An adjudicator for the Guinness Book of World Records was in attendance at the bhoomi pujan (ground-breaking) ceremony in Mahapura village, about 16km from the Rajasthan capital. The ceremony took place when India’s real estate market was starting to cool after a red-hot streak. “The whole idea was to attract attention and create hype around the project,” says Vinay Shenoy, head of marketing at Bangalore-based real estate marketing firm Asipac Group, which conceptualized the event.

The gimmick helped, and the project made up 63% of total residential sales last year in a softening Jaipur real estate market, according to Shenoy. It is an example of how developers are moving away from traditional marketing techniques and adopting novel strategies to attract reluctant homebuyers.

Rising home loan rates and surging inflation have forced both speculators and genuine homebuyers to put purchases on hold, driving developers to think out of the box to drum up consumer interest. Sales in the Delhi suburbs of Gurgaon and Noida have declined by 20-25%, according to estimates by real estate brokers.

Mumbai-based Lodha Group hired an event management company to think up a different on-site experience for potential buyers to sell its luxury villas in Lonavala, a hill station near Mumbai.

The company conducts pre-visit interviews where personal details about the potential buyer are collected. Based on these, buyers are picked up in a luxury car, given their favourite magazine and offered a beverage to sip through the journey to the site, which is then followed up by a personalized trip around the site.

“It is a challenge to sell in a competitive market with consumers being exposed to more variety,” says R. Kartick, marketing head of Lodha Group. “You can’t give out a great advertisement and sit back,” he adds.

Lodha adds a personal touch by clicking a photograph of the visitor on the site. The photograph is framed and then sent to the potential buyer as a memento.

Such personalized marketing techniques lead to increased sales, said Kartick. “There may be a latent desire to purchase but such tools actualize that urge to real buying,” he said.

Unitech Ltd staged special events—a horse race in Delhi and a polo match in Mumbai —to attract buyers when it launched two new towers in its super luxury residential project Unitech Grande in Noida. The events were designed to associate the luxury apartments with pastimes of the rich.

Developers typically spend 1-2% of their revenue on marketing by giving out advertisements in newspapers and airing commercials on radio, television and the Internet.

According to Anuj Puri, country head of Jones Lang La Salle Meghraj, a property consultancy firm, innovative marketing techniques are required for luxury properties and second-home projects, where demand has to be created.

“Such developers have the added task of marketing a lifestyle product and not just a property,” Puri said. “So, you are targeting a customer exposed to international travel and developers are forced to move up the value chain and go beyond the obvious tools of marketing.”

Orange Properties, a real estate marketing agency in Bangalore, has been bailing out mid-sized developers finding it difficult to sell their properties. The agency typically takes up a project for a period of 10 days and markets it aggressively through radio, newspapers and outdoor hoardings, backed by the offer of a range of freebies.

Orange claims that it is successful most of the time. “Buyers don’t have brand recall for smaller developers. So, we have created our own brand, Orange Properties, which we lend to smaller builders and help them in marketing their products,” said a company spokesperson.

In Mumbai, a local developer plans to hand out glasses of lemonade and refreshment towels bearing its brand name to commuters on the local train to Virar to market a residential project it is building in that suburb, said Shenoy of Asipac.

For marketing companies such as Asipac, the real estate market’s slowdown has meant busy—and potentially profitable—times.

Asipac chairman and CEO Amit Bagaria says he is travelling frequently to Mumbai to meet real estate developers who aren’t able to sell their properties and who want him to devise marketing strategies similar to United Builders’ Jaipur bhoomi pujan.

Asipac has received 300-odd emails in the last three to four months from developers, landowners and first-time developers, enquiring about its services. The company used to get two to three such enquiries a fortnight, about three to four months back.According to Shenoy, it is a buyers’ market and the challenge for real estate companies is to cut through the clutter and attract customers.“The projects that are being launched are all the same,” he says. “Today, buyers are making a choice. But the question is how do you draw attention?” That’s where marketing experts are stepping in.

While analysts attribute this trend to dampening spirits of potential buyers, real estate companies prefer to call this a reality check on their advertising budgets. A report from Adex India, a division of TAM Media Research, shows that the share of real estate advertisements in print media saw a drop of 2% during 2007 compared to 2006. According to Adex, the share of real estate advertisement in overall print and TV advertising last year was 4% and 1%, respectively.

Says S K Sayal CEO, Alpha G Corp: “Infrastructure and real estate companies have primarily been responsible for the advertising industry sustaining its double-digit growth rate. However, in general, companies and brands have been increasing their expenditure on advertising. But a recent dip in the realty sector has made things worse for the advertising industry. Many real estate companies, this fiscal, have cut down on their advertising budgets.”

The Adex report indicates that the top 10 advertisers shared an aggregate of 16% of overall ad volumes of real estate advertising in print during 2007. The list includes names such as DLF Group, Parsvnath, Sahara, HDIL and Omaxe group. However, the real estate had maximum share in South India publications followed by North and West publications with 32% and 26% share, respectively, during 2007.

