1001 startup ideas - A marketplace for Real Estate Brokers

What is the idea? 

The startup idea is to establish an online platform, which aggregates real estate brokers. The platform will provide tools and information for brokers to be more productive and knowledgeable; the platform will also facilitate information transfer between broker communities and the real estate developers, who can directly access the end consumers through the brokers who use the platform.

Market Definition

 According to an estimate, approximately 210,000 companies operate on the residential brokerage and management field. These companies generated $200 billion in revenue last year. The same report also estimated that there were 35,000 companies operating in the commercial brokerage and management field last year, generating $35 billion in revenue. 

Competitor Analysis

 Most of the current real estate portals are working on B2C model, ignoring the fact that most of the end customer sale still happens through on-field brokers. Through this model, one will be able to tap into existing network of brokers, producing more value for all the stakeholders. Broex is the early mover in the segment in India and has secured 1 million in seed funding last year. They are getting very good response for broker community and running their operation in Delhi-NCR, Mumbai, Bangalore, Pune, Mumbai, Pune, Ahmedabad & Jaipur. Globally there are quite a few startups that are disrupting this field, India is also seeing action with E-commerce player Flipkart's co-founders Sachin Bansal and Binny Bansal, along with other investors, have invested $3,50,000 in a real estate startup named Plabro Networks. Mobile collaboration startup for property brokers BroEx got $1M from Lightspeed in funding last year.

Pain Point & Target Audience

Currently, the brokers do not have an intra-broker platform, through which they can reach out to multiple brokers in a cost effective manner instantly. Unlike the United States, where there is MLS feed listing all deals in the market, there is a lack of such services in other developing countries, which aggregates listing from the brokers and then relays it further. The brokers do not have access to larger deal flow, there only source of information is the current listing sites, where the owner is directly listing the properties. There are many properties, which don’t get listed immediately and are traded through a close network of confidant brokers. The online portals are technology friendly, have better user experience and make recommendations on the basis of researched data. In the race to modernization, the brokers seem to have been left behind. The end consumer has better access to real estate reports than the brokers, thereby diminishing their credibility. The brokers do not have access to tools and knowledge, which can make them compete with other online portals; they are increasingly being seen as technologically challenged and lacking in market trends. The brokers need a platform which can aggregate all of them and give them tips, data points and market trend info in advance so as to be better prepared for deal making. The platform should make it easier for the brokers to scout for and close deals faster. 

Value Proposition

This platform will empower real estate brokers with tools to broker deals faster and compete effectively with other online portals. With this platform, the Broker will remain updated on real estate trends and will be able to effectively compete with online portals. Brokers will also get access to the wider market through fellow brokers for their customers / investors. Real estate developers can use this platform to launch their new projects and reach directly to the large pool of brokers across different cities; this tool will also help them to get early feedback about the market response, before launching the product to the end consumers by spending mega bucks on promotional events and advertisements. 

Business Model

The basic services like market information, deal listing should be provided free of cost to the brokers. Additional services like a an app for managing deal cycle, CRM tools and other tools to enhance productivity of the brokers should be charged on a monthly basis. The services should be delivered as a Saas. This is the same model, which is followed by LinkedIn, Dropbox and other aggregators. 

Way to market

The first step would be start collaborating with real estate associations, to get the database of brokers. Thereafter run a short survey amongst the end users to identify top pain points and develop a beta product strategy. It may be a good idea to scout for a knowledge partner, who can supply real time information from the ground for your consumption and relaying, its best to rely on other providers and outsource this to experts, so that you can focus on the core application.

 Milestones

The first couple of years in this business should be focused on creating a strong community of brokers who use the portal/app on an everyday basis. Based on the feedback and by tracking usage of the platform by brokers, the startup can create the upgrades for which it will charge its customers and start converting its user base into paid users. Typically a good business running on Freemium model can convert 3- 5 percent of its free users to paid users. 

