Mr. Sarthak Seth, CMO, Tata Realty and Infrastructure Ltd.
Tata Housing Development Company, a name among leading real estate development companies, is a subsidiary of Tata Sons. With a pan-India and international presence, Tata Housing possesses a demonstrated capabilities in Construction, Engineering, Commercial / IT parks, Housing, and Township development.
Just a while back, the company has launched a petite sale “The final rush” that was live for 72 hours. Read more about it from this link.
We interviewed Mr. Sarthak Seth, CMO, Tata Realty and Infrastructure Ltd., and talked about many things including rate cuts and the difficulties the industry is facing for now.
Without much ado, let’s head on to it straight.
Q) How has the year 2020 treated you? How is demand picking up being the economy bouncing back?
Tata Realty witnessed a spike in its residential as well as commercial businesses since the lockdown came into effect. Residential sales grew by more than 15% (especially during the festive period) YOY and commercial saw rental growth of 10%. The commercial portfolio largely remains stable with over 94% occupancy. This can be attributed to the success of our recent consumer-centric campaigns like WOW is Now, Grand Indian Home Festival & the current active Final Rush-72 Hr Flash Sale which created active engagement with teams internally as well as channel partners and deepening of relationship with them. Specific initiatives and schemes with AWHO (Army Welfare Housing Organization) and Tata Employees added to the performance with a 10-15% contribution to sales achieved. We returned with the construction of over 20 projects across 15 cities amongst the first in the country post lifting of lockdown.
Within residential, several noticeable themes are propelling transformation in the sector. Digitization and Technology adaption has accelerated transformation at an unprecedented pace. During the pandemic period, the realty market has seen buyer preferences shift from under-construction to ready-to-move-in properties due to the benefit of GST coupled with an all-time low home loan interest rate and the comfort of buying what you see and moving in immediately. Work from home & office is now an accepted practice and there is a renewed significance for spacious homes. This sentiment reflected through an increase in interest towards larger and spacious homes from Indian as well as NRI buyers. As a result, several of our spacious projects like Myst in Kasauli, Tritvam in Kochi, Raisina Residency in Gurgaon, Serein in Mumbai, and Avenida in Kolkata saw a remarkable performance this year. In fact, our residential project Myst in Kasauli recorded over 345% increase in revenue and an 86% increase in inquiries in FY 20-21 compared to FY 19-20.
Q) What are your current and upcoming projects?
Currently, our overall portfolio has more residential properties and the commercial segment accounts for 30 percent of the total portfolio. We want to balance the asset diversification and expect to increase the share of the commercial portfolio to 60-70 percent of the total projects soon.
While commercial real estate might be a tricky segment for a number of developers, we have been witnessing a tremendous response to our commercial assets. The company has a close to 100 percent leased portfolio of 6.2 million square feet, which is likely to be 20 million from existing land banks owned by Tata Realty.
Q) What are your marketing strategies to stay relevant among customers?
In order to ease the cost burden on homebuyers and enable them to invest in their dream home, Tata Housing introduced several consumer campaigns throughout the lockdown via online launches. These include- ‘A Happy Place Called Home’, ‘Move in India’, ‘WOW is Now @3.99’, ‘The Grand Indian Home Festival’ and ‘The Final Rush’campaign.
“A Happy Place Called Home” digital campaign was first to be launched in May 2020 through a webinar and the campaign that allowed customers to view properties through virtual tours, transact over an online platform, and was very well received by prospective homebuyers. More recently, on the occasion of the 72nd Republic Day, we announced the launch of ‘The Grand Indian Home Festival’campaign through a digital meet, allowing the homebuyers to benefit up to 7%* off on Ready to Move in Projects. With the financial year drawing to a close in March, Tata Housing launched ‘The Final Rush’ Flash Sale. The purpose of this campaign is to enable homebuyers to avail of big savings of up to 21 Lakhs and make the most of the recently announced additional government benefits on stamp duty in Maharashtra and Karnataka.
We believe in adopting a holistic 360- degree approach for most of our marketing campaigns. We recently concluded ‘The Grand Indian Home Festival’ campaign’ was marketed using a 360-degree approach with planned ATL and BTL activities, the media plan to be a combination of print, outdoor, digital, SMS & database marketing. Lasting for a period of 45 days ending 28th Feb 2021, the popular campaign witnessed a generation of 28000+ Leads & 1900+ Site Visits. To enhance the physical home buying experience for this campaign, TRIL also created ‘Happiness Zone’ across all project sites for the campaign where homebuyers will also have a chance to win exciting gift vouchers up to 6 Lakhs during on-site booking. The Company has received a tremendous response for such engaging, on-site activations.
