Recently I read a blog post on how Indian real-estate startups are innovating much faster than global counterparts. Though the new trends are steps in right direction, these are too little and too late.
I find it a little unsettling that real estate companies are positioning their virtual-reality features as means to eliminate the need for a consumer to visit the property. It may be plausible for an investor-driven market like Dubai, but I don’t ever see an end-consumer buying a property without visiting it in-person.
Features such as slice-view, TruView, iHome, virtual reality, retina, 3-D walkthroughs, etc help in only two ways:
- Consumers can shortlist from available options so that they are more informed during an in-person visit
- It creates enough buzz for the property portal to attract users
Trying to project it as anything more than that is just a marketing gimmick or mechanism to get investors excited for yet another fund-raise at high valuation.
Most real-estate portals out west focus on providing relevant information to users that actually help in the decision making process. Agreed that those portals have access to good data repositories which are currently non-existent in India. But that is where Indian companies can really innovate and disrupt – just the way eCommerce disrupted challenges associated with lack of credit-card penetration by launching cash on delivery.
Following are a few suggestions on how Indian real estate companies can really innovate and disrupt to improve their value proposition:
[bs_well size=”lg”]Identify each listing by its electricity meter number. [/bs_well]
As addresses in India are fairly unstructured, it is very hard to identify any listing uniquely just from its geographical address. But the unique electricity meter number for each flat can serve as a good proxy for a unique identifier. Real estate portals can track this internally and associate it with a public MLS ID kind of an identifier.
Tracking this one number alone can solve a lot of problems:
- Multiple listings for the same flat but from multiple brokers and landlords can now be clubbed together. This reduces spamminess in listings, provides clarity to users and increases competitiveness among brokers
- It is much easier to track the pricing history of a specific flat and share this information with all kinds of users such as tenants, landlords & brokers. The portal that executes this successfully can actually become the Kelley Blue Book of the real-estate space.
- In states like Maharashtra, you can check the electricity consumption history just from the meter number. An automated crawler can track consumption to know if an apartment is occupied by a tenant OR vacant and back on the market.
- Even flats on sale, that have remained unsold for extended periods, can then be approached for listing as a temporary housing option. This will allow owners to generate income without blocking out their apartments for long periods of time.
[bs_well size=”lg”]Better quality data on comparable transactions and comparable listings.[/bs_well]
Most pricing trends offered by portals tend to be at a macro level. They can help you pick an area for renting or buying, but beyond that, do not provide any guidance on prices of specific listings.
Following are a few ways of providing better price trends and data on comparable historical transactions:
- Track location data accurately by GPS coordinates along with building and housing society name. This will help provide insight into historical price trends of listings in specific housing society or listings in close proximity.
- Incentivise buyer/seller or landlord/tenants or brokers to share data on actual transactions. These incentives can be as basic as FreeCharge coupons or even discounted coupons to a hyperlocal home services provider startup. A combination of outbound phone calls, SMS campaign and email campaign can help get data over a period of time.
[bs_well size=”lg”]Ratings and reviews – on builders, landlords, flats, housing societies, areas.[/bs_well]
It is quite ironical that despite the scale of the real-estate market, stakeholders such as builders and landlords have very little accountability. Portals can take steps towards bringing this accountability. They can even consider doing this through a separate entity, distinct from their own brand, at least initially.
- Collect reviews from tenants. Ask reviewers to provide the electricity meter number and name of owner OR a copy of the agreement. Allow reviewers to upload user-contributed photos with the review. Validate this information in the background to assign the review a reliability score or weight down/up the rating.
- Generate performance reports on builders and housing societies. Reports should provide information on points such as gain in property prices for builder’s projects, history of on-time/late delivery, number of disputes with home owners’ associations, legal compliance rating, etc. This dashboard can look almost like the one Google Elections created on each candidate.
- Collect information on sound pollution and air pollution from relevant government bodies and make it available to users.
