Developers need to over-deliver to boost homebuyer confidence

DLF commands a premium over its competitor projects. Post covid-19, how that has changed with the property prices correcting. Is DLF offering any price discounts?

Post the pandemic, homebuyers have been asking for covid-19 discounts, but DLF has retained its premium in most of the luxury properties. We have been able to retain our price points in our Grade A properties. In some of the tier-1 or tier-3 cities, we have made some reductions, but that was passed on in the form of incentives than price corrections. We gave our buyers value-added discounts by giving them payment options, including staggered payments, deferred payments, construction allowances and so on. For example, if a customer comes and says he can’t pay in one month but 15 months, we gave the customer the option to pay in 15 months under deferred payment plan. It was more of facilitating homebuyers rather than giving direct discounts. We refrained from giving direct price discounts.

In the past, DLF has said that it will sell houses only after completing the project as part of its new business model to remove any uncertainty regarding costs and delivery timelines. Has this been implemented across projects?

Except for our super-luxury portfolio, where we offer bare shell units and residential plots, we have ready-to-move-in units in residential condos in all our projects across India. Going forward, we are rebooting our overall strategy in two ways. First, as far as future projects are concerned, while certain projects will continue to offer ready-to-move-in inventory, others will resume the sale cycle at the early to mid-stage of construction, instead of waiting until completion. Second, we will also re-index ticket sizes to more mid-value proposition, versus focusing predominantly on the luxury space. We are looking at increasing the base of our launches this fiscal. We will leverage our land bank to re-engineer our product offering and introduce them in the market.

What are the big learnings from the covid-19 crisis?

Two of the biggest learnings would be, first, promises made must not just be kept but over-delivered to build consumer confidence in this sector and increase investment in this asset class. Second, do not devalue your product, instead offer high-value proposition. As the industry tries to find different ways to emerge from the downturn, a successful transition back to normalcy is dependent on how players, especially with solid reputation and proven track records, behave today to stay afloat in the short term.

How have homebuyers’ expectations changed post-covid-19?

We have seen that more people want to own home now from a security point of view. Also, community living and services provided in those communities have suddenly taken an important position. People have realized that you may not need them always, but the day you need it, you should have it. During the pandemic, we had all the services such as food and beverage deliveries going smoothly while in individual bungalows, people had a little bit of a tough time. So, we have seen these two positives changes during covid-19.

What are the key challenges the industry is facing?

From a selling point of view, today’s buyers are more cautious than ever and there is certainly a big change in their buying behaviour. Homebuyers have more clarity of thought on what kind of a property they want to invest in, and which developer they want to go for. Today, the conversation in the market has shifted from bricks and mortar to data and insights. Also, they are looking for additional reassurance, stability and handholding. Also, bank loans processing time in the current environment has made the movement slow.

As far as the industry from a supplier side is concerned, smaller players have remained in a stressed environment since the pre-pandemic period. Liquidity and completion of projects seem to have become the biggest challenges, eroding homebuyer confidence.

On one hand, while the introduction of Real Estate Regulations and Development Act (Rera) and Goods and Services Tax (GST) brought homebuyers a sigh of relief and helped bridge the trust deficit, on the other hand, lack of access to organized finance—and with the non-banking finance companies and housing finance companies in stress—the 12 months before covid-19 were anyway a stressful period for the smaller players. Lack of access to organized finance will give small, and in certain cases even big players with weak balance sheets, a tough time.

Some developers are looking at acquiring stressed projects and completing them. Is DLF looking at any such opportunity?

As of now we have no such plans. Stressed projects come with their own set of challenges, which we can do without. Our energies and focus is completely on liquidating our existing inventory and launching new products that fit today’s consumer demand in the current context.