It may appear that all real estate development entails is placing bricks and cement to build enormous concrete structures. Given the enormous unmet need for homes in India, it may seem like a business that everyone can and should get into. The opposite could not be truer: developing real estate is a challenging endeavor. Furthermore, even though there are now less obstacles to entrance, the real estate industry is also much more complicated.
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Developers nationwide are currently struggling with an enormous unsold inventory, with over 7 lakh units in the top seven cities alone.
Characteristics of achievement
1. Realizing that location is still everything
The single most important factor in every real estate development’s success is its location. Provided that the project is situated in an area with enough social infrastructure and strong multi-nodal transit connections, even the most modest small-scale initiatives with the most basic facilities and services would attract interest. Even the most luxurious contemporary apartment building will collapse if the site is unsuitable. This fact must be taken into consideration by a real estate developer at the outset of the land purchase process. He must also be well-versed in the area’s planned and suggested infrastructure improvements, as well as whether or not they coincide with the project’s development schedules.
2. A precise evaluation of the market
A developer must evaluate the location’s social infrastructure and connections, as well as the precise demand profile, projects being undertaken by competitors, and the trend of growth in the area. What functions in one city or area might not function in another.
3. Steer clear of plagiarism
Replicate previous initiatives offered by the catchment is one of the biggest blunders a developer can do. The success of one initiative may not always translate into success for related projects that don’t provide something novel. In reality, self-emulation might not even succeed; when a developer attempts to recreate a project that receives positive reception in one place but fails catastrophically in another, the result might be disastrous.
4. Ensuring resonance and consistency for the brand
Every real estate project needs to appeal to prospective buyers in line with the company’s gradually developed brand. A major mismatch can lead to a development’s failure. For instance, it will be challenging for a developer that specializes in inexpensive housing developments to draw purchasers to a high-end or luxury property, and vice versa. The brand belongs in a certain niche, and it can’t stray from it. For this reason, a lot of developers who previously established their brands in the mid- to high-end housing market have established separate businesses to focus on the development of affordable homes. Some luxury developers have successfully branched out into the cheap home market under their parent brand by utilizing this strategy.
5. Generating appropriate buzz
A crucial component of sales success is educating the public about a new proposed development so that prospective purchasers are aware of it. To make the appropriate noise for the appropriate audiences at the appropriate decibel levels, a thorough marketing strategy must be written. Developers can no longer succeed if they only use traditional offline marketing techniques and don’t know anything about digital marketing platforms.
6. Making strategic use of local knowledge
It is usually a good idea for a developer to partner with local majors for any real estate development inside their region when they go beyond their usual bounds. Because the local companies already have a strong grasp on the market, this not only adds local expertise to the table but also aids in reaching out to potential buyers. A great deal of disappointment has befallen many developers who had previously branched out on their own without forming the proper alliances and without generating enough buzz in the market.
7. Stressing openness
In the post-RERA era, operating a transparent business is not only the best approach, but the only one that will work. If developers don’t take this seriously, they might find themselves in hot trouble. In several regions of the nation, RERA is still a relatively young phenomena and is not even a significant force. Homebuyers are cognizant of its existence and its purpose, nevertheless. Developers who are truthful and open may and will prosper; those who attempt to “play the market” will not.
Characteristics of failure
Although there are several reasons why real estate ventures fail, we can identify the following seven as the most important ones:
1. Ignoring the geographical factor, which is crucial
going into places where there is no immediate chance of the required support infrastructure being deployed.
2. Adhering to the herd
initiating initiatives in microlocations where there is already an excess of supply.
3. Starting without sufficient funding to finish tasks
A significant disadvantage if one also has no track record and, as a result, no influence with banks and other financial organizations
4. An overemphasis on land accumulation
just because land was inexpensive once, mainly to increase the company’s worth and pay little attention to the real project’s completion.
5. Getting involved in non-core ventures
and using money intended for real estate initiatives for these endeavors instead. Being well-diversified may be beneficial if it is founded on a solid foundation and motivated by the correct goals; this is the case for many of India’s biggest companies. But diversity will backfire if it only means diverting attention.
6. Neglecting to conduct study on microlocations
essentially creating the same product mix that has worked in the past, without making any attempt to comprehend the product typology that is most in demand.
7. Not Inventing Enough
attempting to copy a successful housing model from the past without considering how the competition is advancing and what modern consumers need.