Realty developers outsourcing sales to cut recurring costs

With pressure on margins and no visible upside on residential property prices, a rising number of real estate developers are outsourcing their sales and marketing duties to cut recurring costs and link their outflows to sales inflows.

The slowdown and demand crunch over the last few years have almost forced developers to shift from hiring sales professionals to handing over sales and marketing responsibility of their projects to strategic consultants such as Xanadu Realty and The Guardians Real Estate Advisory.

“Developers working on larger number of launches also require a specialised team to gather sales momentum in these tough markets” said Anurag Singhvi, managing director of Xanadu Realty. “Usually around the launch time, developers need a large sales and marketing team, which remains under utilised otherwise. Being a specialised function, hiring an expert helps in getting better results driven by skilled talent and broader reach,” he said.

Xanadu has sold more than 1,000 apartments in Raunak Group’s two projects in Mumbai suburbs of Thane and Kalyan in the last six months. It also sold 2,200 apartments in Neptune Group’s affordable housing project at Ambivli in a single launch.

Kaushal Agarwal, chairman of The Guardians Real Estate Advisory, a developer who has only one or two projects to be launched in a year saves at least 30% by outsourcing the entire function of marketing and sales.

Most marketing consultancies charge zero signing or mobilisation fee and are willing to link their revenues to the net sales numbers a project achieves so that the developer needs to pay only when a sale is concluded.

The consultation fee is generally in the range of 2-4% of the sale value, industry insiders said.

The consultancy’s strategy and eventual sales achieved by the client decide the future of their relationship.

“Developers are looking for a one stop-shop solution for their sales and marketing requirements. The trend of on-boarding strategic consultants who can advise developers on their product development, marketing, sales and customer relationship management (CRM) is now visible across the industry,” Agarwal said.