BackRoadshows to woo the non-resident
Roadshows to woo the non-resident
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Kolkata: Zubin Mehta, CEO, Maharashtra Chamber of Housing Industry, an industry body, spent last weekend in London where he oversaw a roadshow called India Property 2007. London was wet, he says, but that doesn’t seem to have bothered him or, according to Mehta, people who visited the exhibition.
“Despite rain on Friday and Saturday, we had about 1,100 people walk into our show," he adds. The chamber has 400 members, all developers based in and around Mumbai, and has been holding roadshows like this since 2002.
This year is different: developers are holding their own shows instead of being part of larger shows organized by entities such as the Maharashtra Chamber and Credai (Confederation of Real Estate Developers’ Association of India), an industry body.
A team of Kolkata-based developers that participated in the London event is now on its way to Birmingham to pitch wares to the Bengali community in the region. And professional road-show organizers have jumped on to the bandwagon. “Event management people have entered the fray this year," says G. P. Salvani, resident director, Credai.
Bangalore-based event management company, Studioline Conventions, which usually organizes cultural events and shows, kicked off its foray into property roadshows in February with a show at Bahrain. Driven by the success of it first show, Studioline did its second show at London last month. It has lined up three more shows in the next six- seven months. Another firm, Sumansa Events, has also organized Indian property exhibitions in West Asia.
“There is a roadshow almost every month this year," says Rahul Todi, director of Kolkata-based real estate developer Shrachi Group Ltd. “Every developer today is doing a roadshow," adds Ravinder Grover, managing director, Sandalwood Highstreet Residential Consultants Pvt. Ltd, a wholly owned subsidiary of Jones Lang LaSalle Meghraj. Abhijit Das, regional director of Jones Lang LaSalle Meghraj, estimates that non-resident Indians (NRIs) are buying 30-40% of the units in branded high-end properties coming up in Kolkata.
Real estate developers are looking to sell their properties to NRIs and others outside India because there is a slowdown in the local market for residential properties. “Higher home loan rates have hurt the domestic demand for realty and prompted real estate developers to tap the overseas market with greater zeal," says Grover. The number of people buying properties for purely investment reasons has also been declining and “we need to bridge that gap," says Ashish Jain, head of international marketing at Omaxe Ltd. Omaxe has scheduled seven roadshows in the year.
Jain adds that investments in Indian realty are becoming popular with NRIs and others because they promise higher returns than properties elsewhere. Jain estimates that investments in commercial realty return 10-12% a year on rentals, and those in residential realty, 4-8%. He also estimates that properties have doubled, even tripled, in value over the past three years.
According to Das, sales to NRIs and others have helped raise the price of properties and also helped developers to maintain prices at a time when the domestic demand is weaker. The average price of properties being purchased by NRIs is between Rs50 lakh and Rs2 crore.
“Overseas roadshows are being used to expand the base of marketing," says Naresh Jain, managing director of Chennai-based Vijay Shanthi Builders Ltd, which has recently sold flats worth Rs8 crore each to people within the country and outside. “This is mainly because the (number of) projects being developed have increased. Earlier if it was two projects, now it is 12," he adds.
To ensure that their developments find takers, real estate firms have no option but to go overseas. According to Grover, real estate firms from South India look at buyers in Singapore, Malaysia and West Asia and those in the North at buyers in West Asia, the UK and the US.
West Asia is a strong selling ground for developers. “We were told by the builders that Bahrain is not a big market to tap. But we had about 3,500 families walk into our show over three days and we did a business of Rs33 crore," says Michael Vasanth, proprietor of Studioline. Most of these shows are held over weekends. In West Asia, the weekend shows are usually held between Thursday and Saturday.
Developers sell 10-15% of the projects they pitch in overseas markets to NRIs and others, says Salvani, although there are some developers that have sold 30% of specific projects overseas.
South City Projects (Kolkata) Ltd, for instance, sold around 30% of its project, South City complex overseas “We have been doing road-shows along with the chambers of the industry as well as participating in cultural events such as the North American Bengali Conference," says Sanjay Chowdhury, CEO, South City Projects.
Some developers have also started spending money on promotions. “We spend about 2% of our sales revenue on overseas promotions," says Sushil Mohta, president of Melin Group, a Kolkata-based property developer. Mohta has been touring the world with Bangla music bands to sell his realty products.
Vijay Shanthi plans to tie up with an international real estate broker to organize roadshows. It plans to begin this process in September and is targeting countries where there is substantial NRI population such as the US, West Asia, Singapore and Malaysia.
The company is building 4,000 flats over the next six months, and hopes to sell 300 units or 8% of the flats to NRIs. Emaar MGF Land Pvt Ltd is working with Hamptons International for road shows in markets like the UK, the US, South Africa and Canada, according an official communication from the company.
One Kolkata-based developer Bengal Shrachi Housing Development Ltd is offering a complex, Rosedale Garden, with 504 apartments, each priced between Rs50 lakhand Rs1.30 crore, exclusively for NRIs. However, most developers are unwilling to offer such products as they are not prepared to see their properties turn into ghost towns, in the absence of residents.
John Samuel D Raja in Chennai contributed to this story.
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