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Winning customers with quality
Source : The Hindu Property Plus Published On : 2009-01-17 City : Thiruvandrum

          Builders are confident that reluctant buyers can be made to invest with the promise of quality.

During economic slowdowns, companies worldwide will do well to hark back to a classic story of two branded chocolates. During the global recession in 1970, one of the brands, popular with children and young adults, reduced the thickness of the chocolate layer, while its competitor raised prices and maintained the quality of its product.

The former came under tough competition not only from the other brand but also from many players for several years.

It took nearly half a decade for the brand to win back loyal customers. Quality, it has been proved beyond doubt, cannot be substituted with tricky measures.

Branded building companies seem to be following this dictum nowadays. The real estate sector, affected by the slowdown, seems to take a leaf out of the classic story of the chocolate brands.

Promoters now concentrate on redefining strategies to make people invest in property. They woo customers with property shows, conduct quality checks, build transparency, revalue customer needs and do innovative marketing.

For instance, builders in Kozhikode city swear by quality. The Kerala Builders Forum is a kind of regulatory body looking into the quality aspect, says Nityanand Kamath, secretary of its Kozhikode chapter. All builders try to maintain quality in construction, he says. The materials used for exteriors and interiors, furniture, tiles and plumbing and electrical fittings are of standard quality. Besides, the nearly 25 builders in the city           affiliated to the forum stay committed to whatever promises they have made to the clients. “There has been no kind of issue, and if at all there is, the forum can take it up,” Mr. Kamath says.

Recently, the Confederation of Real Estate Developers’ Association of India (CREDAI) Tamil Nadu unit set up a grievance redress forum for customers to solve disputes between them and the builders. The forum, an affiliate of the confederation, has an idea to establish such a mechanism in Kerala. It will handle complaints, if any, by clients against builders. Going to the court to reach a settlement may not help because of the long delays. The confederation has planned to include an arbitration clause in agreements signed between the builder and the client to ensure transparency and fair practices in dealings.

The forum is planning to change its name to CREDAI chapters in the State shortly. There will be a State-level body with chapters in Kozhikode, Kochi and Thiruvananthapuram, Mr. Kamath says.

Another strategy to beat the slowdown is building customer confidence. The property market in Kozhikode has never been in the hands of speculators. Here the boom is market-driven. “It is pure sentiments that are making people to adopt a policy of wait-and-watch until the economies stabilize,” he says.

After the slowdown, most promoters have reduced the cost by 5 per cent to 10 per cent for flats. But this has nothing to do with the crash in property value. The prices maintained are realistic. It cannot be compared to the stock market crash.

“We are trying to reassure customers that investment in property is still the safest bet,” he says.

Fewer transactions

Builders say that the land prices have not changed, although the number of transactions has come down substantially.

There is only a marginal decrease in the prices of steel and cement. And unlike in metros, speculation and hype over property do not exist in north Kerala. Further, it has been pointed out that a cut in prices cannot reverse a recession, they say.

“The pricing has been based on the total input in the construction industry,” says K.V. Haseeb Ahamed, chairman of the forum’s chapter. Maybe, the prices will come down and real estate will keep its momentum if the State government reduces the stamp duty from 14.5 per cent to 6 per cent. The Andhra Pradesh government reduced the rates from 5.5 per cent to 2.5 per cent recently for smaller houses.

High sales and service taxes are a burden on the property market. A customer has to pay an additional 24 per cent, he says. Another factor is buyers postponing decisions on account of job cuts or economic inactivity in the Gulf countries. However, genuine buyers, professionals in every sector, look forward to buying flats and villas, says a promoter.

Property show

The forum’s Kozhikode chapter will organize a three-day property show on the Marine grounds in the city from January 30. The builders will showcase ongoing and future projects, Mr. Ahamed says.

The builders have to face another worry. After the Satyam scandal, most developers are uncertain about information technology (IT) and business process outsourcing companies coming to Kozhikode. The rentals for IT space have crashed by 40 per cent in metros after the economic meltdown in the U.S.

However, builders say the Satyam fiasco cannot be generalized.

Each industry has tried to prop up valuations.

“Today, the valuation game has gone out of control. Investors are worried if the shares they hold are worth the money,” Mr. Kamath says.

BIJU GOVIND
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