Home >News >India >Why residential developers are turning to agencies to sell homes post-covid

Mumbai: Residential real estate developers across the country are increasingly depending on consultancy firms for sales and marketing functions, even as they begin to downsize their own teams. Both developers and consultants say the latter are able to offer specialised services in the marketing processes that lie outside the core skills of a property developer. This means that prospective home buyers will soon find themselves dealing with large consultancy firms in tier-1 cities and will no longer have extended direct dealings with the property developer.

Last week, Mumbai-based Poddar Housing and Development signed a portfolio deal with Xanadu Realty to sell the former’s affordable home units in Kalyan, Badlapur, and Atgaon. The firm already has similar sales and marketing contracts with developers like Hiranandani, Runwal, Raunak, Ruparel and Ekta World.

“Sales and marketing is a specialised job and developers have realised this. Post the pandemic, there is a refocus on sticking to core competences. Additionally, an entire ecosystem has to be created and made available starting from the brand promise to post possession management," Rohit Poddar, Managing Director, Poddar Housing and Development Ltd, told Mint. “The scale of operations of developers have to be of a certain size to have the cashflows and budgets to be available to attract and retain great talent which is not easy, specially post pandemic. A few credible revenue generation service providers have realised that this gap exists and have created good marketing and sales organisations."

The pandemic has increased the shift towards buying an integrated sales and marketing strategy from real estate agencies, and helps developers, who have been downsizing their sales teams, sharpen margins. An industry insider said that most grade A developers have a core marketing and sales team and a separate team dedicated to individual projects. It’s the latter’s roles that are now being outsourced.

“Retaining specialist real estate consultancies is certainly not a new trend. A firm like Anarock offers several advantages to developers when we undertake a project mandate which their in-house sales teams cannot emulate," Santhosh Kumar, Vice Chairman – Anarock Property Consultants, told Mint. “We use the latest proprietary technology (proptech) and provide a seamless sales experience to developers. However, it is true that the demand for our services has increased manifold after the realities of the pandemic became manifest in all earnest. Developers who were not able to on-board the latest technologies so far find themselves at a disadvantage in the current, highly tech-driven market environment. We fill this gap and also eliminate excessive reliance on in-house sales personnel as we have the best real estate sales specialists in our teams."

Certainly, since the beginning of the pandemic, there was an increase in applications from salespeople who were previously on the rolls of developers, Kumar added. “We have our sights trained on tech-savvy people for whom adoption of proptech interventions is less challenging. These may or may not come from previous developer firms, depending on whether or not a developer had stayed aligned with the latest real estate marketing technologies."

Agencies now underwrite whole projects, where they pay an upfront token amount (a fraction of total project sales) to take over the residential project. This system offers a price arbitrage available to the agency, which then uses this to make inroads among buyers. Experts say this was a popular practice in Delhi-NCR and is now expanding to other major markets where real estate agencies have a significant presence.

“The move towards outsourcing has been prevalent in more mature markets, such as the UK, for a while. So this trend coming to India is a sign of maturity here," Shveta Jain, managing director - residential services, Savills India, told Mint.

"In the past, one did not see Grade A developers opting to outsource to agencies; they preferred to invest in their own teams. But of late, we are seeing some changes here. This also happens sometimes with boutique developers or first-time developers who do not have the expertise to conduct sales," Jain said.

“At Savills, we are running two mandates in Bandra (Mumbai), where we are offering end-to-end services, starting from conceptualising the product, market analysis, product pricing, followed by marketing and sales," Jain said. "This way, we are better able to strategise product positioning and price homes in a better fashion."

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