The online real estate sector is fast catching up with e-commerce in raising funds.

IndiaProperty.com , launched in 2006, is among the early birds, and has attracted $19 million from foreign investors. In an interview to BusinessLine , IndiaProperty CEO Ganesh Vasudevan analysed the reasons for the growth. Excerpts:

Online real estate sites are attracting investors from abroad. What are the reasons?

Real estate in India is a multi-billion dollar market with a lot of growth ahead — primarily due to favourable macro economic conditions, impending urbanisation and growing affluence of the middle class. The market is high on fragmentation and low on transparency because of which many discontinuities exist. These are due to information asymmetry between builders, intermediaries and buyers. In the developed world, there are several online players with billion-dollar-plus valuations. The Indian market is 5-6 years behind. Hence the investors’ interest.

Online portals offer services like providing pictures of homes and assisting in drafting rental/sale agreements. How much has this helped?

Any additional information which helps evaluate a property is useful. And this has moved beyond photos — for instance Indiaproperty.com has virtual panoramic tours of over 4,000 projects. The user can interactively visualise how the finished apartment will look like.

Will getting ECs, ownership verification and registration of sale be done?

Yes, we do it. We have over 2,400 projects where we have verified legal aspects including statutory approvals for the project for free. We can obtain a second legal opinion including on title parent documents in the metros through our assisted buying service.

Developers are getting into an e-mode like offering discount sales. How much would this spur competition?

Discount sales are designed to stimulate customer interest as primary sales have been through a slow down over the last three quarters. I don’t see these offers increasing competition between developers and portals. In fact, both have to work togethe. Indiaproperty.com provides a neutral platform for customers to evaluate property optionsUnlike brokers or developers, we present an unbiased view.

Have you raised foreign investment or are you open to the idea?

We have leading foreign institutional investors on board — Canaan Partners, Mayfield Fund (both US-based) and Bertlesmann India Investments (Europe-based). We have raised $19 million over the last three years. We will raise more funds soon.

What will be the exit route for the investors?

It is early to discuss exits; the industry is just beginning to evolve. Return expectations are typical of venture capital/private equity investments in terms of gestation periods and exits. What is the share of such portals in the overall real estate advertisement market?

The share is 5 per cent of the overall real estate advertising spends. This has been growing at over 30-40 per cent annually for three years now. The next 2-3 years promise to be an exciting phase for the industry and can spawn the next billion-dollar consumer internet industry.

Is this an urban phenomenon?

The industry until recently has only been metro-centric. But thanks to growing internet penetration, we are seeing usage growth from tier-2 markets. The comparison with e-commerce is not appropriate as the category and the need being addressed are completely different. We will see exciting times ahead.

Related Topics
comment COMMENT NOW