The importance of branding for a real estate company

The importance of branding for a real estate company
Roberto Guiñales, Director of Financial Valuations, Gesvalt.

Branded Content by: Gesvalt

The value of a brand can seem incalculable given its intangible nature and all that it encompasses and represents. We cannot forget that the brand is the identity of a company and unifying everything it represents in a single figure can be a challenge. However, the value of a brand can become a key factor in the decision-making process of all the agents involved in a company, i.e. the consumer, the investor and also the entrepreneur. This is the case of companies in the real estate sector, whose prestige and reputation are often based on their own brands.

The brand is built day by day. It is a corporate attitude that is worked on at all levels. Companies that take care of their brand have specific plans and strategies for this. In fact, having a brand objective will contribute to the subsequent positive valuation of the brand and even generate profitability on its own. Studies support this. Companies that have a brand enhancement strategy achieve 40% higher profitability and double the turnover than those that do not, according to the study Brand orientation and business performance, developed by the Leading Brands of Spain Forum and Summa Branding, with the support of the Spanish Patent and Trademark Office and the collaboration of Iberinform.

This study also lists the key behaviours of companies that have a brand-oriented strategy. The involvement of the top management in the brand culture and its strengthening, the consideration of employees as brand ambassadors, the fact of having a strategy that includes investment, support and sufficient resources for brand enhancement, as well as aspects of social and environmental responsibility, the search for value through the brand itself and, of course, its consideration as another strategic asset of the company are some of the good practices that characterise companies that are aware of their identity.

However, the valuation of a brand has its peculiarities, as the process involves analysing variables in which subjectivity comes into play and defining aspects that, given the intangibility of this asset, are quite a challenge. The first thing to bear in mind is that a brand is the whole of a company, the foundation on which all the rest is based. The alpha and the omega. In order to value a brand, it is necessary to analyse everything that underpins it, in other words, financial results, consumer response, competitive advantages, other intangible assets and even the emotional connection with its customers. In this sense, even defining the brand itself is one of the first steps in the valuation process.

Despite the complexity of the process, brand valuations are carried out for different purposes, - based on specific objectives, and using specific methodologies. Companies may need to know the value of their brand due to accounting requirements, used in various transactions, including mergers and acquisitions. Brand valuations are also needed for legal purposes such as franchise creation, non-cash contributions, litigation or tax purposes such as deferral of payment guarantees, to ensure fiscal transparency or in insolvency and liquidation proceedings. In the same way, they are a key complement in accounting processes and as a method for assessing their possible deterioration as a result of a crisis or simply due to the passage of time. Likewise, brand value may be necessary in strategic processes for the planning of the corporate roadmap and the allocation of resources, as well as for the valuation of a possible transfer of the company.

In short, determining the value of a brand has multiple benefits, most of which are decisive and have an impact on the company's activity. This value has a direct impact on the balance sheet and business results. However, we cannot deny the positive impact of brand value on the reputation of companies. This has a direct impact on real estate companies, especially given the volatility of the sector in our country, which has generated mistrust and caution in many periods among both investors and consumers. Real estate companies should be aware of this and know that knowing the value of their brand is a support in the face of market changes and, at the same time, serves them in the search for profit in their business. In short, brand equity is the key lever to attract and build trust.

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