Message from MD – December 2016
01 December 2016
The Modi government has pulled off arguably the most significant reform measure in its tenure. While this expeditious move to boldly counter the black money and parallel economy threat is likely to have significant repercussions, this effort, importantly, will have a visible impact on how the current government’s policies are perceived in the international circles of economic power. Most of the macro-economic impact will be felt in the short term, though there are larger implications in the medium to long term! The immediate effect on our segment was negative, as there was a big propaganda by the media about the crash of real estate markets. We were able to survive the tsunami and get back to reasonably better performance on the sales and collection front by the month end.
Responsibility is what drives every historic initiative. In spite of the hardships that everyone had to go through in the last couple of weeks, demonetisation has also shown its brighter side to us. It’s a blessing in disguise for all genuine home buyers. Contrary to popular expectations and predictions, the scenario is completely changing in favour of the customer.
The unexpected withdrawal of the currency notes will create an unprecedented accumulation of money in banks. This situation will only force banks to dispense more housing loans and that too at lower interest rates. The wiping out of the excess currency in circulation will take care of inflation and prompt the Reserve Bank of India to bring down its repo rate by at least 2%, leading even to a slash of the same proportion in the interest rates on housing loans. In my opinion, the situation may bring down the interest rate to 7%. This only means that we are becoming a more robust economy and that we are inching closer to the housing loan interest rate of 5% offered in the developed countries of the world. The elimination of excess money will facilitate reduction in land prices whereas housing loans are going to afford significant tax breaks leading to a dual advantage for buyers.
Although I don’t see a change in the prices of apartment/villas offered by the organised sector from the prevailing rates, which are reasonable, the ‘low interest rate’ is definitely going to play a pivotal role in reducing the financial pain involved in owning a home.
In a market like Kerala, more than 90% of home-buying happens on bank loans. Moreover, the organised sector garners 60% of its business from NRIs. Hence the chances of an adverse impact of the policy on the state’s real estate sector are negligible. Nevertheless, the policy reaffirms the stature and survival of law-abiding and responsible entities in the industry.
This is the most favourable time for the genuine and intelligent real estate aspirant. Go ahead, build your assets, make a brilliant future, the time is now!
Dear all, this is the message to the market to keep your business intact. The real investors and businesses will be protected and victorious. There was another important turn of events during this month which also reminds us of the same. Yes! Donald Trump’s victory may be a surprise – but not to astute marketers. I think there are many important lessons to be learned from Trump’s brand marketing playbook. I think the most important takeaway among them for us is the brand positioning and marketing campaign.
Give consumers a job. The best marketing campaigns always call on consumers to do something. For example, United Airlines invites you to “Fly The Friendly Skies.” Nike insists that you “Just Do It.” The most successful brands also allow their consumers to co-create brand meaning. “Let’s Make America Great Again” is an inclusive call to arms with a powerful goal that each voter can interpret for himself. It embraces passion and purpose. Clinton’s “Stronger Together” is also inclusive but it evokes process. It’s not that process isn’t important, but the desired outcome is much less clear. Good marketers know that if you don’t position your brand clearly, your competitors will do it for them.
Wish you all a wonderful December, Merry Christmas, great market revival and stunning performance on all work fronts.