Private Developers – A Niche in Their Own

Private Developers – A Niche in Their Own

While most major Tier 1 Developers make their presence felt in the market, spending millions in advertising their new launches, a small segment of private developers has been quietly carrying on with the developments adopting a differentiating strategy and targeting its own niche.

For someone not involved in the Real Estate industry, it would be extremely difficult to fathom, how smaller private developers compete with their gigantic semi-public / semi government owned competitors. With access to Land at competitive pricing, economies of scale and of course the budgets to build master communities; the Big Players are in a league of their own. Yet Dubai continues to see an emergence of multiple private developers every year, wanting to get a share of the pie. This in no way means that all private developers are successful, but a few of them are certainly doing something right to be still thriving in a market place that is dominate by a few.

DIFFERENTIATION STRATEGY

Similar to other industries, Real Estate is also governed by the same basic principles prevailing throughout all business models. One such key principle is the inherent strategy a firm employs to acquire new customers.

If we were to bring in the one of the most fundamental theories of business “Michael Porter’s Generic Competitive Strategy”, into the Dubai Real Estate industry, it is not difficult to see what Private Developers are doing or must do in order to be successful whilst competing with their bigger counterparts.

It’s an uphill task for smaller private developers to take on their bigger competitors on the Cost Leadership front.  Due to the magnitude of the bigger projects they are certainly able to achieve Economies of Scale in their Developments. In addition to that, as most new master communities are launched far away from the central districts, keeping a 5-7 year long tenure in mind, the land is also purchased at nominal prices. These factors then leave the smaller Private Developers to focus all their energy on providing customers with Different, more innovative and boutique offerings, targeting a certain section of the market. Due to the sheer size of the major developments, bigger developers are unable to provide detailed and unique offerings, as they need to come up with projects that have a mass appeal, thus opening up a niche for the smaller developers to target.

In order to emerge successful and compete in a landscape such as that of Dubai, Private Developers need the following factors embedded within their strategy:

  Customer Focused Designs: Offering a Customer/Home Owner/Investor what they want rather than offering them a unit that a developer would ideally like build in order to maximize their return is of utmost importance.

The Sales Experience: Private Developers need to provide the highest level of Customer Service at every step, in order to make their customers feel special and provide them with an experience they deserve for investing their life’s earnings with them.

Pass on Infrastructure cost savings: A majority of private developers opt to build their projects in developed/semi developed communities, where a major portion of the infrastructure works have already been covered by the master developers.

Top Light:  Private developers need their operation, administrative and the higher management their teams at the top to be lean. Private developers should ideally be operating out of smaller teams who should be able to perform multiple functions and roles and be as lean and efficient as possible to keep a check on their overheads.

Attractive Payment Plans: Payment plans seem to be the ultimate marketing and sales tool developers are using to attract end users and investors alike. Unlike most places in the world, developers in Dubai have adopted Post-Handover payment plans, where in the customer is given the option to pay a certain amount during construction, while the rest is collected over the next few years post hand-over.

Aamir Malkani
CEO
Sandstone Properties

 

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