The real estate industry in India has been going through a lot of turbulence for quite some time now, and its woes are far from over.
To put things in perspective, an ASSOCHAM study released this May stated that 18–40 per cent of residential premises and commercial estate inventories are lying unsold in different cities, with the maximum unsold stock lying in Delhi-NCR over the last one year.
Experts believe that highly inflated prices are partly responsible for this slump in demand.
According to PropEquity data, in recent months, prices quoted by developers — which are marginally higher than in 2013 — have remained stagnant.
Prior to founding mydala, a mobile coupon platform, Arjun Basu (44) had spent over five years at Capital One Financial Corporation in the US, where, in his dealings with real estate clients, he had accumulated a fair amount of knowledge about the business. This knowledge included awareness of one of the perennial issues of the realty market — lack of transparency.
He discussed the matter with his friend Subhash Bedi (44), Chairman and MD, Rising Straits Capital, and the duo decided to work together to address the issue.
In September 2016, with an initial in-house investment of $2 million — which was spent largely on building out the product and technology platform — the duo launched DoorKeys, a buyer-focused real estate platform, in Delhi-NCR.
Everyone loves looking at houses online, but when it comes to buying and selling, it’s often described as something to get through or survive. It is a very stressful process.
“There’s no clarity on property price, the real estate market is rife with unreliable and unprofessional agents, and consumers have little/no negotiation power. We are there to address the three major points in the real estate industry — price, agents, and negotiations,” says Arjun, Co-founder and CEO, DoorKeys.
When the founders created DoorKeys, they began by trying to find out how they could use technology to improve the experience for buyers so that they would not have to get lost in the complicated maze of property sites.
To start with, they spoke with real estate agents and seasoned home buyers and sellers. They learned that buyers were anxious during the offer process, feeling like they were submitting an offer to a black box. There was no way to discover market price — based on the demand supply ratio. Buyers were also worried about putting their contact details on property portals as they were spammed mercilessly.
According to Arjun, DoorKeys simplifies the home-buying process by giving buyers (among other tools) the power to negotiate for properties online.
With DoorKeys, buyers can discover properties in their budget — what other similar buyers are willing to pay for them and what other users are saying about the locations and projects. They can negotiate with prospective sellers on the basis of market price, demand, and supply for a property, and can also choose sellers or agents on the basis of peer buyer ratings and reviews.
“The DoorKeys core proposition to the buyers is ‘buy at your price’, which essentially gives the buyer the power to negotiate online with sellers. Currently in most Indian cities, there is a huge mismatch in pricing expectation between what the buyer is willing to pay and what sellers are asking for. This has created distress in some markets today with minimal transactions, which is resulting in buyers holding off from completing purchases and record unsold inventories,” says Arjun.
DoorKeys follows a pay-for-performance model for sellers and brokers.
For primary property, it charges between one and five percent of commission on the total price. For secondary sales, the commission rate ranges between one and two-and-a-half percent.
The platform claims to feature over 4,000 buyers from the Delhi-NCR region. The number of sellers is 1,000.
In the past one month, the website has witnessed around 30,000 unique visitors and 10 transactions have been made. However, these transactions are yet to be monetised.
According to Arjun, he is working towards creating tools that will enable the seller community to ensure last-mile fulfilment as well as match buyer expectations. On the buyer side, DoorKeys will continuously build out tools to enable better credit profiling, so that both buyers and sellers are confident of dealing with each other.
Real estate review
According to IBEF, the Indian real estate market is expected to touch $180 billion by 2020. The housing sector alone contributes five to six percent to the country's GDP.
There is a horde of players who work on commission basis and offer solutions to the realty market — both offline and online players.
In the online category, Magicbricks, 99acres, Housing, PropTiger, CommonFloor, Square Yards, Makaan and many other players are offering selling, buying and renting facilities.
Earlier this year, online classified major Quikr acquired realty portal CommonFloor for an undisclosed amount.
In August 2015, Housing acquired cloud-based sales life cycle management platform HomeBuy360 for $2 million. In October last year, Square Yards acquired Ahmedabad-based Oryden Tech Labs, which specialises in 3D architectural and industrial visualisation, 2D animation and creative design.