In recent times, India has emerged as one of the fastest growing economies in the world, driven by swift development across multifarious industries and implementation of better policies to ensure growth of various sectors across the country. One such is the Indian real estate sector, which is one of the most globally recognized sectors in the world.
Over the past decade, it has been observed that the real estate sector in India has evolved considerably, and has become one of the most prominent sectors in India owing to rapid infrastructure development and steady rise in disposable income of consumers. According to a report by Indian Brand Equity Foundation, the Indian real estate sector is projected to be worth more than USD 180 Billion by 2020, and is expected to grow at 30 percent over the next decade. The sector is the 2nd largest employer in India after agriculture sector, and is made up of Housing, Commercial, Retail, and Hospitality sub-sectors. Government’s focus on affordable housing is also going to support this growth.
In addition, another factor that is contributing to the steady growth of the real estate sector in India is the ever-increasing demand for office spaces among Indian corporates, along with urban and semi-urban housing projects announced for the country’s growing urban population. Overall, the real estate market in India is projected to witness significant growth at a Compound Annual Growth Rate (CAGR) of 11.2 percent within the next 3 years.
While the growth of the Indian real estate market has been a striking example of urban development in the country, it should be noted that one key aspect that is playing an important role in promoting the industry’s growth is utilization of innovative technology.
Technology – Growth driver of the unorganized real estate sector
In the past couple of years, advancement in the field of innovative technology, especially mobile & internet has managed to transform several industries, such as the real estate sector in India, and has become an important growth enabler for the same.
Prior to utilizing the power of technology, the Indian real estate sector faced certain challenges in terms of discovery and enabling transactions due to limited means, such as referrals. The overall process was quite inefficient and slow as most individuals had to rely on those within the network to seek credible sources for referral prior to undertaking any kind of transactions. Moreover, lack of social media during those times meant that people had to rely on word of mouth to seek referrals. While print media served as a viable source for real estate players in the form newspaper classifieds, allowing people to post their ads and help both tenants & buyers to seek information from such sources, it still proved to be a slow and time-consuming process.
This was followed by the arrival of real estate agents or brokers, who made discovery easier as these people became the most important source to seek information for multiple properties. They also played an important role in managing and taking care of all the bureaucratic documentation, apart from enabling site visits and ensuring that all parties involved were genuine. However, all this also led to creation of an additional brokerage cost borne by customers.
The increase in number of brokers within the realm of real estate further made the market more competitive, encouraging entrepreneurial brokers to attract as many clients as possible. What’s more, through them, the real estate industry eventually began to witness technological disruption as brokers started using different platforms like Justdial to seek out potential customers. The sector eventually started gaining online visibility in the form of various real estate portals like 99acres & Magicbricks, and online classifieds like OLX, Quikr, etc., with a focus on listed properties rather than brokers. This allowed buyers to directly connect with the builder or broker of the property for site visits and documentation. Still, the subsequent processes were still taken care of offline, and no provisions were made to eliminate the cost of the middleman.
People soon came to a realization that information asymmetry, coupled with brokerage issues were some of the major issues faced by the real estate market, and thus, were compelled to find a solution. This subsequently led to the next wave of technological disruption in the sector with platforms like Housing.com, which claimed that it allowed people to access correct information based on genuine figures.
Driven by such swift improvements, many promising real estate players ultimately realized that it was time to eliminate brokerage, one of the biggest constraints faced by customers while house hunting, and led to creation of new generation peer-to-peer platforms like NoBroker.
Such platforms are now playing a key role in eliminating information asymmetry, and are connecting tenants and lessors directly, and eliminating extra costs to the tune of hundreds of crores every year. Also, a lot of documentation has also moved online and with the support of Aadhar. Additionally, it further proved that technological disruption can pave the way forward for the unorganized real estate market in India, and also build customer confidence via tech-based platforms in future.