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What luxury home buyers are looking for
Prasad Sangameshwaran & K Raghavendra Kamath in Mumbai | December 26, 2007
Is this a job interview? A visa application? Perhaps a matrimonial enquiry? Actually, it's "none of the above". This is a potential luxury homeowner being vetted before his purchase is approved.
If you thought the only differences between luxury homes and their middle-class counterparts were the price tags and the frills, think again. Posh houses collectively worth more than Rs 30,000 crore (Rs 300 billion) are coming up across the country and builders and developers are fast realising that if they are to get buyers to willingly part with eight-figure sums, they need selling strategies that are significantly different from what they follow for more affordable housing.
So whether it is brochures that could pass off for coffee-table books or conducting a series of "personal interactions" to determine whether a buyer is worthy of an upscale apartment complex, they're willing to try it all. And then some.
That's because even within the fast-growing luxury segment, property is quite distinct. Unlike other luxury goods, such as fashion, automobiles, jewellery and accessories, the price of top-end real estate differs drastically depending on where you buy it. A crore would fetch you a minuscule, bare four-walls in a Mumbai suburb, where the same amount or a little over could buy you a decent deal in another metro, and a posh flat in smaller towns.
Of course, "luxury" costs extra. Multi-layered security, water and power backup, Wi-Fi, modular kitchens and marble flooring are becoming hygiene factors in most new mid- to high-end residential projects. Which means property developers need to constantly offer their demanding, deep-pocketed customers something more.
Here is how they do it.
Less is more
"It's not about selling a commodity like other homes, but a lifestyle," declares Anuj Puri, chairman of property consulting firm, Jones Lang LaSalle Meghraj. Adds Pranay Vakil, chairman, Knight Frank, "You will almost never find large-scale advertisements for luxury homes. Publicity is done mainly through word-of-mouth or by select property consultancies." The subtle approach helps the developer discourage window shoppers and zero in on the serious buyer.
Typically, new luxury housing projects target top-level professionals and executives. Which means developers need to speak to them in their language. It may be a while before Indian property developers take prospective buyers to site visits in stretch limos but, meanwhile, they aren't holding back in organising the kind of dos that will appeal to their target clientele.
The Lodha group, which builds high-end apartments in Mumbai, uses events as a marketing strategy. Rather than hard sell the group's exclusive projects, select sets of prospective buyers are invited to events like art appreciation or wine and cheese sessions.
The return on investment is intangible, but substantial: even if only 10-20 per cent of the invitees follow through and become customers, the remaining 80-90 per cent become worthwhile word-of-mouth ambassadors.
"Events create a complete experience for prospective customers. It helps them understand our products better," says Abhisheck Lodha, director, Lodha Developers.
The Unitech group also opted for the subtle approach when it launched Grande, a 5,400 luxury apartment project in Noida, near Delhi. Instead of the usual brochures and flyers with covered with floor plans and details of proposed amenities, it created a two-part "book".
While book 1 is all about luxury, lifestyle, safety and the thought behind a township centred on a golf course, the other book provides the specifications of the apartments, the project layout and other details.
"You cannot sell luxury products with simple brochures," says R Nagraju, general manager, corporate planning and strategy, Unitech. He does not divulge details on the number of books in circulation or conversion rates.
As for marketing costs, each flat in the Grande development will sell for over Rs 2 crore (Rs 20 million); realty consultants believe the coffee-table brochures will account for less than 1 per cent of sales.
Not that advertising isn't an option. But many developers believe an exclusive print campaign in niche publications may fit the bill better than broadbased television commercials.
Nitesh Estates vice president, marketing, Ashok Ganguly points out that his company advertises its Bangalore-based Canary Wharf project in select magazines as well as in-flight publications on certain domestic and international airlines.
"This kind of advertising has given quality visibility with quality audience. The ads cater to intellectual mind space of prospective consumers and translating their aspirations into reality," says Ganguly.
Perhaps the most in-your-face marketing initiative was a couple of years ago for Sahara Group's Aamby Valley.
