Is Celebrity Endorsed Real Estate projects are worth Investment?

In the year 2016, Kanakia Spaces Pvt Ltd paid an exuberant price to the most decorated footballer and current manager of Real Madrid Zinedine Zidane to promote their French themed residential complex in BKC Mumbai named Paris. Similarly, in 2013, five-time Grand Slam winner Maria Sharapova launched luxury residential complex Ballet by Sharapova which had a tennis academy, lavish clubhouse and a helipad in Gurgaon developed by Homestead Infrastructure. Like these, there are many more real estate projects in India endorsed by celebrities to lure buyers and get a good value for the property.

Over the last 10 years, many high-profile personalities and celebrities from the worlds of cinema and sports have lent their name and image to mega residential projects, charming hundreds of buyers into parting with their money for dream homes.

However, the major question mark still remains, is celebrity endorsed real estate project are worth to invest on. Many such project constructions are either halted or buyers are still waiting for the possession. The prime example the project by Homestead Infrastructure, endorsed by Maria Sharapova, which the developer abandoned construction work.

The reality is there are many such celebrity endorsed projects the work of which has been abandoned.

Not a New Trend in the Industry:

From Aishwarya Rai Bachchan to Akshay Kumar, M.S. Dhoni to Sachin Tendulkar and Deepika Padukone to Sehwag, the credibility afforded by the celebrities often helps real estate developers convert buyers much quicker.

Such endorsements help the project stand out from the clutter and ensure better ad recall. “A project is placed at a much higher pedestal than others in the market because it gets the celebrity’s sanctity,” agrees Parveen Jain, Vice Chairman, National Real Estate Development Council (Naredco). 

Celebrity endorsement in real estate is a big draw as the trust factor is high. Moreover, it is a brand building policy. Moreover, they help in creating goodwill among buyers as celebrities are known for picking projects wisely. According to Pawan Jasuja, Director, Finlace Consulting Pvt Ltd, "This is especially the case with India, where we practically live and breathe Bollywood and cricket." In real estate markets in Delhi and NCR, it is hard to bring prospective buyers to the projects due to negative remarks in the market. In such cases, brand ambassadors push the limit of buying the property, which eventually affects the sale.

Manju Yagnik, Vice Chairperson of Nahar Group states, "For the real estate brand or project that is endorsed by the celebrity, the initial impact is phenomenal as it attracts the desired visibility for the project."

Giving a Second Thought:

While industry experts and real estate developers do agree with the positive effect of celebrity endorsement, but buyer still need to give a second thought over it. Real estate is a not small or medium size investment; it is a huge investment, especially in this fluctuating market. So the buyer should give a second thought and perform a good research work before investing. Buyers and investors should do a research of developer's track record. The quality of construction, government compliance project, on-time delivery of possession and other things are important to consider.

Celebrities endorsing various real estate projects:

Actor: Deepika Padukone 
Developer: Lodha Group 
Project: Belmondo 
City: Pune 
Launched: December 2012 
Initial Deadline: Q3 2017 
New Deadline: December 2017 

Actor: Aishwarya Rai Bachchan
Developer: Lodha Group 
Project: The Park 
City: Mumbai 
Launch: April 2013 
Initial Deadline: End 2018 
New Deadline: December 2021 

Racing Driver: Michael Schumacher 
Developer: Homestead Infrastructure
Project: Michael Schumacher World Tower 
City: Gurgaon 
Launch: June 2012 
Initial Deadline: End 2018 
New Deadline: December 2019 

Footballer: Zinedine Zidane
Developer: Kanakia Spaces
Project: Paris 
City: Mumbai 
Launch: October 2014 
Initial Deadline: End 2018 
New Deadline: September 2019 

Actor: Shah Rukh Khan
Developer: Mahagun India 
Project: The M Collection 
City: Noida 
Launch: March 2015 
Initial Deadline: NA 
Expected to be completed by: June 2020 

Actors: Akshay Kumar, Twinkle Khanna 
Developer: Lodha Group 
Project: Amara 
City: Thane 
Launch: March 2016 
Initial Deadline: End 2019 
Expected: November 2019 

Government's Interference on Endorsements:

In recent times, government has proposed to hold celebrities accountable for misleading endorsement for brands. Experts believe that celebrities add glamour to the brand in order to increase the sales and visibility of the product. However, they also feel that holding celebrities liable isn't a fair judgment.

The responsibility of the product or its performance and delivery rests with the owners or the custodians. Holding celebrity liable for the developer's wrongdoing would not be entirely fair," states Manju Yagnik.

However, on the other hand, it is also important on the part of buyers to apply some logic and perform research work before investment to avoid any financial issues later. It is the moral responsibility of the celebrity to endorse on the right brand and keep the fair alive among fans. There is a sizeable section in India that blindly follows celebrities and their work. So it becomes highly essential for both the parties to consider certain guidelines before going ahead with the endorsement thing.

Some of important considerations are-

• Is the project RERA compliant?

• Location and quality of the project

• Does the project offer sufficient amenities?

• Brand of the developer

Before investment, the buyer needs to conduct complete due diligence and research of the project. The surrounding infrastructure and other things should also be considered. If the developer doesn't meet the requirement and is still endorsed by the celebrity, then its better take off your thoughts from the project. It is important to consider that investing just with the perception of celebrity will not earn you good yield.