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.

Will growing popularity of online commerce put an end to boom in shopping retail malls?

Author: Sachin Gupta | Find me on Twitter Follow @sach_gupta

Take it or not, e-commerce is here to stay. A survey by industry body ASSOCHAM reveals that online shopping this Diwali 2014 season will touch Rs. 10000 Crores. Phew…this is a stupendous jump of 350% over the last season. Despite Flipkart’s ‘Flopkart’ day glitches, online shopping is surging with Amazon launching a 6 day Diwali Dhamaka. Snapdeal is also not far behind and there are options galore for consumers to choose from.

What does it mean for shopping malls that mushroomed from 2003 to 2010? Is this the end of the road for new shopping malls? Time will tell, however, a survey by ASSOCHAM reveals that in 10 major cities across India shopping mall footfalls have fallen drastically. The survey was carried out in Mumbai, Delhi NCR, Chennai, Kolkata, Bangalore, Ahmedabad, Hyderabad, Chandigarh, Pune, and Dehradun. Delhi NCR has registered a highest drop (49.5 %) in footfalls at city malls. Ahmedabad registered a fall of 48.2%, Chennai a drop of 46%, Mumbai a drop of 42%, and Hyderabad a drop of 39%.

Those are sharp fall in footfalls in one year period. And with institutional funds backing the e-commerce space, there is all the likelihood, that new e-commerce ventures will come up and put more pressure on the shopping mall sales.

Why are consumers flocking to these e-commerce sites as opposed to visiting the shopping malls? There are various reasons and we list them below:

• Convenience:

No debate about it. This is the most common reason for the success of e-commerce sites. Let’s have a look at the typical process in online purchase:

1. Consumer logs on to the e-commerce site(s). Or one can visit the aggregator site that shows the products by 10-12 e-commerce sites.
2. Search for the product
3. Compare the products (reviews, price, etc.)
4. Purchase
5. Home delivery
6. Payment

In a matter of minutes one can purchase the product he/she desires. It’s as simple as that and the consumer is rest assured that he/she is not overpaying for the product.

• Rising fuel and parking prices:

Going to a shopping mall is a project in itself. Get ready, ask your family members to get ready, take a car, drive, and park the car. All of it costs. Fuel costs and Parking costs are rising with every passing year. Finding the car parking space in a metropolitan area is a hell and even within a shopping mall it is cumbersome and expensive. With online shopping, one can certainly save on these costs. Does it mean that people will stop visiting the malls altogether? No way, people will continue to visit the malls for leisure activities such as movies, restaurants, window shopping, kid’s play zones, etc. However, the footfall at malls will decrease due to the change in shopping habits. And this is clearly evident from the ASSOCHAM survey.

• Online discounts:

Other than the convenience of buying products on e-commerce sites, one can also find various offers, discount deals on display. In fact, during the festive seasons, major e-commerce sites come up with lucrative offers to sell products to consumers across cities in India. Flipkart recently came up with ‘Diwali Day’ and registered a whopping sale of Rs. 600 Crores. Similarly, Amazon and Snapdeal have also launched special Diwali sales. Other e-commerce websites are not far behind.

• Variety of choices:

It goes without saying that consumer is spoilt for choices on these e-commerce sites. One can only find limited choices if he/she visits a showroom in a shopping mall, however, e-commerce sites have no end (or tail as it is called) and there is plethora of options to choose from.

What will be the impact of 'rise in online shopping' on Retail Malls?

1. As discussed, footfalls will continue to drop.
2. There are possibilities that launch of new malls will be postponed by the real estate developers to assess the larger impact of online shopping on retail development.
3. Rental across shopping malls may begin to fall.
4. And subsequently, Capital values at retail malls will fall.

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