Things to be considered while buying a branded property

What’s in a brand name?

Everything! Today’s consumers swear by brand names for each and everything, ranging from a simple breakfast cereal to watches and real estate. Towards the end of the last fiscal, a report prepared by internationally acclaimed property consultants revealed the growing trend towards branded properties.

As per the report, while the prime city markets around the world have witnessed prices increase by an average of 15.5 per cent within the last three years – outperforming more mainstream markets – they were, in turn, outperformed by residences launched by branded developers.

Home buyers need to consider whether to choose this option and willingly pay a premium for branded property‘s or whether the brand is cashing on its goodwill and using it as a marketing gimmick which could safely be ignored. Certain things such as the following should be considered before making a decision to invest in a branded property.

What is a branded house?

As suggested by the name, a branded house can simply be defined as a property which has the developer’s company name associated with the project. This is especially true in the case of developers who have carved a niche for themselves through their construction quality, over the decades. Because of this goodwill and credibility they are able to command a premium for their properties.

As per the managing director of Hiranadani Group of Companies, typically a reputed developer with a good brand image includes numerous features and amenities that the other developers might ignore. For instance, superior quality flooring while constructing a house would be installed by the former. The electrical appliances and switches, bathroom fittings and plumbing, etc, would be of premium quality and grade. For this prime quality and additional amenities, the developer would incur certain costs, which according to logical business ideals should be passed on to the end home buyers. So the extra premium paid by the end buyer would also include this cost as well as the cost of associating with the brand name.

What’s does the premium entitle?

According to real estate consultants and experts, a branded luxury home buyer can expect to pay a minimum premium of 25 per cent over and above the luxury residential rates for any given location. Howbeit, the premium would depend on the international stature of the brand, although presently there is no scale of reference pertaining to real estate.

The buyer is expected to pay for the privilege, but the buyer in turn also receives value for the premium.

What are the advantages of investing in a branded property?

The most pronounced advantage would be the guarantee of high return on investment provided by branded properties. As per realty professionals, branded projects include perks such as recreation centers, open parks, swimming pool, security systems along with good parking facilities for tenants, all of which combined drive up the resale value of the property. Few developers even offer warranties on their properties limited to a certain period of time.

Customers can also expect improved services in terms of the general upkeep and maintenance of the property. Branded housing societies proffer better housekeeping services, security, proper maintenance of gardens, by outsourcing the work to professional agencies. Better property maintenance in turn ensures higher rate of appreciation.

Lastly, the end user can comfortably bank on the quality of construction, down to the smallest detail. Hence, terminating the customers need to put in the additional effort of redoing the place while directly moving into the apartment.

Property seekers looking for a property purely for rental purposes, too can not go wrong with a branded one as rental income from such properties is almost always higher by 15 to 20 per cent than that of a regular project, mainly due to the amenities on offer. Besides, the good upkeep translates into reduced time frame for renting the property out.

Which direction is the trend headed?

Points to consider :
Overt dependence on the brand’s name:

Given that a branded project goes hand in hand with the brand’s name and image, in the scenario of the death of the developer, the eponymic brand might to perish in an untimely fashion. This has especially been observed in the case of family-run enterprise, a difference of opinion between the next generation or relatives could easily hurt the brand.

Choices and workings may differ:

Investment in real estate is chiefly subjected to location-specific preferences, so things that might work for home buyers in the north would not necessarily work for the home buyer in the south. If the purchasing decision is being dictated only by the rental yield of a developer’s branded project within a specific area, there is a huge scope for disappointment if the same does not materialize or fails to garner as much attention in other cities.

Blind faith:

Few home buyers prefer a branded house because of the premium they command, given the assumption that expensive is always better. This is might turn out to be a simple marketing gimmick, as everything that glitters is not gold. Appropriate time should be taken to study the project before investing in it. The requirements of the home owner should be matched carefully with the project. If the sole intention of investment is to resell the property, the property buyer should also be vary that exorbitant prices would eventually make it difficult to find buyers.