Recently I had to call my cousin Vicky who is the go-to person to find out where to buy what. I was looking out for an android phone as my current one was heating up a lot more even with low usage and the speed was too slow. He keeps an eye on all the latest deals across platforms on electronic gadgets and restaurants. I would check with him to get the best deal for a team lunch or for a high budget electronic gadget that I buy.
Offers drive our spending. Thanks to Amazon, Swiggy and other similar companies we are now used to offers like cash back, coupon codes and discounts. We have built an analytical engine within ourselves to compare across multiple apps before choosing the deal that will best suit our wallet. At the end of the day, we would all love that extra buck in our wallet.
Buying a property should probably be the biggest purchase one would make in their lifetime, unless you are looking up for a yacht or a private jet. This article or blog is not for those buyers who fly their own planes or charters, but for 99.99% of general purchasers or the so-called ‘Common Man’ who mind those small bucks.
Most Indian companies operate in the April to March Financial year cycle, and builders are no exception. Most of the large builders have a proper company structure which would also mean, they have sales structure and stand operating procedures in place. The other way to look at it is just like the company when we all work, the employees (read it as sales managers) have quarterly sales pressure. We are familiar with the year-end sale in retail. Similarly, builders push for clearing off their inventories by March every year.
To meet the annual target and clear off inventories, all the companies come up with aggressive and sales and marketing strategies. January to March is the time for promotions and attractive schemes that are offered by Builders. This is the time when builders launch referral offers, launch discounts, new phase launches with deep discounts, innovative payment models / rental schemes, etc.
Once you show interest towards a property, the builder would throw offers and discounts to convert every qualified lead. They cannot afford to let go of a single opportunity.
If moving the price bit downwards can help them close a deal, the sales manager would offer high discounts during negotiations. That’s right; they will give you an offer that you cannot reject.
What does it mean to a customer?
An ideal time to get deeper discounts for a property is January to March quarter. That’s the time when you will get self-satisfaction of having negotiated a property price to a level which you would consider as the ideal one.
So the right time to make the purchase is waiting for the 4th Quarter and go for the kill.
How do they do it?
If you are wondering how the builders can provide more offers during the 4th quarter than before, then here is the strategy. During the first nine months of the financial year, the builder’s team would shore up the maximum margins possible which would be way above their target margins. For example, if their annual target for profit margins is 20%, they would have achieved over 30 to 35% margins during the first three quarters. During the final quarter, they would sell aggressively by dropping their margins.
Which projects get such deep discounts?
One of the strategic challenges with this approach is that it is not possible to drop the price of an existing project, which has been sold to several customers already. It can upset their current customers. So the plan is to launch new projects at a highly discounted price. Usually, the realtors sell their maximum during their project launch. So they end up launching several projects during their last quarter and invest heavily in marketing to reach out to their target audience.
Before we deep dive into numbers, you might have a question on why customers are not buying during the last quarter alone.
If we were to buy products only during offers, businesses would run only on offers. Each one is different, and our need for the property is a function of our cash flow, interest in properties, patience and above pressure from family.
A glimpse of new launches in 2018.
The number of new launches in 2018-19 has gone up by 53% as per a report by JLL. Major players who have announced the launches include Casagrande, Alliance, Urbanrise, and Fomra groups. The economy went through a cycle in 2016 and 2017 when the builders got stuck with the inventories. The market has slowly opened up, and this can be seen by the number of launches that all the builders have made over the last three months (Dec 2018 to Feb 2019). Places like Villivakkam, Jamalia, and Ponneri attracted new launches of about 300% more than the previous year. Kelambakkam, Thazhambur, Thoraipakkam, SP Koil, Guduvanchery, Manapakkam, Vadapalani, and Velachery witnessed the launch of about 70% more than the last year.
Budget Properties Launched in Chennai
Chennai has now become one of the preferred destinations to invest in properties. Chennai’s real estate market has seen a positive development in 2019. Understanding the perception of buyers, many realtors have come up with affordable projects in Chennai. In Chennai, apartments are now available at a suitable price range for every income group. The big players like Alliance and Casagrande have launched projects within the budget of 50Lakhs which makes investments possible in Chennai. Since there is a widespread of IT parks in Sholinganallur and OMR, now the choice of location become dynamic.
If you would slightly increase your budget up to 75Lakhs, there are numerous choices. Fomra has launched a project in Porur within 75L budget.
Chennai has the choice of investing in luxury apartments with a budget of 1 CR and above.
With several players entering the Chennai market, we have varied property options to choose.
To conclude, how much ever you are planning to invest in Chennai projects they would give you the ROI (return of Investment) .