Seven strategies for real estate development success or failure

In today’s competitive real estate market, when sellers are finding it difficult to sell, how can a real estate developer establish himself?

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 complex.Developers nationwide are currently struggling with an enormous unsold inventory, with over 7 lakh units in the top seven cities alone.

Success indicators

1. Awareness that it is still always about location

The most important success factor in any real estate development is location. Even the most modest of small-scale projects with the bare minimum of facilities and services will find buyers if they are located in areas with enough social infrastructure and multi-nodal transportation connectivity. The most luxurious modern apartment high-rise will fall flat if the site isn’t right. This information must be considered by a real estate developer during the initial stage of land acquisition. He must also understand the area’s planned and proposed infrastructure changes, as well as whether they align with the project’s development schedules.

2. Reliable market analysis

A developer must analyze the exact demand profile, the competition’s initiatives, and the development pattern in and around the location, in addition to appraising the location in terms of connectivity and social infrastructure. What is effective in one city or region may not be effective in another.

3. Preventing Plagiarism

One of the worst mistakes a developer may make is simply replicating previous projects offered by the catchment. The success of one project does not always imply the success of comparable efforts that provide nothing new. In fact, even self-emulation may fail — when a developer repeats a project that was enthusiastically received in one place in another, it can sometimes fail catastrophically.

4. Making certain brand consistency and resonance

Any real estate development must connect with potential buyers in accordance with the company’s brand, which has been developed over time. A development can fail if there is a significant mismatch. A developer specializing in inexpensive housing, for example, will struggle to attract customers for a high-end/luxury property, and vice versa. The brand has a specific niche that it must adhere to. As a result, several developers who previously created a brand for mid-income or high-end housing have formed separate companies to develop inexpensive homes. Some premium developers have built successful affordable housing offshoots under the parent brand by taking this technique.

5. Generating the appropriate buzz

Making the general public, and hence potential customers, aware of a new proposed development is a critical success factor in sales. To make the proper kind of noise at the right decibel levels and to the right people, a complete marketing plan must be created. Developers who continue to rely entirely on traditional offline marketing and lack skills and understanding of digital marketing media will fail.

6. Leveraging local expertise strategically

When a developer expands outside his usual boundaries, it is always a good idea for him to partner with local majors for any real estate development in their domain. This not only adds local expertise to the table, but it also aids in reaching out to potential buyers, as local players already have a strong foothold in the industry. Many developers who previously stepped outside of their countries on their own without forming the necessary relationships or building enough market buzz have been severely disappointed.

7. Emphasizing openness

Transparent business operations are not simply the best approach in the post-RERA environment; they are the only strategy that will succeed, and failing to take them seriously might land a developer in hot water. RERA is still a relatively young phenomenon, and in some regions of the country, it is hardly a force to be reckoned with. Homebuyers, on the other hand, are well aware of its existence and the reasons for its existence. Honest and transparent developers can and will succeed, but those who try to ‘play the market’ will fail.

Failure Characteristics

There are numerous reasons that contribute to failing real estate ventures, but we can identify the seven most crucial errors:

1. Ignoring the crucial location aspect

Venturing into places devoid of critical support infrastructure with no immediate prospect of deployment.

2. tracking the herd

Starting projects in micro-locations where there is already an abundance of supply.

3. Starting initiatives without the funds to finish them

A significant disadvantage if one also has a track record and hence has no clout with banks and other financing institutions.

4. Excessive emphasis on land consolidation

Simply because land was inexpensive at one point – solely to boost the company’s worth, with no regard for real project implementation.

5. Expansion into non-core businesses

Also, cash intended for real estate projects are being diverted to these ventures. Diversification is beneficial if it begins with a strong foundation and is supported by the correct intent – several of India’s largest players are well-diversified. However, if diversification is only defined as a diversion, it will backfire.

6. Failure to do micro-location research

Investing no effort in understanding the product type that is most in demand, instead generating the same product mix that has previously succeeded.

7. A failure to innovate

Trying to recreate a successful housing concept without considering how the competition is changing and what buyers expect now.

Frequently Asked Questions