How is the residential real estate market in general today? Various reports have suggested recovery in home sales in the March quarter. Do you see this trend picking up over the next few quarters?
While the global economic scenario remains tough, the domestic macro factors of interest rates and inflation have started to soften, though at a tepid pace. Hence, even though the short term outlook for real estate is expected to be sluggish, the long-term remains strong.
Further, the market is seeing a fundamental shift with end users emerging as the key buyer segment across all cities. Given the price sensitive behaviour and demand for real use of this segment, the downside on both sales volumes and prices, if any, is expected to be limited from here on.
We are seeing consolidation starting to happen in the real estate start-up space. While one has happened, others are in the pipeline. What is the reason for the same? Where do you see the real estate start-up market five years from now?
As with any other industry, the rationale for consolidation in online real estate is to grow market share, reduce overall operating costs and drive towards profitability. Competing companies that merge can reduce costs by eliminating redundancies in back office operations, accounting, human resources, technology and marketing costs while increasing market share. In the instance of the acquisition of Makaan.com by Proptiger, the rationale was to create a single business that provided a seamless and comprehensive customer offering starting from search and discovery all the way to transaction fulfilment.
It is difficult to predict what the online real estate market would look like five years from now but it would be safe to say that we would see one or two strong brands dominating the space that provide a comprehensive offering to all industry participants including investors, developers, agents, home sellers and landlords and home buyers and lessees.
Which new revenue models are you tapping to decrease depends on the brokerage business?
While commission from developers from sale of new developments remains the biggest source of revenue for the company, we have developed new revenue streams over the past one year that include commissions from sale of pre-owned homes, fees for arranging home loans for our customers, marketing fees from developers for promoting their developments on Makaan.com, sale of interactive new-media marketing solutions for developers for their new project experience centres and research and consulting products and services from our data-labs division.
How is innovation playing a part in improving the buying experience of consumers?
We believe that technology can do wonders in terms of improving the buying experience in real estate be it related to visualization, data analytics, understanding visitors needs in depth, providing right information set at the right time during the buying journey or, giving powerful tools to buyer for decision making or, tracking properties of interest.
What are you doing to increase on-ground support for homebuyers?
We have a team of in-house property advisors who hand-hold customers through the entire home buying journey, all the way from site visits to documentation to arranging for home finance and finally registration of the property. We prefer to have an in-house team so that we have greater control over customer experience.
Consumers were really skeptical about buying homes online in the initial days due to homes being a high-value commodity. Has the scenario changed now?
Buying a home is the most expensive purchase decision a family will ever make. Hence, people are naturally skeptical about purchasing a home online. Also, a family typically will not buy a home more than once or twice in their lifetime so they are willing to invest a considerable amount of time in order to buy the “perfect” home. Thus, it may still be some years away before online property buying becomes as common as purchasing clothes, electronics or books. Having said that, a majority of home buyers go online to seek information and compare homes so that they can reduce the time spent on search. Real estate portals have made an immense contribution towards making the home buying experience more transparent and efficient by providing information online in a structured manner that was previously just not available.
We try and gain the trust of the consumer by providing reliable information in an unbiased manner to the best of our ability. Also, by being with the customer throughout the home buying journey we give the customer the much needed confidence during what can be a an emotionally very draining experience.
How do you see the new real estate regulatory Act changing the real estate market in general?
As a sector that lacks regulation and is riddled with legal disputes between consumers and developers, passage of the Real Estate Regulatory Bill comes as a much needed relief.
Delayed completion and possession of properties has been a major cause of trust deficit in the space and has kept potential consumers away from buying properties under construction. However, State-level Real Estate Regulatory Authorities (RERAs) are now expected to ensure timely completion and handover of projects. Homebuyers will be able to know the status of the land, site and layout plan, schedule for completion, and details on approvals from various government agencies. The RERAs will ensure that the builder will honor its commitments, which in turn should lead to an increase in consumer confidence and a revival of the market.
What are the bottlenecks still remaining in the Indian market for seamless growth of online businesses like yours?
Online real estate businesses have come a long way since they first started out a decade ago. The groundwork has already been laid for most internet businesses, not just online real estate, to succeed in India – the availability of inexpensive smart phones, broadband connectivity, the comfort Indian consumers have in general making purchases online, advances in payments technology etc. Online real estate is going through a rough patch because real estate as a sector has been facing tough times. Once the real estate sector witnesses a turn-around I have no doubt that online real estate businesses will fulfill their promise.
Online real estate home listing business has matured with time. What are the learnings for you guys in doing business in this space?
One big learning is that one must be patient to succeed in this business. Real estate is a cyclical business and if one is in a downturn one must have the forbearance to see the business through the downturn. The other big learning is that one has to manage one’s costs very smartly. Since home purchase is not a high frequency transaction one cannot afford to spend too much on customer acquisition and one has to ensure that every transaction is profitable today.