A transition to selling lifestyles – Partner’s Speak
Managing Partner, CnT Architects
As per conventional wisdom, the real estate industry defines itself as selling products in the form of homes, office space, and retail space. Should the industry take a broader view where it looks beyond the immediate products it markets to identify itself as an industry selling lifestyles? There is cause to consider this given the turmoil within traditional segments.
In the residential market, the point at which all units were sold has moved further and further into the project cycle, and now it’s par for the course for a project to complete construction with unsold inventory. The average time expended to make a sale has continued an upward curve.
The office market has been radically shaken by the combination of technological development and the Covid pandemic. Employees in many organisations are reluctant to return to a business-as-usual scenario, and discussions are on about hybrid work models that combine office work with workfrom-home.
The retail market has begun a post-Covid recovery, but the percentage of the retail market claimed by online sales will certainly remain higher than it was before the pandemic. Many retailers are pushing for an alternative economic model that is based on percentage of turnover rather than high fixed rental rates.
The industry is being churned by new regulation such as the Real Estate Regulation and Development Act of 2016 (RERA), forcing what had been a relatively disorganised industry to restructure itself to rigorous formal commitments to consumers. This is likely to reshape the industry into large, organised brands on one hand and boutique brands on the other who differentiate themselves through personalised attention. A substantive bulk of players who formed a disorganised middle will consequently fall by the wayside. The contours of this new industry are yet to crystallise./p>
A transition to selling lifestyles rather than products can occur along three dimensions, each backed by rigorous market research.
Design will need to shift focus from creating products to offering aspirational experiences. The way we label spaces affects our perception of them, and a change is needed from functional labels to delineating each space in terms of qualitative experience, offering such experience at the scales of home, building, and landscape.
Design will need to be attentive to how it offers spatial aura and detailing aligned with these experiences
Customer relationships tend to be predicated on singular sales, without considering how aspirations change over a lifetime. A young couple early in family life will have one set of aspirations, which are likely to change with greater affluence in mid-life, and change again in old age, and the market is not responsive to the flexibility this demands. Customer relationships will have to transcend transactional encounters to also offer nontransactional dialogues oriented to evolving aspirations. The industry also needs to lobby for the necessary policy and regulatory changes needed to expand options in rental housing.
The poor condition of cities, with attendant constraints on transit and services, is a major bottleneck to the industry. This has led to real estate projects being marketed as refuges from the city, rather than anchoring and shaping the city. The industry must come together, project a capacity to be a vision leader on urban policy and planning, and use its status to lobby for radical changes to the current paradigm.