THE REAL ESTATE SECTOR IS SEEKING TO TIE UP WITH ONLINE REAL ESTATE STARTUPS

When the world is moving to the web, then how can the housing sector stay behind? The venture of new real estate startups is heading towards the online business, as it is one platform that can reach to millions of potential customers. The segment is seeking a consolidation that will lead to monetization. It is hoping to assure powerful business entities with the latest being the merger of CommonFloor with Quikr's realty vertical.

• The growth of online real estate startups

Online real estate collaborations include PropTiger's purchase of Makaan-.com and Square Yards' acquisition of three companies in the past year. It is also reported that Housing.com is in talks with Snapdeal and News Corp for a stake sale. Apparently, over the past two years, the segment has attracted over $250 million, or Rs 1,600 crore in investments. This occurred during a period when realty sales were the slowest in India. The investments were made by Helion Ventures, Nexus Venture Partners, Accel India, Horizen Ventures, SoftBank Group, Qualcomm Ventures and Nirvana Ventures. It is believed that more mergers are currently happening as they are driven by the synergistic value created by the two companies for achieving goals faster. The mergers will be more for acquiring products.

• The benefits of resorting to online business

Every business aims at offering value to their customers but also seek to gain maximum profits. However, profitability depends on the stage at which these companies are now. India is still at an early stage. A saturated market with too many competitors also reduces margins. At times, part of the amalgamation is taking place because of a founder's inability to take the business to the next level or sustain it in challenging market conditions.

Today, online real estate value chain has its base in transactions. Organizations are looking to control the advisory transaction space. Study reports reveal that more mergers and acquisitions are bound to happen in the area of search and discovery. This happens to be an area that has under-performed despite high levels of investment. The emergence of more mature business models is profitable and sustainable this year.

• What is the future of such consolidations

The prevailing sluggish real estate market is expected to launch more opportunities for acquisition of entities that are grappling to move ahead. There is an enormous scope for consolidation, given that there is very limited capital available. Apart from that, there are plenty of opportunities available now. As the burn rate is quite low, some firms have been introducing multiple options, including fundraising and acquisition for future growth. General investors drive most of the acquisition after second and third rounds of funding, which are strategically running the companies. According to industry officials, consolidation will be quicker than the rate at which these companies entered the market.

So as we see, today, investors are enthusiastic and confident of fundraising by these startups. Now, companies themselves are looking for stronger partners to achieve growth. It can be concluded that with new acquisition proposals, online construction developers are on their way to creating a revolution in the real estate space.


This is a guest post by Deepak Yewale. The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NirrtiGo and NirrtiGo does not assume any responsibility or liability for the same.