Investment Needed For Prototype

For testing & building the prototype, pitch for raising $100K- $250K from angel investors or incubators like 500 startups. There should be no office rentals or salary payout; the entire budget should be apportioned for customer acquisition and technology. 

Team Capability

You would need to have a real estate expert and a tech expert as co-founders. The real estate expert will bring his expertise in real estate industry to help the tech expert in creating the platform.

Investors / Expert Take

Overall, the private equity investors threw a projected $1.5 billion at real estate tech startups in 2015; as per reports from CB Insights. That’s a big leap from $1.1 billion in venture/ private equity funding in 2014 and represents a threefold increase from 2010 numbers. Whilst most of the real estate technology startups are based in New York City, or at least in the US, there is an untapped market for such emerging products globally. International juggernauts like Jones Lang LaSalle, Cushman & Wakefield and CBRE have been in the brokerage business for generations and would be keenly watching this space as it has the potential to topple their applecart, if it picks up steam.

Resource: http://www.moneycontrol.com

Housing prices down 1% during March quarter in Delhi-NCR: 99acres

NEW DELHI: Housing prices fell by 1 per cent in Delhi-NCR during January-March this year compared with the previous quarter on sluggish demand, according to a report by realty portal 99acres.

Rentals also fell by 1 per cent during the last one year.

The report captures capital and rental price trends of the residential realty market on quarterly basis across seven major cities of India.

"Property prices per sq ft in Delhi NCR witnessed a minimal downtrend of 1 per cent in January-March as compared to October-December 2015," the company said in a statement.

The rental market, too, plateaued over the last one year, it said.

"Delhi NCR's real estate graph continued to delineate a marginal downtrend, with the land pooling policy of the government offering a ray of hope," said Narasimha Jayakumar, Chief Business Officer, 99acres.

The national capital also witnessed the second highest absorption of office space in the country, predicting an optimistic future for the rental landscape, in the long run, he added.

In Delhi, the capital market of apartments continued to remain lacklustre in the first quarter of 2015 with limited number of new launches across the city.

"A few localities fared well on the capital growth index, primarily due to over-ambitious 'ask' rates by sellers. One such locality, Dilshad Garden, noted a capital hike of 5 per cent in January-March 2016 against the previous quarter,"

Despite the huge supply pipeline, some sectors in Dwarka -- sector 14, 12 and 7 -- witnessed a quarterly increase in capital values to the tune of 2-3 per cent.

Resource: http://economictimes.indiatimes.com

Cousins Properties to merge with rival

Noted Atlanta real estate developer and property manager Cousins Properties said Friday it will merge with fellow real estate investment trust Parkway Properties in a move that will expand Cousins’ reach in the Sun Belt.

The stock-for-stock merger deal will involve a spinoff of properties in the Houston area going to a new firm called HoustonCo. The new Cousins will operate 41 properties totaling nearly 16 million square feet in Atlanta, Austin, Charlotte, Phoenix, Orlando, and Tampa, the company said in a news release.

Additional terms of the deal should be known after an 8:30 a.m. conference call.

“These creative transactions continue Cousins’ heritage as a proven ‘sharpshooter’ in the growing Sun Belt markets, deepening our presence in Atlanta, Austin and Charlotte and establishing a strong presence in Phoenix, Orlando and Tampa. We firmly believe our shareholders will benefit by having an expanded portfolio of office towers in key urban submarkets, greater tenant and geographic diversity and enhanced access to the capital markets,” Larry Gellerstedt, President and CEO of Cousins, said in the release. “At the same time, we believe that unlocking the value in our Houston portfolio allows us to capitalize on that market’s eventual resurgence through the creation of HoustonCo.”

Cousins, founded by legendary Atlanta developer Tom Cousins, is one of Atlanta’s best known real estate brands. The firm in recent years has shifted strategy to become a more urban-focused developer and property manager.

The firm owns notable Atlanta towers such as 191 Peachtree, Midtown’s Promenade and the Terminus towers in Buckhead. The company in its history also developed the CNN Center complex and Bank of America Plaza.

