There are dozen of web and mobile platforms in offering real estate solutions. But all of them are focusing at the volume business where end customers are the focal point of business. In order to create more value to their target audience, these portals often ignore the middle layer of agents, brokers and property consultants, by taking up the role of a marketplace.
These portals become yet another classified for real estate. Vikram Dhawan, the then a senior manager in real estate firm, found an opportunity in this gap and launched IndianRealtyExchange (IRX), a platform for brokers and agents along with Karan Jindal, a management graduate from Indian School of Business (ISB) who was working with SVG Media before he quit to start his venture. At SVG, he was already dealing with startups and e-commerce firms.
Vikram had dropped out from college to work for living and build something of his own. He worked with brokerage and real estate houses which gave him a good understanding of both the worlds. Karan and Vikram, complimented bringing understanding of starting up and the real-estate market.
‘Just like our stock exchanges, where thousand of traders/brokers are involved, I wanted to create a platform or an exchange, which empowers the brokers to buy/ sell and transact in a seamless and transparent manner, where the broker would be the facilitator, the magnet. Today, real estate market is a unorganized and this becomes our opportunity,” said Vikram.
For Delhi-based IRX, the target audience are the 50 lakh stakeholders involved in real estate business, varying from small brokers with $150-$450 deal value to established brokers involved in large properties with approx deal worth $ 15,000. At present, IRX has over 1500 brokers from across six cities namely, Mumbai, Gurgaon, Delhi, Chennai, Hyderabad, Bangalore andKolkata. It has over 2300 mobile application downloads, 24,000 verified properties and 3000 leads on the platform. On an average, over 20 new brokers register every day and over 100 properties are listed.
IRX works as an exchange platform, and has a list of properties like houses, land, plot, spaces available for purchase, and a list of brokers available to provide help reach the property builder or land owner. Every registered broker on IRX, has a profile in the database, with details of his portfolio, prior deals, his expertise areas and more.
While the platform is still in the development stage and from next month it will start enabling interactions on the platform. People could book plots and sites, similar to site purchase of a premium apartment worth INR 1.1 Cr, made on Snapdeal in August 2014.
The Business Model
In terms of market positioning, IRX is trying to fall somewhere between a Practo in reality space with its listing and database of agents. Before Practo became the name it is today, it created a huge database of doctors which acted as a pull-factor, bringing customer to its application.
Though IRX is trying to position itself as an exchange by moving away from the typical marketplace concept, it still works on marketplace model where typical transaction is lead generation and lead validation. Another differentiation that unlike Housing.com, brokers do not have to pay to come onboard and get listed on IRX.
On IRX, a broker can list his portfolio, get leads and even get a margin for converting the leads all for free. For IRX this is just the bait to keep them engaged and build market credibility because the startup is more interested in the larger transactions.
The startup plans to earn revenues from the developers and builders who would pay for listing their property on the platform. In next three – four years, IRX plans to bring over 50 developers on board. Apart from the listing fee, IRX will charge a hefty margin on each deal cracked on the platform. It could make upto 50% margin from a deal which could be worth $15000. These deals would be exclusive to the startup and thus fetching a good chunk of revenue. These transactions would include agriculture projects, farmland, commercial land and more.
According to a report released by property consultancy, Knight Frank India, around 192,568 residential properties are lying in inventory in National Capital Region (NCR), which adds up to approximately 14 quarters to sell (QTS), while Mumbai falls second in line with 12 QTS, followed by Hyderabad, Pune, Chennai and Bangalore. The overall real estate market is expected to touch $180 Bn by 2020 from $93.8 Bn market size in 2014. This gives opportunity to builders to explore newer ways of clearing off their inventory.
Competitive landscape and Challenges
For IRX, technology has been the biggest hurdle and therefore it is now building its in-house team of developers to improve the technology piece.
Furthermore, in this over-crowded and unorganized market, IRX is trying to bring value for the brokers, but they are not alone in the game. Apart from the existing biggies like Makaan.com, Indiaproperty.com, Housing.com, Commonfloor.com and more.
At least three startups have emerged in real estate brokerage space with slight difference in the business models, such as Mumbai–based Oku Tech (BroEx), SmartAgentConnect and Gurgaon-based Plabro, and all these three recently got funded.
On the other hand, there startups like Nobroker, that are trying to do away with this middle layer connecting the buyer directly with seller.
While IRX is looking for raising fund, its rival players BroEx and SmartAgentConnect have raised around $1 Mn from Lightspeed Venture and $700k from angels respectively.
With declining sales and rising inventory in the real estate properties, IRX has entered the market at the very right time with the right value proposition. However, it is not just about the idea, but execution. The startup has a long way to go before it sees the blueprint shaping into reality, but it is just a start.