In a day and age where nearly two-thirds of enterprise value is originating from intangible assets alone, the future value of businesses, especially those which are knowledge driven, will largely tend to be concentrated in the ways in which firms manage and acknowledge these value creating assets. Branding in a knowledge driven business like real estate consulting is a fairly new concept. In this article, I discuss why real estate consulting firms should adopt the practice of brand-building and how this in turn can enhance their long term value and future growth in a market like India.
After the slump in the mid-90s', real estate firms are back in action into what can be called as the biggest housing and commercial real estate booms in the history. This time the bubble seems to be growing Entry modes of FDI in India and until it pops, the business may just keep looking better. While some investors may insist that the growth is too much too soon, there are many who believe that the growing real estate sector is not due to any irrational exuberance but a vote of confidence in resurgent India. The demand for real estate is at a all time high. The Ernst & Young report recently pegged the Indian Real Estate market at $12billion and estimated a consistent growth of over 30 percent a year in the next 5 years. In addition to this, the government's move in opening up the real estate sector allowing 100 percent foreign direct investment in the construction and development has already spurred huge investments.
As 'expansion' becomes the latest buzzword within corporate India, one can hardly predict how long will this trend continue. With the growing number of high net worth individuals, the booming spend-thrift middle class population and the massive inflow of multinational corporations, the demand for real estate is sky-rocketing. This growth can largely be attributed to five key catalysts of change: Favourable economic environment; increasing purchasing power; increasing financing options; favourable reforms initiated by the government and growing professionalism. Given the chaos and action in the realty sector, there is no doubt that real estate consulting firms will play a major role in meeting the growing demands.
As demand pushes up, so will the number of competing players in the market. Not to forget that these will be in addition to the already established thousands of realtors in this market. So one can only imagine what it's going to take for a new firm to make it big and to make is fast. The challenges are emerging from different quarters, namely big firms such as Tamwell Crow Meghraj and Colliers International which are looking at becoming one stop shops, individual experts who have vast experience of the realty business, online experts such as 99acres.com, management consulting firms such as PWC, financial service companies such as IndiaBulls, ICICI, HDFC etc. As more and more players foray into this business, what will ultimately happen is a shake-out where the industry will get rid of the quacks. Only those that are able to build a strong credibility in the market will survive.
To many marketers, branding a real estate consulting business may sound too farcical. This is because most believe that branding benefits only those who deal in tangible goods. And since the business of consulting is not product driven, brand-building at best may accrue to word-of-mouth marketing. But aren't we missing out something here? If knowledge driven businesses such as Infosys, Intebrand and Mckinsey & Co. can all invest huge sums on money on brand building initiatives, then why can't a real estate consulting business do the same? If knowledge like tangible goods is transferable from one party to another, the why question the former under the pretext of intangibility?
Real Estate consulting firms in India have long engaged in head-to-head competition in search of sustained, profitable growth. They have fought for competitive advantage, battled over market share, and struggled for differentiation. Yet in today's overcrowded real estate market, competing head-on results in nothing but a bloody "red ocean" of rivals fighting over a shrinking profit pool. The only key to success and survival in this market is not to out-perform the competition, but to create a new uncontested market space, thereby making the competition irrelevant. Hence, the three building blocks of branded differentiation that real estate consulting firms must adapt are: value innovation, tipping point leadership and robust delivery process.
As intangible assets (especially brands) contribute over two-thirds of the enterprise value for any business operating in the service sector, shouldn't it be given top most priority in corporate boardrooms? Well, for most companies, branding is still not a strategic priority. It is a part of marketing and is often seen from a profit and loss perspective. Real estate consulting firms must understand that with internationalisation of the market and the tightening of competition, customers now have a lot of choices available. Today's mantra is not about being the 'first choice' of a customer but rather the 'only choice'. In other words, a successful real estate consulting brand would be one that becomes the only source of reference for customers as far as buying, selling or leasing a property is concerned. But this is easier said than done.
Realty firms must build for long-term and aim for developing a strong brand equity (reputational value), rather than just a brand image. Only then will it be able to create an uncontested market space and compete effectively and profitably even at times of market downturns. Firms must remember that building a brand generally takes a long time and requires a strong commitment from the senior management. A brand may easily be destroyed if the firm is not acting according to its brand promises. All people, processes and key activities must be aligned with the brand promise. Real estate firms must realise that brand is not worth building up for mere pleasure, but it must bring benefit, for example increased customer base or higher returns on investment. The best brands - whether consumables, real estates or services - are always desired. They may also be exported around the world. A good brand will reclaim the promise, keep the customers satisfied and get them to repurchase your brand over and over again.
A final word of advice:
Entry modes of FDI in India Building strong brands has nothing to do with being recognized widely on mass media. It has everything to do with dedicating your entire organization to excellence in every little transaction you conduct, internally or externally. However big or small you are today, the future will belong to only those who create a strong reputational value. So my proposition to all you realtors out there is to set global standards in everything you do and make way for your brand to lead your business.