After the recession, Cousins focused much of its development and acquisition attention on what were then fast-growing markets of Austin and Houston. But of late, the company has been growing its portfolio in Atlanta and the Carolinas.

Its ownership of trophy office towers in the Houston area has been a headwind for the company’s stock in recent quarters as oil prices hurt the city’s energy-strong economy.

Cousins’ portfolio of Houston office towers has performed well despite the broader weakness in the Houston economy and commercial real estate market.

Gellerstedt will remain the company’s CEO and Cousins Chairman Taylor Glover will remain in his role with the combined company. The board will have five legacy Cousins board members and four from Parkway.

The deal is expected to close by the end of the year.

Resource: http://www.ajc.com

Large realty firms scouting for stuck projects to fuel expansion

Mumbai: Large real estate developers, such as House of Hiranandani, Tata Housing Development Co. and Godrej Properties Ltd are expanding their portfolios and footprint by acquiring residential projects that are stuck, usually for want of money, or buyers, or both.

House of Hiranandani (HOH), a real estate venture of Surendra Hiranandani, plans to expand its presence in Mumbai and enter markets like the National Capital Region (NCR) and Pune by buying stressed assets from or forging alliances with developers whose projects are stuck.

In a 20 April interview, Hiranandani said that his company is looking to acquire projects worth between Rs.500 crore and Rs.750 crore or with land of around 10 acres in NCR, Mumbai and Pune.

So far, the firm has focused on building residences in Bengaluru and Chennai, though it recently entered Mumbai—a stronghold of the other Hiranandani company Hiranandani Constructions. (Surendra is a co-founder, although his brother Niranjan runs it.)

Tata Housing is at present scouting for projects which are at an initial stage of development or at a planning stage, in Mumbai and Delhi.

Brotin Banerjee, chief executive and managing director of Tata Housing, said that the number of local builders approaching Tata Housing, either for joint development or sale of under-construction projects, has increased significantly in the last two years.

“There is a good amount of opportunity for a brand like us. We are right now talking to different developers and exploring opportunities in the four metro markets. The size of the deal depends on the market. In Mumbai, it has to be close to 5-7 lakh sq.ft; in Bengaluru, it could be larger. In terms of value, it has to be more than Rs.300 crore,” said Banerjee.

The company plans to add about of 8-9 new projects across the four metros this year. It also expects to double the number of homes it will deliver to 10,000 units during the period.

In November, Tata Housing entered into an agreement with Mumbai-based Neptune Group to jointly develop a 10-acre residential project in Bhandup, a Mumbai suburb.

In the last two years, 30-35% of Tata’s product portfolio has come from outright purchase of assets from local builders. The rest has been jointly developed with other firms.

Even lesser-known firms are following this strategy.

Mumbai-based developer Wadhwa Group said it plans to start work on two projects worth about Rs.1,000-1,500 crore, spread across a million sq.ft in Mumbai this year.

The company’s managing director Navin Makhija said he is looking at about five to six projects in Mumbai. A couple of them are in an advanced stage of negotiation, he added. Makhija’s plan is to enter into a joint venture or opt for a joint development model.

Deals such as these work to the benefit of both parties.

In an earlier interview with Mint, Pirojsha Godrej, managing director and chief executive of Godrej Properties, said a developer such as Godrej Properties could help monetize projects faster and “bring greater value to them”.

“We are seeing a lot of opportunities from the fact that we have been able to sell quite well despite the market being sort of subdued. And what that has allowed us to do is to make a case to other developers that we can help them monetize their products,” he had said.

And there are many in need of such help.

According to Samir Jasuja, founder and managing director of real estate database firm PropEquity, the number of stressed assets mainly in the residential segment has grown by at least 50% in the last two years. Most are located in NCR and Mumbai.

Ramesh Nair, chief operating officer, JLL India, a property consultant, said many smaller developers are looking to partner with branded names to relaunch their products, and in “many cases investors are pushing the developer to partner with a better marketable name”.

