Airline, capital market models drive property sales in Bangalore

http://timesofindia.indiatimes.com/business/india-business/Airline-capital-market-models-drive-property-sales-in-Bangalore/articleshow/33152846.cms

BANGALORE: City-based developers are thinking out-of-the box to market large-scale housing projects. And the strategies appear to be working. 

Puravankara Projects launched its theme-based project Purva Palm Beach in Hennur through an IPO-like book building mechanism. 

DivyaSree Developers is using an Air Asia-like seat pricing method to sell its inventory of over 1,400 apartments in the Republic of Whitefield project. 

"We review sales on a daily basis and only revise prices of fast-selling units. The more popular a certain type of apartment or a block of apartments is, the higher will be its price," said Amit Bagaria, chairman of Asipac Group, the marketing consultant to the project. 

The norm in the real estate industry is to increase the per sq ft price of a project as a whole. In Republic of Whitefield, the sales happen like the way low-cost airlines sell their front row, exit row, window and aisle seats. 

In Puravankara's case, it first got expressions of interest from buyers, including their preferred price, over a period of 30 to 45 days. "Based on the expressions of interest a certain number of units were released with a specified price band. The buyer is thus assured that he is paying a price that is market-determined," said Jackbastian Nazareth, CEO, Puravankara Projects. 

The traditional way is for developers to release products into the market and then react to the demand. The book building method gauges customers' interest upfront. "This not only eliminates any ambiguity, the process of sales gets an impetus," said Nazareth. 

While Puravankara's customized Palm Beach IPO was oversubscribed three times, DivyaSree is setting real estate benchmarks, with over Rs 400 crore in sales in less than five months. 

Giving a fillip to the marketing initiatives is the sub Rs 1 crore price tag that both projects offer, coupled with a high focus on amenities and other social offerings. 

L J Hooker India ran a buyer bid campaign for a residential project Tivoli in Whitefield. "The builder set a reserve price and buyers had a fixed period to make a sealed bid. The highest bids above reserve bought the apartments," said Alexander Moore, CEO, L J Hooker India. 

Pankaj Kapoor, MD of real estate research firm Liases Foras, said developers have understood the importance of sales velocity. "They are no longer stubborn about their prices. Their strategies clearly suggest that the focus is on generating higher cash-flows," he said. 

Kapoor added that Bangalore developers weren't committing the same mistakes as their counterparts in Mumbai and NCR, where most developers are sitting on piles of inventory and in turn facing stressed cash flows. 

Borrowing a sales strategy 

Puravankara Projects launched its theme-based project Purva Palm Beach in Hennur through an IPO-like book building mechanism 

DivyaSree Developers is using an Air Asia-like seat pricing method to sell its inventory of over 1,400 apartments in the Republic of Whitefield project 

L J Hooker India ran a buyer bid campaign for a residential project Tivoli in Whitefield

Residential land prices shot up by over 35% in 2 years: Survey

http://zeenews.india.com/business/realestate/latest-news/residential-land-prices-shot-up-by-over-35-in-2-years-survey_97329.html

Mumbai: Prices of land, which are used for development of residential projects in Mumbai, have appreciated by almost 35.2 percent over the last two years mainly due to change in norms and increase in property prices, a recent survey said.

A survey conducted by Knight Frank of 13 top Asian cities on the parameters of prices of land used for residential and commercial projects, pointed out that Mumbai is an expensive market compared to Delhi NCR and Bangalore, which have been studied in the report.

According to the report, Mumbai's residential development land prices appreciated by 35.2 percent in the last two years, while those of Bangalore grew by 26.1 percent and Delhi NCR by 24.9 percent.

However, in terms of office space development, land prices fell by 13.1 percent, even as Delhi NCR and Bangalore registered a growth of 16.3 percent and 12.9 percent, respectively.

"Change in development norms coupled with increase in residential prices resulted in an increase in prices for land used for residential development in Mumbai. However, a fall in office space absorption combined with large quantum of supply led to a decline in the office development land index," the report said.

The report noted that prime residential development land index for NCR witnessed an appreciation of 24.9 percent owing to the increase in prime property prices and steady demand.

Emerging markets of Gurgaon illustrate a much higher rise in prime office land values compared to the established markets of Connaught Place and Saket, it said.

In case of Bangalore, increase in property prices and demand for housing due to steady job growth enabled residential land prices to grow 26.1 percent. Similarly, increase in demand from the IT/ITeS sectors pushed office development land prices.

"While Mumbai witnessed maximum appreciation compared to National Capital Region and Bangalore in residential land prices, it emerged as the worst performer in the office space front," Knight Frank Chief Economist and Director ? Research Samantak Das said.

Land prices in Mumbai are likely to continue to grow in the coming future mainly because of its limited availability, poor quality infrastructure and regulatory constraints, that have severely restricted creation of new housing stock, resulting in an ever widening demand supply gap and consequent increase in-built property prices.