India, relaxed FDI norms in defence manufacturing and a gradual progress
WORKPLACES ON THE FRINGE
While Mumbai has traditionally been a hub for financial services in the country, it is strongly emerging as an IT and knowledge hub, especially with huge IT parks coming up in low-cost regions such as Navi Mumbai and Thane.
In Navi Mumbai, as much as 76% of commercial space is already occupied by IT/ ITES players.“micro-markets such as Malad, Goregaon and Powai are established commercial centres,” says Gautam Saraf, managing director, Mumbai, Cushman & Wakefield. But Navi Mumbai alone is expected to witness average absorption rate of approximately 1.2 million square feet over the next three years, he adds. Major companies like Capgemini, WNS, Hexaware, TCS and Accenture are expanding their operations. “The rentals in Mumbai are in the Rs40-50 per square foot, which is less than a dollar, with good scope for appreciation in the years to come,” Saraf says.
Dharmesh Jain, CMD, Nirmal Lifestyle and president, CREDAI-MCHI, believes that Mumbai has favourable government policies, skilled IT resources and excellent infrastructure facilities, making it one of the top destinations for outsourcing. “The outlook for commercial real estate for 2017 is likely to be vigorous with increasing demand,” says Jain. Commercial real estate in Mumbai and nearby areas is being driven by outsourcing services in a big way. “Waking up to this opportunity, Mumbai’s property developers have started to fully comprehend the workspace specifications required for IT, BPO and KPO services, which will drive the market for years to come,” says Jain.
WHERE OFFICES GROW, HOMES GROW TOO
The strong growth in commercial office market and expected buoyancy has spurred substantial demand for residential apartments. In Navi Mumbai, the IT boom has given a huge boost to the residential market in nodes near the offices like Airoli, Ghansoli, Vashi, Koparkhairane and Nerul. “Availability of affordable residential supply, combined with promising prospects in terms of planned infrastructure and commercial office market are expected to further attract both end-users and investors in this region,” says Saraf. “This coupled with a robust retail growth, is helping fuel the revival of the residential real estate market.” Selling homes is no longer a local business. As realtors increasingly try to expand their reach and network, a wealthy Indian working in Dubai or even in the Silicon Valley is a potential customer for a developer building luxury apartments in Pune or Gurgaon. But how does one sell homes to them? After all, buying a property is a lifetime investment for most.
Unlike traditional builders who have resorted to the conventional medium of print and through word of mouth marketing strategies, more and more developers are relying on digital platforms and technologies to expand customer base. Given the market situation where cracking a deal particularly in the luxury space is getting tougher, digital marketing and online platforms are coming to the rescue by helping generate more queries and continuously engaging with the target customers.
“Today developers need more enquiries to close a deal. Earlier, for instance out of 50 enquiries one gets closed, today even 100 enquiries won’t close it. So the number of enquiries you need to get is very high and if you have to generate that kind of enquiry, digital is the only medium at a lower cost,” Vikram Kotnis, founder and managing director, Amura Marketing Technologies Ltd, a Pune-based real estate digital marketing firm which has worked with around 120 firms including Hiranandani Constructions Ltd, Oberoi Realty Ltd and Shapoorji Pallonji Group.
According to him, developers are increasingly stepping up their digital marketing plans or even pushing a little further by experimenting with virtual reality tours of sample flats. Kotnis said his firm has also acquired 30% stake in another Pune-based Quark Experiences Ltd, which specializes in developing virtual reality or augmented reality contents. Both the companies are currently working together to create innovations around virtual reality contents for various real estate firms.
“The adoption of technology is increasing rapidly among developers because the return on investment is very good. Builders have started placing both offine and online digital marketing teams. The next wave beyond digital marketing is the extensive use of technology because they have realised that technology can help them save a lot of cost. Besides it’s quick and it’s portable,” said Sohel I S, chief executive officer, HDFC RED, an online real estate portal of HDFC Group.
He said digital platforms are a big tool for high end customers as most do not prefer to visit the developer’s office.
To woo such customers, developers are creating highly advanced digital sample flats with more interactive or gamified interface where one can feel they are actually walking into an apartment, Sohel said.
Tata Housing Development Company Ltd, which pioneered selling homes online in India in 2013 by partnering with Google’s Great Online Shopping Festival (GOSF), said it has sold around 2500 homes through the digital medium including its own websites and through various real estate online portals in the last three years.
Since then the company has gradually upgraded its various technology platforms including creating an integrated payment gateway.
“Tata Housing has witnessed a rising appetite for online sales from tier II and tier III markets, which jumped from 11% in 2013 to 30 % in 2014. In tier-1 cities over 57 percent buyers were influenced by online research, while in tier-2 cities the impact was around 48 percent to complete the entire home-buying transaction online,” said Rajeeb Dash, head (corporate marketing) Tata Housing.
Similarly most developers are allocating 40-50% of their marketing budget to digital as against 20-25% two years back. Property advisors said pushing for more digital marketing redu ces cost of customer acquisition expands their reach signifi cantly while allowing them attract customers in a more tar geted approach.
Noida-based builder ATS Infrastructures Ltd, which sells mid to high end homes mainly in Delhi and National capital region(ncr) is currently build ing an digital platform to sel homes as well as to serve its cus tomer care needs through online.
“With digital marketing, cost of customer acquisition comes down substantially, it is more efficient and easy to handle. We are budgeting more money towards digital so much so that we will create an entirely new vertical for digital marketing within the company,” Sanjeev Kathuria, executive director (sales and business operations) ATS Infrastructure.
He said the strategy is also in line with increasing its sales from the Non Residential Indian (NRI) community outside the country which currently accounts up to 10% of its total revenue.
For Pune-based Kolte Patil digital platforms allow the com pany to re-market certain pro jects or target specific customers within certain age bracket or within a region. Besides, it helps a regional company like them to expand themselves across the country.
“Digital marketing contrib utes 40-45 % of out total bookings It can generate leads and vol umes and real estate is no longer specific to a local market. If it is outside the city and outside India, we cannot afford to go for traditional marketing. That’s where digital plays an important role and those markets are equally contribute to sales vol ume,” Bhushan Nalawade, head (digital marketing) Kolte Pati Developers.