“This trend is expected to continue until sales pick up. It is also a win-win as big developers get projects that have already been approved and at a lower cost of entry,” Nair said.

Resource: http://www.livemint.com

Work begins on luxury residential project in MBR City in Dubai

Dubai-based Gemini Property Developers has commenced construction of Gemini Splendor, a luxury residential project, in Mohammed Bin Rashid (MBR) City.

The project with a built-up area of over 320,000 square feet is expected to be completed in early 2018.

Following its groundbreaking earlier this month, the construction work has been initiated at the site by the developers.

The project will feature a total of 134 units of well-planned one, two and three-bedroom apartments, penthouses and townhouses equipped with state-of-the-art amenities. Apartment units range from 780 square feet to 3,400 square feet.

Sudhakar R. Rao, Managing Director of Gemini Property Developers, said: “Gemini Splendor will help in satisfying the rising demand among Dubai residents for luxury apartments built to best-in-class standards. The project marks an important phase of our entry into the real estate industry and reinforces our commitment to deliver key projects in one of the most sought-after Middle Eastern markets.

The company has awarded the enabling works contract to National Piling and will be announcing the contract for the main construction soon.

The company will be announcing the sales and marketing plan soon.

"The UAE has emerged as one of the most vibrant, cosmopolitan and progressive regions in the Middle East and there is very strong demand for value-for-money housing in many parts of the country. We are confident that due to UAE’s preference for high-quality living, our projects will be well received," said company Joint Managing Director Prabhakar R. Rao.

Resource: http://www.emirates247.com

The bestselling residential projects of 2015-16

Bengaluru: Even in a slow real estate market scenario, when sales have been tepid and property prices in correction mode, top developers seem to have sold their premium and luxury projects in a better ration than the others in the last financial year. Wealthy homebuyers paid a premium for homes that were sold by large, branded realty firms, for the location and detailing of the project and faith that they will be delivered on schedule. While affordable projects sold well in property markets such as Bengaluru and Pune, Mumbai saw homebuyers willing to pay the price for quality projects and developers.

Property analysts said that buyers today are looking beyond price and location, considered to play key roles in buying decisions.

“Buyers look at specification and detailing of the project, reputation of the developer and want to buy into projects that are closer to completion,” said Ashutosh Limaye, head of research at property advisory JLL India.

Mint takes a look at some of the best performing projects last year:

Mahindra Lifespace Developers Ltd

It sold about 60% of its inventory in its newly-launched ‘Vivante’ project in Mumbai’s Andheri area. The project, which was launched in January, has already sold off all the 700 sq.ft one-bedroom apartments, priced at Rs.1.45 crore each. The developer’s first project launch in Bengaluru, Windchimes off Banerghatta Road, also sold 60% of its 200 units since its launch in June despite the premium pricing range of Rs.1.4-2.8 crore.

“Despite premium pricing for both the projects, what seems to have worked is the research behind designing the right product and confidence in the brand,” said managing director and chief executive Anita Arjundas.

Indiabulls Real Estate Ltd

The developer’s ultra-luxury project ‘Blu’ in south Mumbai was its best-performing project last year despite the overall slowdown in the luxury segment across the country. The project sells at a premium to most projects in the vicinity, with Rs.20-25 crore an apartment a floor, in one tower, and Rs.10-15 crore an apartment in the second tower. It has sold about 65% of the stock.

“It’s a unique project, being spread across 10 acres and built on a low FSI (floor space index, the ratio of the building floor area to the size of the land) of 1.33 which gives a sense of expanse. Wealthy individuals, who want to live themselves and not just for investment, have bought homes in this,” said Gagan Banga, vice-chairman and managing director, Indiabulls Housing Finance Ltd.

Embassy Group

Embassy Group in Bengaluru, which has a sizeable portfolio of residential projects, saw strong sales in its luxury villa project ‘Boulevard’ in Yelahanka. Launched in 2014, it has 43 of the 169 villas, priced at Rs.6.5-14 crore, left to be sold.

