Getting your business to soar with the eagles

Embracing versus Embarrassing the potential Customer;

Changing the way the Luxury business is done in India

- Author: Joseph Sam

Statistics don’t lie but what’s underlying is always food for speculation and so it summarizes why even though the luxury market in India shows positive indices is still less than 2% of the global luxury market.  The number of High Net Worth Individual’s ( defined as those with more than $1 million in onshore liquid assets) in India grew 200 per cent from 2006 to 2013 and households with an annual disposable income of over $100,000 increased 60 per cent, from 700,000 in 2006 to 1.1 million in 2013. Expected to grow at over 20% to reach $14 billion by 2016 (ASSOCHAM-KPMG study )owing to rising number of wealthy people, aspiring middle class and affluent young consumers the intangible barriers to luxury consumption far exceed issues such as the distribution of the target luxury consumer across various markets in India.

So why are Indian consumers reluctant to let their guard down in embracing luxury in the manner consumers have done in other emerging markets which have evolved? The key answer is in exploring the background of ‘the target luxury consumers’. Most of the new wealth in India has been added by virtue of entrepreneurs from the aspiring middle class, SME’s and the trading community which has been expanding their footprint. Even high net worth individuals with a professional background (investment bankers, techno-preneurs, engineers etc) are those who have established their credentials in developed markets and reverse migrated to ride the great India economic wave. What is common to all these classes of the new luxury consumer is their ‘cultural backgrounds and upbringing’, where they were taught to ‘save and be apologetic about spending’. Since the  late 90’s to early 2008 a large number of mid level brands and products established their presence in the Indian market while luxury struggled getting a foothold primarily because of lack of partners, shortage of quality retail space and the difference in pricing Internationally & India, courtesy high duties and overheads. It’s only in the last 5 years, especially with the opening up of FDI, that brands have understood the need to be present directly in the market to access the dispersed pockets of wealth as well as transform this regressed cultural ethos from apologetic purchases into an unabashed frenzy of being ostentatious on opulence & personal indulgence.

So how do you get to provoke these new maharajahs to indulge in luxury be it apparel or accessories or food services or cars & bikes or even products like real estate when there is this constant cultural impediment which is far more significant a reason than what most luxury brand owners have been resonating saying that luxury isn't growing the way it should be because Indian’s are price conscious. The key is ‘Price-Value-Equity’ (try getting it on an X Y Z graph to see it place marked right at your face) and how as pre qualified reverse engineers we are able to give value to the content without having the requisite lineage or culture to quantify the legacy of a brand. Yes the Indian consumer is brand struck, but not every brand has struck it out well in the market and with the influence of social media on mindsets, opinions and perceptions, verdicts are out by the day, making or killing brands overnight.

The first step to engaging the potential luxury client in the background of the cultural paradox is to adhere to the ‘global positioning of the brand’ as luxury brands are uniquely positioned and respected for the ability to conform to a vocabulary that differentiates them, so localization at the cost of distorting brand & product DNA should be avoided at all costs. Second is to make the brand ‘relevant’ to the target customer and how the acquisition of its offering adds perceptible and tangible value to the customer in a way that the value of owning it far outweighs its perceived cost. The third step of the way is far more kaleidoscopic than what it implies, ‘accessibility’, which is a spirited combination of physical access (retail, eCommerce, luggage sales, concierge....), price & payment access and the access to experience. The last factor, in our studies, is the most vital considering that it is where cultural barriers are broken, comfort/ the excitement of owning the product is created or enhanced AND luxury is matured as a concept in the mind of the target or repeat customer. The final step is to disseminate the various facets of the brand beyond its product and service offerings into ensuring that it communicates to its patrons that their engagement & relationship is symbiotic in a meaningful manner that is lasting. The ‘relationship enhancement’ step is about going beyond the tokenism of espousing ‘causes’ and zooming into the resolution of issues that would directly impact ‘the way we live’.

Brands are akin to people with distinct and powerful personalities and being a global brand is more about engagement than the distortion of its DNA by compulsive localisation. With luxury brands where mental roadblocks are normally higher than a potential client’s self pride, the challenge of meeting the brand’s business objectives would be best served by the localization of the method of engagement. In markets like India luxury brands have to go the extra mile especially as they are saddled with a legacy of regressive cultural disposition towards spending on indulgences. In conclusion while tendencies are changing it has to go hand in hand with a sense of respect for the brand as well as a methodical evolution of the patron qualifying them for the more privileged products and services.

Author:               I.Joseph Sam

Designation:   Business Director, Tasteful Living

Email:                  jsam@tastefulliving.in

How do you evaluate properties for their 'luxury quotient'?