[bs_well size=”lg”]Eliminate deposits for rental transactions.[/bs_well]
The age old practice of taking a huge deposit from tenants although necessary to protect landlords, is often abused by landlords and is hard on tenants. I wonder why no insurance company has yet launched a product that underwrites the risk involved in the rental transaction. I don’t think the premium would amount to much and it can then be split evenly between landlord and tenant. One of the super funded real-estate portals can nudge an insurance provider to co-launch such a product
[bs_well size=”lg”]Help consumers take a peek into the future .[/bs_well]
Many savvy real-estate investors pour over town planning documents before strategizing their real-estate investments. In fact, there are tales abound on how politicians have made money through insider information. On the other hand, many consumers bear the brunt of asymmetry in information while buying a flat. For example, it is far too common for a builder to be aware of a planned fly-over through a big housing society project, which the builder positions as huge empty space or a wide road in their sales brochures. Or how a builder tries to monetize the increase in permitted FSI years after the project is completed after residents have moved in.
So there is indeed a lot of value that can be derived from various town planning documents. Almost like mutual fund advisories, real-estate portals should have a team of analysts that dissects these documents and makes contextually relevant information available to consumers.
[bs_well size=”lg”]Apply all virtual reality tools to the domain of vacation homes & plot projects at touristy destinations.[/bs_well]
Several portals have sections dedicated to land and new projects. They have come up with nifty mechanisms to represent these properties in the form of glorified online brochures. I wonder why none of them have applied any of these to the domain of vacation homes or plot projects at touristy locations as yet. It is a big and growing niche where the consumers can actually benefit from aerial views, virtual tours, 3-D views, retina, etc. The consumers will have greater appreciation for all the virtual reality information because by definition of this market, the prospective buyer is in a different city than the vacation home/plot property. So here they will place greater value on any virtual reality tool.
[bs_well size=”lg”]Hire a Head of Public Policy immediately.[/bs_well] Most disruptive tech-enabled companies understand the importance of public policy in shaping the future of their industry. That is the reason a Google, Twitter, Facebook, Uber, Airbnb, etc has roles such as Head of Public Policy in most of their important markets.
Real estate in India has very few regulations governing the domain. Each real estate portal should immediately hire senior executives who should together form a non-partisan committee that will be responsible for guiding/lobbying the public policy framework governing the real-estate market in the country.
Lobbying efforts by commercial entities certainly carries the risk of compromising the interest of the consumer. But given the Indian landscape, I would expect a progressive framework to emerge from partnership with the industry rather than politicians and bureaucrats framing it in isolation.
[bs_well size=”lg”]Invest in developing open source frameworks and information exchange protocols [/bs_well]
As a concurrent step, the industry should come together in formulating frameworks leading towards an MLS type of system customized to address the challenges in India. Despite the scale of investment being thrown at the wall, not a single provider serves as an authoritative source of comprehensive inventory in any single region. I do not see that changing anytime soon. And even if it does, there would still be multiple players in this space. So this is the time when the industry should invest in creation of data exchange frameworks and guidelines for information exchange. Off course adoption of such frameworks will be left to each company – but the mere presence of such framework is strategically important for the ecosystem.
[bs_well size=”lg”]Final thoughts[/bs_well]
I could go on and on with additional thoughts on points such as
- why real-estate portals should build tools for real estate brokers to help them uncover value. proposition that goes beyond their current reliance on information opacity.
- how real-estate portals should storyboard the entire experience of their users and optimize as many frames as possible (taking inspiration from what Airbnb did).
- how portals should facilitate transactions in the secondary market for new projects.
Clearly there are many holes in each of the above suggestions. Those gaps can be plugged through an iterative process and clever minds can solve most of those problems through collective thinking.
Above is a representation of my views as an outside observer. I am just hoping that it serves as food for thought of clever minds who have access to much more internal data.
[About the author: Ashish Agrawal, the author of this blogpost is the founder of RoomLion.com. His startup eases discovery & booking of temporary housing in India. In the past, while pursuing his graduate studies, Ashish earned pocket money by consulting for real-estate brokers in the US.]