Jitu Virwani, chairman, Embassy Group said that the project is nearing completion, and buyers of luxury homes seem to prefer buying in projects that are more mature in terms of development, and that’s what worked towards the sales in the Boulevard project last year.

Kolte Patil Developers Ltd

The Pune-based developer sold maximum homes in its project ‘Corolla’ in Wagholi where one-bedroom apartments are priced at about Rs.30 lakh each. Launched last May, it has sold about 4.2 lakh sq.ft. its second project, Western Avenue at Wakad, is a 17-acre sprawl where a two-bedroom project costs Rs.77 lakh.

“The reasons behind the sales momentum in Corolla would be the pricing and the easy payment scheme. The Wakad project, on the other hand, has all the possible modern amenities and that’s what buyers liked,” said Gopal Sarda, chief executive-Mumbai, Kolte Patil.

Lodha Group

India’s largest developer in terms of residential sales, which crossed Rs.8,000 crore in 2015-16 in terms of gross sales, saw its new project ‘Amara’ in suburban Thane contribute about 30% to its sales, followed by sales in its township Palava, near Mumbai.

“The product, brand and price are the three things that played important roles in generating this kind of sales. We have also been able to significantly improve the net to gross ratio without sustained consumer-centric approach,” said Prashant Bindal, chief sales officer, Lodha Group.

Sobha Ltd

The Bengaluru developer’s new sales of 3.38 million sq.ft, valued at Rs.2,012 crore in 2015-16, was driven by its first affordable housing project under the Dream Acres brand in the city and the launch of its plotted development project ‘Sobha Retreat’ in Mysore.

“We believe that the company’s focus on mid-income housing going forward backed by rapid execution owing to investment in technology will be a major driver for its operating performance,” said Adhidev Chattopadhyay, analyst, Elara Securities Ltd.

DLF Ltd

The ‘Camellias’ project in Gurgaon continued to the biggest sales churner for the developer even when the National Capital Region (NCR) continued to be slow in terms of sale and project launches. DLF, which didn’t launch any new project in 2015-16, has sold about 1.39 million sq.ft in Camellias till the December quarter, its best performing project among its new projects.

“Undoubtedly, Camellias was a standout. Sales were better than 2014-15 and customers are again coming back,” said DLF’s chief executive Rajeev Talwar.

Godrej Properties Ltd

The Mumbai-based developer sold 348 apartments in its flagship project ‘The Trees’ in suburban Vikhroli for Rs.862 crore within a month of the launch in November. Godrej sold at an average of Rs.19,000 per sq.ft, managing to achieve premium pricing even in a highly competitive scenario. Last May, it sold 200 apartments in about three weeks after the launch of Godrej Icon, a residential project in Gurgaon, a market where some of India’s biggest developers are struggling.

Resource: http://www.livemint.com/

Residential projects: Low demand yet prices rule high

With residential housing sales not witnessing a pick-up despite a 150-basis point cut in rates by the Reserve Bank of India over the last 16 months, RBI Governor Raghuram Rajan has called for a cut in real estate prices in a bid to encourage homebuyers to enter the market and buy properties.

The call from the RBI Governor comes at a time when the industry remains saddled with high unsold inventories and many within the industry terming 2015 as one of the worst years for the sector in a decade in terms of sales and new launches.

“I am hopeful that as interest rates come down, there will be more credit and buying. And I am also hopeful that prices adjust in a way that encourage people to buy,” Rajan said earlier this week in Mumbai. He added, “there is a little bit of everything that needs to happen” for the revival in the real estate sector.

The realty industry has been quick to react to the governor’s call and has responded by saying that the market has already witnessed price correction over the last three years as they have declined by around 30 per cent.

“There has been consistent correction in property prices in the past 3 years by nearly 35 to 40 per cent across the industry. In fact nearly 90 per cent of the home supply in the country has already shown price correction. Given the ever increasing cost of land and cost of construction any further fall in prices will only lead to non performing assets (NPAs) and non delivery of projects,” said Amit Modi, director, ABA Corp and vice president of Credai, western UP.

