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Impact Of Advertising On Real Estate

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Impact Of Advertising On Real Estate

Last updated: March 11 2013
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  • Impact Of Advertising On Real Estate

    On my daily commute from Bandra to Malad and back (via the Western Express Highway), I observe many of the hoardings on the WEH.

    One interesting thing I have noticed over the last one week or so is the dramatic increase in the real estate projects being advertised on these hoardings. There used to always be some real estate projects being advertised there but it seems to me that the number of RE advertisements across the WEH has multiplied 2x or 3x over the last week or so.

    There are three possible explanations:
    1. Builders are getting desperate and so have increased their advertising spend - (but this is hard to understand as volumes have been very low for almost the last 2 years but I have never seen such extensive advertising at any time during that period).
    2. Builders are seeing a revival in the market and perhaps increase in volumes and so have started pouring money back into advertising.
    3. I am just imagining things and there is no actual increase in advertising

    Would appreciate your views...
  • #2

    #2

    Re : Impact Of Advertising On Real Estate

    Volumes are low but so is the availability land.

    When you enter into the market as an end user you would find barely any good RTM flats for sale , neither in resale nor fresh.

    People are in no rush to sell. If they sell they will do it only at the current rates.

    If builders nor investors are selling, they could see a further potential of price rise.

    Comment

    • #3

      #3

      Re : Impact Of Advertising On Real Estate

      Gautam.... could there be a 4 th explanation. The required & long delayed BMC permissions are coming through and construction activity is slowly on the rise.

      Comment

      • #4

        #4

        Re : Impact Of Advertising On Real Estate

        In all possibility it's point#01 of your post meaning - developers are gettign desperate and ready to offload inventory - the recent spate of attacks or life bid on developers is pointer to things to come in near future.

        Some where on this blogs - i read abour 83K apartments are ready or will be ready soon with most of them with not end-user buyer - all these apts with investor will be available soon hence developers are acting fast - they want to sell off there inventory as pre-launch, soft launch etc before these 83K RTM's hit market.

        At the end of the day - nothing comes free adn one has to advertise (hard!!) to sell a product which mkt is not picking as expected.

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        • #5

          #5

          Re : Impact Of Advertising On Real Estate

          Hmmmm... I am still not convinced about the right explanation for this...

          Lets see, only time will tell I guess!

          I personally don't subscribe to the idea that developers will go for panic selling and drop rates

          Comment

          • #6

            #6

            Re : Impact Of Advertising On Real Estate

            No 1 is the reason, its not panic selling but its desperate selling ... imagine a situation where you are not seeing sales, inventory is high, cash inflows are poor, cash outflows on construction/ labour etc etc continue, you have to commit money for new land/ new project .... all this is driving such loads of adverts ... and frankly, relative to most other sectors this sector has done welll and ability to spend is high ...

            Comment

            • #7

              #7

              Re : Impact Of Advertising On Real Estate

              Guys jst take a look ate this report:

              Lodha, first realtor to cross Rs10,000 cr sales - Money - DNA

              After reading this who will say sales are slow...For Lodha sales has increased by 70%

              Comment

              • #8

                #8

                Re : Impact Of Advertising On Real Estate

                I am skeptical of this number.

                What counts as a "sale" is unclear. Lodha proudly proclaims that it got over 6000 cr of applications on the bluemoon project. It is unclear if they are counting these as "sales". Clearly a lot of people will opt out of this allotment and take their money back.

                70% increase means they sold 5900 cr of flats last year. Without bluemoon they have sold 4000 cr this year. Adjust for the price rise over the last one year (10% atleast) that would be 3600 cr this year comparable to last years 5900 cr.

                Thats a pretty solid decline if you ask me. I think one needs to be wary of unaudited announcements made by these unlisted companies.

                Comment

                • #9

                  #9

                  Re : Impact Of Advertising On Real Estate

                  Originally posted by ms98198 View Post
                  I am skeptical of this number.

                  What counts as a "sale" is unclear. Lodha proudly proclaims that it got over 6000 cr of applications on the bluemoon project. It is unclear if they are counting these as "sales". Clearly a lot of people will opt out of this allotment and take their money back.

                  70% increase means they sold 5900 cr of flats last year. Without bluemoon they have sold 4000 cr this year. Adjust for the price rise over the last one year (10% atleast) that would be 3600 cr this year comparable to last years 5900 cr.

                  Thats a pretty solid decline if you ask me. I think one needs to be wary of unaudited announcements made by these unlisted companies.
                  There are very clear and unambiguous rules for revenue recognition for real estate projects. There can of course be a little bit of variation through creative accounting - say 5%. But what you are suggesting is just not possible.

                  For the Blue Moon Project, they wouldn't have even recognized 5% of the value - so less then 300 Cr out of the 10000 Cr would be coming from that.

                  Given the number of projects Lodha has launched and is in the process of construction, it is not hard to believe this number. Just the Dombivali project which has 12,000+ units would have contributed a significant percentage of the 10,000 Cr.

                  It is good to be circumspect - but to suggest that there is a conspiracy in everything that developers do is, in my opinion, a little unjust.

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                  • #10

                    #10

                    Re : Impact Of Advertising On Real Estate

                    Sales number includes everything including the flats sold at blue moon and if i am not wrong it is the also the price before discount. It doesn't mean he generated 10k crore cash, he will be getting the money over the next few years as the construction progresses. They are just generating this hype to get a good response for their planned IPO. It will be very difficult for the company to match this figure for next few years.

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