The easiest card in the pack to flash to a novice is the ace of luxury and be it fashion or lifestyle or real estate you'd see every head turn at the drop of the word. To differentiate and ensure that the word luxury exemplifies dignity for a project or a product, brand custodians started exaggerating it using words like 'uber', 'aspirational', 'ultra' and 'high end' confusing target clients even more and most often misleading them. An established adage since decades is that a brand's composition is defined 'tangibly' and 'intangibly' and not merely by its physical assets. We can speak elaborately about the design, craftmanship, technical inputs, material used and brands but the intangible is what goes the 'extra mile' in ensuring that a project is 'differentiated from the other' offerings especially when it comes to 'services' and 'innovation'.

Another reason most developers (infact this seems to be the inevitable reason) call their projects or properties 'luxury projects' is only because the cost of land acquisition is extremely high which means with the cost of development, conversions (legal & liaising), operations, human resource, marketing & sales the project has no choice to be called anything but a luxury project. What demeans it then is that every project around it with more or less the same costing structure will also have no choice but to be 'termed' a luxury project and when a whole lot of luxury projects come up together they're either no longer luxury or there's a crash around the corner!

So how exactly do you evaluate the luxury quotient of a property? Is it by the tangibles, or the beauty of presentation done by a creative agency or the usage of fixtures and fittings or possibly by a combination of factors. While our methodology is proprietary I will be disclosing the 7 key parameters we use to evaluate and rank a luxury property and if you're paying the right value for what you intend to buy. What I will not be disclosing are the sub parameters, weight-ages and  qualitative issues that can offset or supplement the so called lacuna's or sublime advantages. If it ranks above 70 you're definitely buying a luxury property and between 80-90 a property that will escalate in its value of more than 35-50% in the next 2-3 years and yes between 90 & 100 almost double in value in the same period.

The first and foremost ofcourse is LOCATION (1) which also addresses the current & proposed DEVELOPMENT that is envisaged in and around the location. Another key issue in the location is the specific location of the project with respect to elements accentuating the project such as sea, forest or mountain FACING or SURROUNDING. The development could be as a part of the larger master plan inclusive of infrastructure, resource utilization (& leverage) and zoning. This is also the primary influencer of the price of the land.  The second parameter is the economic & political STABILITY (2) of the state or country in which the property is located (and largely its reputation or perceived branding by buyers). The next is the AVAILABILITY of LAND versus THE DEMAND (3) which is largely driven by economy fueling an influx of migrants or workforce. I will also put 'future demand' as a decisive sub parameter so that too many palm islands are not created with little or no economy supporting it's existence even if its just tourism.

The next few parameters are more related to how the property or project is enhanced in its intrinsic value by virtue of what is immediately in and around it such as the NEIGHBORHOOD and the profile of 'Neighbors' (4) , the AMENITIES (5) provided within and surrounding the property, the DENSITY & PROFILE (6) of the POPULATION  targeted (or currently being engaged) by the property developers/owners  and finally the Specific PROPERTY COMPOSITION (7) such as the Architect(ure), Age of Structure, Art collection, Interiors, Designer associated, heritage & other factors intrinsic to it. A parameter like 'amenities' is further ranked based on concierge services provided, club house, swimming pool, on call professionals available and access to services such as grocery purchases, maids, drivers, gardeners, cooks and even baby sitting. 

To summarize evaluating the luxury quotient of  a project (and bringing out a property specific evaluation docket) will be as important as a 'due diligence' or 'feasibility report' in the near future, if not now. This way the customer will not only get to know if they're actually buying a 'luxury property' but this can also be an eye opener to a potential developer or investor in understanding if they should get into luxury development unless they've understood the influence and ramification of these parameters on a potential clients 'buying decision'. 

If you would like to evaluate the luxury quotient of your project please feel free to contact us.

Author: I.Joseph Sam

Designation: Business Director, Tasteful Living

Email: jsam@tastefulliving.in

(Next in series: "Elements in designing a luxury property")

Luxury farm villas versus the Apartment life

"Farm villas versus the Apartment life"....This has been one of the most debated subjects when it comes to the choice of living, be it a rented property or one that is purchased. This ofcourse is considering the key factors of supply, parity in price and accessibility wherein a buyer or a tenant can choose either and tends to mostly choose living in an apartment over living in a farm. While the benefits of living in an apartment cannot be discounted from issues such as security to maintenance, power back up, homogeneous tenants (in choices of lifestyle) to community living the fact is that it takes away the joy of living in an open space. If these benefits can be leveraged into the farmhouse living then it is physically, psychologically & socially healthier, gives the opportunity to do more things together as a family, with friends and within a community and more than anything else land as an asset class can only appreciate unlike an apartment where appreciation is completely driven by supply and the possibility of vertical growth in the same area.