Television commercials, hoardings and full-colour advertisements featured celebrity brand ambassadors like Amitabh Bachchan, Aishwarya Rai, Boris Becker and Anna Kournikova, promoting the township in in Lonavla, Maharashtra.
But that's a one-off case, say experts. You won't find too many multi-media campaigns for top-end housing projects. In fact, you won't find them listed with your neighbourhood broker, either - a portfolio manager is a better bet for promoting these properties. Which is why building a strong network is the prime focus of developers.
"We do a network campaign in three ways; through top end portfolio managers, housing finance companies and through customer reference," says Ramashraya Yadav, head, finance and strategies, Orbit Corporation [Get Quote], the Mumbai-based developers of Villa Orb. That's an 18-storey, eight-apartment building on Mumbai's Nepeansea Road, each of which will sell at upward of Rs 42 crore (Rs 420 million).
Others are developing "dealer" networks. "We have a network of 850 franchisees and dealers. We also participate in exhibitions both domestically and internationally to reach our target audience," says Bipin Agarwal, executive director, Omaxe, a Delhi-based developer.
What is a luxury home buyer looking for? Most property dealers still can't answer that with certainty, but they are taking no chances. They offer apartments and villas and exclusive floors that come fully loaded with every conceivable modcon and round-the-clock security.
But what swings the deal for most high networth individuals is knowing who their neighbours will be and whether their privacy is adequately protected or not.
"If you sell one flat to a managing director, you cannot sell remaining flats to lesser ranked executives," agrees Raminder Grover, managing director, Sandalwood High Street Residential, a subsidiary of Jones Lang LaSalle Meghraj. Which is where the pre-purchase screening interviews come in.
To make doubly sure the privacy angle is covered, builders offer more space. Even in prime, heart of town locations, luxury homebuilders offer fewer flats. On Nepeansea Road, Villa Orb and Lodha's Solitaire offer just eight apartments each. In Bangalore, the Canary Wharf project - located close to the commercial heart of Brigade Road and MG Road - will host only eight exclusive buyers.
"Luxury home buyers need space that's more than utilitarian, like bigger parking space, wider lobbies and so on," says Niranjan Hiranandani, managing director, Hiranandani Constructions, a leading Mumbai developer.
That's in the "town" houses. Space is not so much at a premium in the suburbs, so developers play another trump card - they create "destinations". Taking a second look at the concept of luxury homes, developers are offering concept-based living options, often engaging foreign architects for the purpose.
The result is residences in golf courses (Jaypee in Noida), green areas (Omaxe's The Forest in Noida), and spas (MetroCorp's Nirvana in Bangalore), among others.
While the Omaxe project is located close to 325 acres of reserve forest, the project's expected price of Rs 3 crore (Rs 30 million) a unit is also attributed to the lavish landscaping within the project area.
Casa Estebana, developed by Koncept Ambience on the outskirts of Hyderabad, differentiates itself through Spanish style houses, while two projects in Noida (one by Jaypee and the other by Unitech) offers courses designed by golfing legend Greg Norman.
Developers are also offering upscale homes in smaller towns. There are two very good reasons for that. There's very little competition from other builders and there's significant untapped demand - not just from locals but also "townies" looking for a second, or holiday home.
Which is why DLF is planning a 115-acre ski village near Manali, Himachal Pradesh, which will also offer its villa residents kayaking, paragliding and other sport options. There's a villa project coming up at Rishikesh as well - complete with swimming pool filled with Ganga water, a selling point, apparently.
High "net" worth
Projects like those are particularly appealing to prosperous, non-resident Indians. As most companies are finding, NRI demand accounts for anywhere between 15 and 25 per cent of all luxury home sales. Sales pitches in person to this influential and affluent customer group is difficult, which is why most builders are fine-tuning their online strategies.
That includes CRM programmes, quick follow-through on enquiries and targeted advertising. Virtual, 3-D tours and web walk-throughs are also an increasingly favoured option - Unitech and Orbit both offer the facility. Online interviews aren't being considered, though.