Why It's Easier Than Ever To Enter India's Home Market Now
It's evident that new launches and sales of residential projects took a hit as a result of demonetization in India.
The National Capital Region (NCR) was the most affected - demand contracted 29% and supply was down 73%. Launches in the Mumbai Metropolitan Region (MMR) plunged 53% and sales were down 26%, according to a report by Knight Frank. Deals have come to a standstill as both buyers and sellers wait for clarity.
Source: Knight Frank Research
Before demonetization, however, there had been consolidation in the real estate sector. Driven by stagnant property prices over the past two years and interest rates cuts, home sales across top eight cities in the country in September 2016 jumped 15% year-on-year. Sales were dominated by the MMR and NCR.
Phase of consolidation
Last year, Quikr acquired real estate portal CommonFloor for $200 million and Sequoia-backed Grabhouse, making a foray into the managed property rental business.
CommonFloor, which counts Accel, Google Capital and Tiger Global as investors, was acquired after it failed to raise additional capital to fund its business. In 2015, Quickr had also bought India Realty Exchange (IRX), a mobile-first aggregator of real estate agents founded by Vikram Dhawan and Karan Jindal for an undisclosed sum. IRX tags agents and brokers with real-time projects and locations, and also helps users connect with them to buy and sell a property.
These acquisitions were a strategic move that enabled Quikr to strengthen its newly launched vertical, QuikrHomes.
Emergence of largest online real estate services company
In fact, the real estate sector continues to consolidate this year and things are already heating up. First up is the merger of PropTiger and Housing.com - the deal comes less than a year after Commonfloor got acquired by Quikr.
The merged entity will be raising $50 million from online real estate advertising company REA Group and $5 million from Softbank. In this tie-up, Housing.com will primarily act as an online leads generator, while PropTiger will provide on-the-ground staff facilitating potential customers to view the property, paperwork and ultimately closing the deal.
The new entity will be the only player in India offering the full range of online and offline services in the real estate market. This means buyers are able to go to the firm for personalized search, virtual viewing, site visits, legal and financial diligence, negotiations, property registration, home loans and post- sales service.
Innovative Systems and Processes
India has more than 200,000 brokers, however, because the market is highly fragmented there's a lack of information, it is hard for consumers to choose a broker. To lift efficiency and to help customers, online real estate portals are working on a rating system for brokers to enhance user experience and bring more accountability into the dealer community.
Quikr is looking at including on its portal various informative parameters such as the number of years a broker has served on the platform, his/her responsiveness to leads and credit worthiness. The program is still at the pilot stage and Quikr is expecting to launch it on both its portals Quikr.com and Commonfloor.com.
MagicBricks.com is also working along the same lines, combining data from various parameters to assign ratings. The portal has launched a comprehensive “Agent Score”, which takes into account an agent’s activity on the site and inputs from consumers. MagicBricks.com is also collaborating with rating agency Crisil for broker certification and is in the process of building a broker directory.
These exciting new services offered by consolidated players have economies of scale, and they'll prove to be a boon for homebuyers. Customers can expect a better user experience when it comes to purchasing their dream property.