The answer to the facilities and amenities that one tends to expect or rather take for granted in an apartment complex can be addressed in a gated farm villa community if the project is planned well, backed by a visionary development team and if the human factors (social, physiological and aspirational needs) are met through the engagement of the key stakeholders from the inception of the project. 

I am going to restrict myself to addressing this debate to the geography of Delhi in India (no longer the NCR but right at the heart of it) as this has become the current hot spot of investment in land projects especially for farm houses giving way to the possibility of branded luxury and premium gated villa farm communities.

Private Farm Villa in the heart of the luxury belt of South Delhi

Since the new Delhi Master Plan 2021 was notified the opportunity of owning a farm and that within a gated community has become a practical proposition (increased FAR allows 13,068 sq ft of built up space above the ground per acre & the basement is free of FAR) and that in the near future. As a Chief Project Guide (and one responsible for its marketing & positioning) I've had the opportunity of being associated with 2 visionary developers in the farm (or green) belt of the developed zones which spread from the Southern most part of the state of Delhi (adjoining the MG road side of Gurgaon in Haryana) to South West Delhi (bordering the new developments along the Dwarka expressway). In the advent of healthy client activism it is important to address the legal issues as importantly as the issues related to design, luxury living, environmental concerns, sustainable living and community living especially in the context of sharing resources. The one issue that has rarely been addressed is that of how one can create the ambiance and the framework for this community living which has undertones of respecting each other space, privacy and needs. In both these projects we've addressed them through a continued interaction between the design & development team and focus groups (comprising of HNI's) who have been living in farms and in luxury gated communities across the world. 

  (Reference: Project NITAI by Samsaara Developers, Master Planning & lead Architect: Lotus Designs)

The quality of life within a set quantum of resources & amenities (air, water, sewage/waste disposal, walk ways, common facilities like club, security, concierge, swimming pools, parking etc) is far superior in gated farm villas than in apartments as it is shared by lesser number of people and the possibility of conflict or mishaps reduces considerably. With apartment prices going beyond the INR 15 to 25,000 (USD 250 to 400) per sq ft benchmark in luxury condominiums (sky rises with limited common facilities and access to same resources & amenities) a farm villa is not only a far more sensible proposition to invest in but the land that comes with it appreciates faster. Besides this one gets to possess a 'Capital' address, priority in resource allocation, luxury residence with greenery & openness yet privacy, live in a lesser congested neighborhood with like minded people, and in areas that are strategically located with respect to the NCR and linked by multiple access roads through mainstream expressways, national highways and broad arterial roads.

 (Reference: Project ARAHAM by BRISK, Lead Architect: DFI)

How do you chose the right kind of farm to live or invest in?- I'd go with 5 key factors:

a) The community DNA planned by the developer including the ethos, value system and contextual definition of luxury.

b) The amenities & facilities being built into making this community engage with each other.

c) The qualification of the design & development team including the architect, landscaping team, the environmental engineering team, the construction entity & project managers and those who are the related stakeholders.

d) The character, nature and specification of your property (land, villa and amenities specific to the property)

e) and yes Location (and how its accessed, located with respect to markets, distance from key landmarks and its significance)

While one tends to generalize the above to even choosing apartments and most often developers even try to fit their projects into the above key factors (which you have to live with) the truth is projects have to adhere to the above for a truly luxurious, sustainable and community based living and not vice versa merely for justification.

(Reference: Project NITAI by Samsaara Developers)

While this mindset may take time, to shift from an apartment to a gated farm villa, the time to make the change is now because of the limited options available (locality being the key factor), the entry price structure and the support given by the civic agencies to the initial projects that are being launched. Someone told me 'its a no brainer' between these two choices considering that besides all the benefits an apartment is never expandable whereas villas have land and space to add further rooms as the family grows but the fact is that the apartment culture has been established & entrenched in the mindset of people across the last 10 to 15 years within most of the cities in India and this can only be overcome by one on one client engagements with stakeholders and the initiative taken by clients to explore the potential and considerably large number of benefits in living in a farm house villa. With the monetization and development of farm land in the green belt and existing farm belts of Delhi this will catch up but unlike apartments this is going to be limited in number and definitely worth the investment as well as living.

Author: I.Joseph Sam

Designation: Business Director, Tasteful Living

Email: jsam@tastefulliving.in

(Next in series: "Evaluating properties for their luxury quotient"