“This is because all real estate companies want a national footprint. Also, these companies are now turning professional. They’re setting standards when it comes to managing their A2S (advertising to sales) ratio,” says Jagdeep Kapur, CMD, Samsika Marketing Consultants.

According to a FICCI-PricewaterhouseCoopers study on the Indian Entertainment and Media (E&M) industry, the year 2007 saw the advertising industry contribute 38% of the overall industry revenues of 2007, recording a growth of 22% over the previous year. Internet advertising is expected to reach Rs 420 crore in 2008, and Rs 1,100 crore by 2012, with a compound annual growth rate (CAGR) of 32%.

Harish Bijoor, CEO, Harish Bijoor Consults, feels that print’s loss has been television’s gain. “There has been a number of IPOs of real estate companies in the recent past. The print advertisement gives you the immediacy factor, while the theme is built by a television commercial,” he says. Bijoor believes that if at all there has been any dip, it has been in the B2B real estate advertisements.

Adds Kamal Taneja, MD, TDI Group: “There has been a little over-spending by the real estate industry in the advertising sector in the last three to five years. Now that the realty sector is looking at various ad avenues, it is certain that the industry is going to witness a dip.”

Mr Chandru L Raheja, Chairman, K Raheja Corp, informed, “We feel happy to be associated with Servcorp. They are one of the global leaders in the serviced offices and virtual offices business and have a proven track record in the markets worldwide. Servcorp will strengthen the Group’s objective of providing an end-to-end business logistic support to our clients in India. And further grow our breadth in the Realty and Consumer business.”

Mr Taine Moufarrige, Executive Director, Servcorp, added, “We are pleased to announce our tie-up with K Raheja Corp, one of the leading real estate players in India. Since opening our first location in Sydney, Servcorp has grown into a global network of exceptional office facilities. With an unwavering commitment to deliver premium quality business solutions, Servcorp always establish their facilities in premier buildings with unparalleled addresses located in the most dynamic cities worldwide. We hope to extend the similar levels of quality in India too.”

Mr Sunil Hingorani, Senior VP-Finance, K Raheja Corp, who is leading this venture, said, “The partnership will offer fully functional serviced offices to the new ventures. We will offer state-of-the-art Business Centers across major cities in India. The first two centers are located in Hyderabad and Mumbai. The Indian economy is growing at very fast pace and there are enhanced opportunities available for entrepreneur fraternity today. Backed by Servcorp’s international expertise, we are sure that this partnership will be frontrunner in serviced and virtual offices business space.”

Servcorp is about providing total business solutions and offering maximum flexibility to the business ventures. It offers everything that a new business would require, allowing them to focus on the day-to-day running of their business in a cost effective way. All meeting rooms and administration services run on a “pay for what you use, only” basis. Elegant boardrooms, executive offices and a full range of professional and technical support staff, customized to meet the needs of every business contribute to clients gaining a competitive advantage and developing a global corporate image.

To support those businesses that do not have a requirement for physical office space, Servcorp offers Virtual Office packages. Virtual Office clients can take advantage of the prestigious addresses utilizing it on business cards and letterheads, be assisted by a dedicated receptionist who’ll answer calls in their company name or gain international access to boardrooms and meeting rooms. Everything you’d expect from a professional office environment – without actually having an office!

Their state of the art product “Hottdesk” is an internet based platform that allows the delivery of services and products online and in real time. Clients can check emails, make boardroom bookings, request translations, utilize a remote data storage system, and print to any Servcorp office worldwide, book a courier and much more. Servcorp clients can access “Hottdesk” wherever the internet is available.

Among the big players, promoter’s stake in Jaiprakash Associates has declined to 44.58%, as a result of expansion of equity base to Rs 234 crore in March ’08. Similarly, for Nagarjuna Construction, the stake has declined to 22.5% on March ’08. Nagarjuna has been diluting its stake for the last five years; in March 03, promoter holding was as high as 48.2%. The company’s equity base has increased to Rs. 45.75 crore in March ’08 from 9.45 crore in March ’03.

An interesting feature of the dilution has been that most large players have managed to get good valuation due to booming markets. In most cases, promoter holding has come down due to conversion of securities into equity by preferential shareholders and also due to private placement of shares to PE players.

Further, companies had also issues FCCB to raise money from the market for long-term requirement. The need for dilution comes due to largely negative cash flow from operations, which puts pressure on companies to infuse funds from other sources. The negative cash flow from operations is because of delay in payment, long gestation period, investment in fixed assets like equipment, and so on. Further, investment in SPVs for various BOT projects have also led to significant increase in capital requirement for the companies. Promoter of small construction player like Tantia Construction and Kalindee Rail Nirman have also diluted their stake. Few companies such as Noida Toll Bridge and Era construction have witnessed a hike in promoter holding.