But the residential price data for last three years accessed from Knight Frank reveals that the average price across the major markets have either gone up or have remained stable.

Data on Housing Price Index (HPI) released by the Reserve Bank of India on Thursday showed that housing prices across the country rose during the quarter ended December 2015. While the highest price increase was witnessed in Lucknow, Jaipur saw a mild correction in prices during the quarter against the corresponding quarter last year.

The HPI-All India rose to 221.7 in third quarter of FY16 from 218.2 in the previous three-month period. However, as homebuyers stayed away from the market, there has been a moderation in the pace of price increase. “The annual increase of HPI-All India moderated since Q1, FY16. During Q3, FY16, the rate of increase fell below 10 per cent,” RBI said.

The RBI released the data for the entire country and 10 major cities — Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Lucknow, Ahmedabad, Jaipur, Kanpur and Kochi for the October-December quarter of 2015-16.

Another set of real estate price data accessed from Knight Frank for eight major cities — Mumbai, Delhi-NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata and Ahmedabad — shows that all the eight cities have seen the average residential price going up by 3 to 15 per cent between 2013 and 2015.

While average prices in Bengaluru went up 15 per cent from Rs 4,158 per sq ft (psf) in 2013 to Rs 4,780 psf in 2015, average prices in Mumbai rose by 12.8 per cent in the same period from Rs 7,085 psf to Rs 7,994 psf. While the Delhi NCR market witnessed a price increase of 7.4 per cent, Kolkata and Chennai remained the most stable as prices went up by 3.1 per cent and 5.6 per cent, respectively.

Also, according to a report released by online real estate firm PropTiger earlier this month, both the sales and new project launches for the top 9 cities for the year ended March 2016 slid to a three-year low.

While factors such as lower-than-expected economic growth, slowdown in job creation played a role in decline in demand, factors such as prevailing high real estate prices, high interest rates and delay in delivery of projects by the developers have also played a big part in keeping prospective homebuyers on the sidelines over the last few years.

Pointing at the need for adjustment so that more people want to go and buy houses, Rajan said that apart from interest rates, measures such as including affordable housing loans under the priority sector lending requirements will encourage homebuyers. He also called for greater transparency. “We need action on real side (as) also on transparency on land acquisition, on transparency on construction and on sales,” he added.

On the other hand, while developers have been claiming to have reduced the prices, they also say that there is a limitation to the price cuts that they can bring in as there is a fixed cost that they work on and if they reduce the prices further they would be operating in losses.

Anuj Goel, executive director of KDP Developers said: “Service tax, VAT, registry cost and various other government levies only add to the fixed cost and hence leads to an overall increase in the basic cost of a project. If any further reduction is done on our end the project would only act as a NPA for us.”

Concerns have also been raised on banks not fully passing on the benefit of repo rate cut (rate at which RBI lends to commercial banks) by the RBI and thus there is an issue of transmission of the same. While RBI has reduced the repo rate by 150 basis points, the banks have brought the lending rates down by up to 80 basis points.

“We sincerely hope that both finance ministry and the RBI push all the banks to transfer the entire benefit to the end consumer for whose benefit it is meant, else these moves will severely stop short of benefiting the consumer and only help in buffering the bottom lines of the banks,” said Modi.

The average price of residential units not coming down despite weak sales and rising inventory only shows that developers are also in a wait-and-watch mode and are looking to hold on to the prices in the hopes of a market revival. While they are not bringing the prices down they are also looking to sweeten the deal with some offers and by offering to pay the EMI till the time of possession.

An industry insider said that some developers are open to negotiation on the price with customers: “The developers are negotiating on price with serious buyers but are not announcing a cut in prices as they think that it will send a wrong signal in the market. Also they are looking to hold on to units and waiting for markets to improve instead of going for a cut in prices and reducing their overall realisation from the project.” He, however, added that the prices had moved significantly higher and they need to come down to attract the homebuyers.

Resource: http://indianexpress.com