Online realty players gear up for tough battle

22-Jul-2014    |    Source:    http://economictimes.indiatimes.com/

 MUMBAI: Buying or renting a house is among the biggest expenses for Indians, creating a huge market for online players--ranging from established players to startups--who are now bracing themselves up for a tough battle ahead. 

Info Edge, best known as owner of recruitment portal Naukri.com, said on Friday it will raise up to Rs 750 crore through a qualified institutional placement in a bid to aggressively expand its real estate classifieds business 99acres. The move is significant as this is for the first time the zero-debt company is raising capital since its initial public offer in 2006. 

99acres is targeting market dominance in the real estate classifieds space, where it competes for market leadership with Magicbricks, owned by the publishers of this newspaper. 

"Eventually, the real estate space will be the biggest among online classifieds, overtaking jobs and matrimonials which are leading the space as of today. Everyone wants a share of the action," said Sudhir Pai, business head of Magicbricks. 

But both these players are being challenged by startups like Housing.com and Commonfloor as well as others like Indiaproperty, IndiaHomes and Proptiger, which are all backed by venture capital funding."

This game has just begun, it is different and it is much more capitalintensive as compared to Naukri," said Chintan Thakkar, CFO at Info Edge, which emerged as a market leader in recruitment with a 55% share during the last decade. 

Thakkar said this segment can add at least a billion dollars to the company's valuation. With this fundraising and over Rs 550-crore cash on its balance sheet, Info EdgeBSE -0.73 % will have a war chest of over Rs 1,000 crore which could also be used for acquisitions.But others are also ready for increasing competition. "Whoever makes use of the capital in the best possible way will eventually win," said Sumit Jain, cofounder and CEO of Commonfloor which has been seeing a 400-500% increase in topline though he declined to share numbers.

Players like Housing.com, which was founded two years ago by IIT Bombay graduates, are also charting aggressive expansion fuelled by venture capital financing. The Mumbai-based portal changed the market dynamics with its mapbased search. 

"A few months ago, we used to list 200 houses per day , and now we list over 2,000 houses per day . Soon we'll be mapping 10k-12k houses everyday" said cofounder Advitiya Sharma last month when the company announced funding. 

Also, investors feel that the newer players are filling a major gap in the market. "The current market lead ers are more of advertising channels for developers and do not solve consumers' problems," said Tarun Davda, VP at Matrix Partners India, pointing out to the lack of verification on listings. 

Both 99acres and Magicbricks have taken notice of this issue and are increasingly focusing on verified listings."The focus has been on improving quality , accuracy and information of broker listings," said Pai of Magicbricks. 

Online real estate classifieds players make revenues through advertisement by developers of new properties or listings by agents for sale or rent of existing properties. While in developed market like the United States the latter model dominates, in emerging economies with new de velopments the former dominates. 

The focus on the space comes as the total spending on advertisement in realty segment, including online and offline, is expected to increase from Rs 3,500 crore-4,000 crore to Rs 6,000 crore in the next five years. 

"The share of online portals in this will increase from the current around 10% to 30-40%, which is disruptive growth. So to become a leader in the category, a company needs to spend," said an analyst tracking the sector. 

With all players battling for market share, industry trackers expect a dominant leader to emerge over the next two-three years. "In the United States, two players exist, Zillow and Trulia, which indicates that it may not be a winner-takes-all market," said Davda of Matrix. 

 

 

 

 

 
 
 

 

 

 
 
 
 
 

 


Projects You may be interested in

Ekta Parksville

Ekta Parksville

Virar West, Mira Road And Beyond

Contact Us

Use the form below to contact us!

Share Property

Property Valuation Form