This makes India the second-most affected nation after Malaysia in the first quarter of 2008 among key property markets, according to a Citigroup report. Interestingly, in the US, the property market index is trading at just 12% discount to its NAV. Its performance is even better than the global index, which is ruling at an 18% discount. NAV is the present discounted value of all future cash flows of a property firm. It factors in the existing land bank, overall development opportunities and project execution of a property firm. It is a valuation tool for real estate firms.

Analysts say the discount to NAV shows that the Indian property market is on a downswing. According to ICICI Direct real estate analyst Rupesh Sankhe, “Historically, when the property market cycle is on an upswing, firm’s trade at a premium to their NAVs, and during a downturn, this tends to get reversed with shares trading at a discount. Since real estate stocks are high risk, the trend gets amplified.”

Indian property stock prices have dropped as much as 50-67% and underperformed the Sensex by 23% in the first quarter of 2008. Such a sharp fall has widened the discount to their NAVs, which was just 1-2% in November ’07. This is despite the fact that Citigroup has lowered the NAVs of Indian property firms by 9-27% in its analysis. Real estate consultancy firm Cushman & Wakefield joint managing director Sanjay Dutt says high interest rates have made property firms with high debt exposure prone to rapid erosion of corporate valuations.

He added that each segment of the domestic real estate sector is facing problems: “With the exit of speculators from the residential market, the transaction volume is down by almost 40%. Secondly, a large part of the IT & ITES space is occupied by US and Europe-based MNCs, but in the first quarter of this year, a majority of them didn’t commit to any space and we don’t expect it to change in the second quarter either. In the office space, rates have started softening due to new supplies. Majority of the mall developers are also hit as cost of servicing debt has gone up and private equity funds are being cautious in investing in the sector.”

Valuations in the Indian real estate sector had peaked in January, when the benchmark stock market index, Sensex, also hit an all-time high, with realty stocks trading at over 20% premium to their NAVs. After the stock market crash, DLF, Unitech and Purvankara traded at a discount of 18%, 26%, and 49%, respectively, to their NAVs. Regionwise, Malaysia fared worse than India with property stocks here trading at a marginally higher discount compared to India. The correction in Chinese property stocks seems to be the deepest since November last year. Chinese property stocks are trading at a discount of 27% to their NAVs compared to a premium of 5% in November. The US, in fact, saw marginal reduction in discount since November ‘07.

Some risks appear to be priced in and the valuations seem attractive, but there could be more volatility ahead, says the Citigroup report, pointing out that the sector is highly vulnerable to capital flows as risk appetite tapers off.

“The cost of raising funds has gone up from what it was six months ago,” K P Singh told media, adding that real estate firms faced a tight situation. Several real estate firms, including DLF, Unitech, Indiabulls and Omaxe, have put off their plans to raise funds through capital market due to a global market meltdown. The listing of DLF Assets (DAL), a firm owned by the promoters of DLF, as a real estate investment trust (REIT) in Singapore has also been postponed. DAL is now raising funds worth Rs 2,000 crore through private placement.

“One would like to go for an IPO to raise funds. But since the market sentiment is not good, one has to opt for private placement,’’ says Mr. Singh, adding that Singapore listing will happen ‘once market sentiments improve.” DAL has been in talks with several global funds for the private placement.

“For a good company, raising funds through private placement is not very difficult. But it has become expensive as the investor takes his pound of flesh,” he said, indicating that recent meltdown has put private equity or other institutional investors at an advantage. In the given scenario, Mr. Singh said, one could expect more PE deals in real estate, but that would depend on “how desperate people are for funds.”

With homebuyers’ budgets expanding, investing in state-of the-art amenities and designer internal fit-outs are the order of the day. LJH’s new venture in India will provide professional maintenance and upkeep of these assets upon project completion.

Project management or letting management provides services like regular property inspections, end of-year financial reporting, tenant sourcing and lease preparation among others. The venture is part of LJH’s project marketing division.

“We believe there is a huge void to be occupied. Domestic and NRI buyers are investing heavily in homes here. In a bull market, a majority of the investments made turn profitable.

Worries about maximizing returns crop up only when the market softens. Quality maintenance protects the value of the property considerably during a market slowdown,” said Alexander Moore, director-CEO, LJH India Project Marketing.

The company is in talks with leading developers across India in a bid to tap their customers and prospective buyers. That apart, the expanding franchisee network will help rope in clients, Mr. Moore said.

Emaar has recently unveiled 144 Armani Residences at its iconic Burj Dubai development, predicted to be the tallest man-made structure in the world.

Emaar MGF has also chalked out plans to set up the Armani brand of luxury hotels in places like Mumbai, Delhi and Goa. Emaar MGF is expanding aggressively in the hospitality sector of India with several luxury hotels. These could include Armani Hotels & Resorts. Currently, Emaar is evaluating the options of launching an Armani property in the country.

Burj Dubai will host the first Armani Hotel which will be opened in the last quarter of 2008. The Armani Hotel Dubai will include restaurants, 160 guest rooms and suites, and a spa covering more than 40,000 square meters.