A robust establishment of skill- based manufacturing industries has led to fast- paced urbanization in the southern region, housing 102.8 million people in just urban areas (27.3% of India’s total urban population). The accelerated pace of economic development in Tamil Nadu, Andhra Pradesh, Karnataka and Kerala contributed to 25.4% of the national domestic product (NDP) and has marginally increased in the past 5 years. Whilst maintaining a strong focus on the manufacturing sector for industries such as automobiles, textiles, pharmaceuticals, defense and aerospace, these southern states have gradually become attractive centers for the service industry, especially when we talk about technology. Overall, the four states house close to 50% of the total number of SEZs in the country. Together with industrial growth, IT remains the dominant driver for the real estate market.
Real estate, earlier an unorganized, family-driven practice, has slowly and steadily driven to becoming more organized and professionally practiced due to increasing competition in the region, however, operational hurdles for the industry is yet to be tackled.
First, building a sustainable customer base is a recurring challenge for most realtors. A customer typically engages with a real estate developer for a minimum of two to three years – from the launch of a project to construction completion and finally possession. During this period, developers should ensure a positive experience to enhance the possibility of reinvestments and referrals – the key drivers of sales in the real estate space. Today, customers are highly aware of the offerings of the market and expect the best-in-class service. Unlike the customer-seller relationship trends in other industries, customers maintain long-term relations with their real estate developers. Given this larger context of “customer relationship,” developers compete on their customer service skills and try positioning it as a key-differentiating factor to build their brand image and make sales effective, with a vision to enhance credibility overtime. The quality and effectiveness of communication with customers at various stages of the project life cycle requires real estate companies to build technological robust systems to keep up with customers’ expectations, abolish inconsistent practices, have an edge over other real estate developers by aiming to deliver a truly differentiated customer experience.
Second, there has been a visible change in product mix by developers due to muted demand and oversupply in Chennai and urban centers around the region. A massive oversupply in retail real estate has forced developers to either shelve projects or convert mall projects into mixed- use destinations or residential projects. Additionally, the demand supply mismatch has put a cap on the rising rentals for mall in various locations across cities. Most of the developers in southern India have revisited development plans for their mixed-use projects in Bengaluru, Chennai and Hyderabad.