HDFC Realty, the wholly owned subsidiary of HDFC Ltd, is planning to tap the wide network of independent brokers, and the home loan and insurance agents base of the HDFC group spread across tier II and III cities to expand its residential and commercial real estate advisory business. Vikram Goel, CEO, HDFC Realty, tells Shubhra Tandon of FE that the company is adopting the “aggregation model” to grow. Excerpts:
What are the plans with regard to scaling up of the residential portfolio of HDFC Realty?
In the last four years, we have expanded from 8 to 19 cities with business reach across 38 cities. In order to further expansion, we have initiated a wide distribution network of brokers known as – ‘prop partners’. The benefit here is that through our parent company HDFC Ltd, we already have existing relationships with around 20,000–25,000 brokers. Going forward, we would like to leverage this ecosystem of ours. With this set-up of networking, our objective is to create a familiar distribution network across India.
Why did you feel the need to have this model for scaling up?
In a competitive market, whether in India or globally, it is an aggregation model that is essential in order to scale up. Across the world, real estate expansion takes place through a composition of varied resources. As a conglomerate, we have already done the same through insurance, with mutual funds in the past and with home loans. I think it’s time when real estate also follows the same model. I think this is how all our products got scaled up and this is how we plan to scale up this as well.
How will this impact the top line of HDFC Realty’s business?
Our residential business has been consistently growing, and over the next three years, we are confident to grow at a faster pace, given the focus on affordable housing and housing for all by 2020.
How much progress has been made in this plan and what is the timeline that you are working with for having this model in place?
We’ve always been working with brokers. We started this about three quarters back and like I said, we already have a few projects which are being exclusively marketed across major cities and developers across India are also interested.
On the distribution side, we’ve started the process of enrolling brokers and we have begun doing sales through them.
We have started focusing on this about nine months back. In Mumbai, Pune and other cities, we’ve already been successful, where sales have been done through these brokers.
Enumerate your expansion plans on the commercial business as well and what would that contribute to the top line from the current level?
Our commercial business has been growing at about 100% year-on-year in the last two years. Going forward, we are looking at setting up HDFC Realty more as a corporate real estate solutions company. While we continue to focus on large transactions in tier 1 cities, we have realised that there is a huge opportunity in tier II and III cities as a result of banking and NBFC expansions. Also, with the government push for rural and non-urban growth, increase of digital reach, and penetration of internet in these areas, we are looking to develop 30–40 cities.