Following a period of significant expansion until 2008 and a temporary setback during the global financial crisis that ensued that year, the real estate market witnessed a prolonged down cycle from 2013. Events such as demonetization, followed by the RERA Act (Real Estate Regulatory Authority) and GST in 2017, coupled with the NBFC crisis created further challenges.
However, the COVID-19 pandemic became a turning point for the real estate segment. As people's perception of home ownership shifted, remote work spurred demand in tier II cities. Government initiatives like reduced interest rates and rebates on stamp duty further boosted the real estate sector.
"Increased digital adoption during the pandemic provided a significant boost to PropTech businesses like ours, marking a dual resurgence in both the real estate market and digital engagement," said Dhruv Agarwala, CEO of REA India, which owns brands like Housing.com, Proptiger.com and Makaan.com, in an exclusive interview with Outlook Business.
Cutting Down Losses
Founded in 2011 as Proptiger.com, the company secured seed funding and raised series A in 2012 from SAIF Partners and Accel. Following internal rounds and strategic acquisitions, including Makaan.com and Housing.com, the organization joined forces with REA Group in 2020. While the majority focus of the group is consolidated on Housing.com as most of the investments fall under the pipeline of this brand, subsidiary company Makaan.com is more like a flanking brand, as per Agarwala. The latter witnesses minimal investment and no direct advertising or listing sales.
Amidst the dynamic nature of the real estate sector, owing to distinctive policies and regulations in every domestic state, Agarwala sees it as an opportunity. In his view, increased regulations contribute to a more organized sector.
Greater regulation is essential for the real estate sector to enhance transparency and accountability. "While distinctive policies may pose challenges, their resolution lies in implementing consistent regulations to solve the issues at hand," said Dhruv Agarwala. Drawing parallels with the insurance industry, he believes that increased regulatory oversight has led to maturity in sectors.
Many of the factors seem inclined to the future pathway of housing.com, yet the company has failed to deliver profitable figures in its financial sheet. Commenting on the losses, Agarwala said, "Going forward year on year, we'll continue to bring our losses down, but we do believe that the size of the price is so big that it makes sense to continue to invest till we get to that clear market leadership position, at which point in time there is a disproportionate share of revenues and profits."
Last year, REA Group's annual net profit stood at A$372.2 million, reflecting a 9 per cent YoY decrease amid challenging market conditions. Meanwhile, its subsidiary Housing.com struggled to transform losses into a profitable storyline.
While the onset of the COVID-19 pandemic turned people more tech-savvy, drawing them towards more lucrative service offerings, a subsequent downturn followed in the aftermath, as individuals reverted to conventional practices. Many people believed that this shift might have contributed to the decline observed in sectors such as edtech and the broader funding landscape.
However, Housing.com's trajectory diverged, experiencing a continual rise in user numbers. "Despite being an offline product, the real estate sector has seen sustained online interest, with audience numbers consistently growing," he said. Recognizing the emotional and offline aspects of real estate decisions, Agarwala mentioned that the online platform provides valuable information such as transaction history, price trends, and project reviews. It acts as a resource to identify verified brokers and streamlines the shortlisting process, minimizing the need for extensive offline property visits. The synergy between offline and online components, complementing each other, is essential for making well-informed and prompt real estate decisions.
"We still believe that real estate buying is something where a broker's presence is essential and we believe that's going to continue for some time to come. But there is this small niche that is emerging where people want to do it themselves (DIY) and want to save on brokerage. So that's an area also we've started investing in and we'll continue to sort of play a role."
As the real estate market is projected to clock $1 trillion by the end of this decade, it would be interesting to see if Housing.com can carve out a slice of the pie.