Until recently, sluggish real estate markets coupled with high-interest rates, and slow economic growth have been the key factors for reduced sales of residential apartments. In addition, government regulatory uncertainties and poor builder project completion track records have also contributed to this slowdown.
Unsold apartment inventory can amount to huge losses for the builder. It not only disrupts the cash flow but also delays work on new projects due to lack of resources.
Although, not as simple as it looks, there are a few strategies that the real estate agents or developers can adopt to deal with this problem.
Work on Buyers Perspective:
The trick here is to play on the advantages and undermine the drawbacks of completed inventory to assure higher sales. Marketing and selling completed housing projects has its own set of benefits and drawbacks. The main advantage being a better perception of completed inventory in the eyes of the buyers as against under-construction projects. The developers can use this advantage to make quicker sales and, maybe, get slightly better prices. However, on the downside, completed projects require the buyers to make complete arrangements for financing on their own, in addition to the home loan burden.
Therefore, the realtors should try to reduce the financial burden of potential prospects by offering semi-furnished or furnished apartments, giving an all-inclusive package deal instead of per square footage, offering group buying for corporate clients etc. The buyers should also be told of the three benefits of buying completed projects, i.e. savings in service tax, tax deduction from the first year itself and savings in rentals provided the buyer is moving from a rented accommodation.
Dynamic Marketing Mix:
Selling unsold inventory in a sluggish real estate market will require some dynamic and out of the box marketing strategies. Therefore, it is imperative for every builder as well as a realtor to reinvent their marketing plan and tweak it according to the current project requirements. Innovative media advertisements, print ads, eye-catching billboards, radio announcements are some of the methods of enhancing the brand recall value and developing interest among potential customers which can then be converted to sales.
In today’s world of social networking, developers and realtors need to invest massively into maintaining their presences on various social media platforms. Failure to do so may result in losing to competition and incurring losses from unsold inventory.
Limited –Time promotions.
This strategy can create a sense of urgency among potential buyers giving them the much-needed push to act now, instead of later. For instance, a lot of builders offer freebies like electronic equipment’s, cars, or an extra down payment grant to quicken sales.
Inventory should not become Cash Flow Issue.
Lastly, when planning the residential projects, the developers should plan their cash flow in a way so that at any given point and time, enough working capital is available. The key is to understand one’s financials and take up those sized projects that the builder can successfully sell without incurring any losses.