Targeting secondary sale space, how PropKaro aims to organise the $4bn realty brokerage market
The real estate market has long been suffering from a problem of plenty. Too many properties up for grabs, too many brokers, too much of networking - the inevitable fallout of which has been unprofessionalism, lax regulation, and unstandardised brokerage practices.
Aakash Anand and Shorya Mahajan wanted to change all of this and streamline the realty sector. They spied an opportunity on studying the market and observing its wants.
With more than eight years of experience each in real estate, the startup space, and marketing and commerce, it didn’t take the duo long to come up with PropKaro. Launched in July 2015, PropKaro is a peer-to-peer real estate portal that deals in secondary sales of property. They kicked off its business arm PropSixty in April this year.
PropKaro links the entire real estate industry by creating a platform for real estate developers, real estate agents, and end users to showcase inventories in a clean and formatted process, making it easier for the consumer to search and match.
The co-founders made an initial investment of around Rs 20 lakh to develop the pilot project.
How it works
PropKaro aims to make transactions “transparent and professional”. It goes about doing that by first inviting all real estate agents, end users, and builders to list realty requirements and inventories free of cost on its Property Centre, then search and match listings, exchange contacts, and finally transact with ease.
The platform also provides real estate certification, workshops, conventions and training sessions to enhance the knowledge and skillset of the agent community.
“The Indian real estate market operates with minor regulations. The property listing mechanism is highly unorganised, with the majority of brokers using WhatsApp groups, Google groups, etc., to list inventories and requirements,” says 31-year-old Shorya, listing his grievances against the sector. “There are also no programmes or forums to enhance the skills of the real estate agent community. The Indian brokerage industry is also forecasted to have only a few franchise-based brokerage houses,” he adds.
The duo also point out the lack of broker networking platforms (though players such as Broex and Plabro have come up recently and are giving competition to PropKaro).
Since both partners do not come from a tech background, Aakash says they spent some time scouting for the right CTO. While he himself remains hands-on with core business knowledge, driving revenues for PropKaro by managing operations and overlooking the transactions and broker network, Shorya enables growth through tie ups across the ecosystem, given his experience in driving growth through channel partners.
Getting down to business
Realty is a $120-billion market. PropKaro is targeting a yearly turnover of $20 million with net revenue of $3 million by the end of 2018.
They believe their platform is well planned to make such kind of money. “Through our free listing platform, PropKaro has a broker network of over 10,000 agents across the country and it shall be harnessed to carry out primary and secondary transactions in the market,” he explains.
According to him, the platform attracted a total of over 10,000 subscribers in nine months and 4,000-5,000 monthly visits.
The revenue is through primary and secondary real estate transactions such as buying, selling and leasing of commercial and residential real estate.
“Growth prospects are huge as structuring in the secondary market is still virgin and no company has tried to crack the code, apart from us,” says Shorya.
“In the brokerage market, we have little competition as all major companies are focusing on primary sales. All secondary sales are currently carried out by smaller, unorganised, and unstructured independent brokers,” he says.
The only challenge, according to the founders, is the loyalty of the end user, keeping in mind the high number of unlicensed brokers operating in the market who are willing to work at lesser commissions. However, they point out that the end users are repeatedly having negative experiences with such brokers and are looking for professionals.
“A user now does not care much about the fee, but gives more value to exceptional service,” quips Shorya.
Elaborating on PropSixty, he says it is the transaction arm of PropKaro and only works through a property mandate and exclusivity model. “Clients issue us a 60-day property mandate by agreeing to a fixed service fee (no brokerage). The transaction is completed using PropKaro’s broker network and franchisees,” he adds.
PropKaro has over 20 franchise offices in Gurgaon and plans to grow the network after Series A funding. The franchise offices act as offline centres, where an end user can walk in and have transactions completed.
Competing with other fish
As far as the broker platform goes, Aakash and Shorya count BroEx and Plabro with other players like 1Group among their competitors.
The real estate brokerage market is currently dominated by 5,00,000 independent brokers and agencies, and generates $4 billion in brokerage fee income for real estate sales and rentals annually. The fragmented nature of the market restricts the ability of industry stakeholders (brokers, builders, and customers) to collaborate effectively.
The market has been witnessing a lot of activity in the real estate segment. Recently, many technology-based online ventures working in various real estate segments have raised different rounds of funding.
During July 2015, BroEx, an app that caters to the network of real estate brokers, raised a seed funding of $1 million from Lightspeed India.
In June 2015, Propstack raised $3 million in Series A round of funding, in participation with Real Capital Analytics. The startup tracks real estate trends and creates collateral risk management tools through the use of technology.
In February 2015, broker-free property search portal NoBroker raised $3 million in Series A funding from SAIF Partners and Fulcrum Ventures. In February this year, it raised $10 million funding led by Singapore based venture capital firm BEENEXT and Digital Garage along with other investors namely BEENOS, Qualgro and Mamoru Taniya of Asuka holdings.
NoBroker focuses on enabling owners and tenants to complete the entire transaction without the assistance of a broker. Founded by Akhil Gupta and Amit Agarwal, the portal currently caters to Mumbai and Bengaluru in the residential rental space.