Q) What are the difficulties real estate industries facing?
The pandemic aggravated some of the long-lasting issues of the residential segment, which had over 25 months’ worth of unsold inventory. However, the residential sector has bounced back faster than expected with help from State and Central Government on various financial waivers and schemes such as moratoriums on loans, etc. to support the homebuyer needs. For instance, Maharashtra and Karnataka have lowered their stamp duty rates, which has led to a surge in sales in these regions. This coupled with lower inflation and home loan interest to below 7% and below, subventions for affordable homes positively impacted sales.
One of the biggest changes that are already happening is consolidation in the real estate space. While some of India’s developers face difficulties in raising funds, the bigger, more established and well-funded players have either taken over or are assisting in the completion of stressed projects. Going forward, we can only expect this trend to continue and provide some much-needed structure and streamlining to the real estate sector in India.
The Covid-19 pandemic has caused disruption in all aspects of business and forced real estate companies to re-evaluate their advertising strategies. It has certainly prompted a rapid transition to all things digital, in an effort to thrive in the new normal. Most Indian real estate developers have been quick to adapt; nearly every developer has expanded their digital offerings. With the recent disruptions caused by Covid-19, we are mindful of the market sentiments as the consumers spend more time indoors and on their mobile phones. We are digitizing a lot of our advertising/ marketing efforts to overcome the hurdles caused by the pandemic.
Q) Home Loan rates are at an all-time low. Do you see any further rate cuts? How does it impact the industry?
Prior to the pandemic, many people were waiting for a price correction to take place to make their investments. Since the past few months, RBI has been maintaining an accommodative stance for repo rate, resulting in home loan interest coming down. This supported by attractive offers from the developers, No GST for Ready to move in inventory, immediate rental saving or income, seems like an attractive proposition. One can anticipate that more shall consider investing in property as that is a more stable, long-term asset against the rationale of renting or low yields. Some recent volatility in stock markets has shaken the confidence as well and certain sectors may take time to recover. All of these factors, coupled with the emotional requirement to have a safe haven during the age of social distancing, will surely lead to an increase in demand for homes in urban as well as semi-urban markets.
Q) The government has already taken a lot of positive steps supporting the real estate industry. What are your expectations going ahead?
Several cash positive projects in the industry are stuck largely due to lack of capital and with no fault of developers. The cost of Governance, Compliance, Capital and State Government delays has made real estate unviable for many. Given the extraordinary circumstances, we have made representations to the Government to initiate measures to-
- Improve developer liquidity
- Reduce provisioning requirements for loans to the real estate sector
- The flexibilities offered to the Banks in respect of moratorium, deferral, etc. should also be passed on to NBFCs
- Foreign Institutional Investors should be allowed to directly invest in ready-to-move-in residential inventory for a period of 5 years
- GST input credit should be allowed for residential and commercial
- Provide stimulus to end-consumer demand-
- Subvention scheme for Real Estate should be restored
- Interest rate subsidy of 3% for all buyers of residential units for a period of 3 years
- State Stamp duty on registration should be 2% only.
- Remove capital gain
- Allow deduction of interest paid to bank from rental incomes of houses.
- Provide stimulus through taxation measures- increase limits under section 24 b
- Set more distressed funds
- Abolish GST on JD Agreements to allow consolidation.
- GST on cement should be reduced from 28% to 12%
Q) How are you looking at the year 2021? What are your expectations?
We know the pandemic is closer to being addressed but as most predict perhaps not before March-June. The demand for residential is expected to improve from current levels. The sentiments and the economic indicators show early signs of recovery but it would be only after another quarter of better results that one would conclude that.
Our strategy is always built around customer wellbeing, health, quality, transparency, and high governance. We believe in delivering a higher value and better experience to our customers. Our new investments shall be in top key cities, which include NCR, Mumbai, Bengaluru, Pune, and Chennai. We have strategic institutional investors who are very keen to grow with us. We intend to co-invest with them in green, brown, and developed assets across key markets and more specifically top 26 micro-markets of key cities.
While footfall increase in malls is taking some more time, production volumes have gone up in the manufacturing sector, consumption is increasing, certain offline channels of distribution are up and running. The economy has shown signs of recovery in the last few months and going by this pace, it will be back to pre covid levels in a couple of quarters. Not to forget that India is a great consumption story and it is expediting the recovery process faster than anticipated.