Virtual realty

Written by Timsy Jaipuria | Updated: Sep 28 2014, 07:49am hrs
BOOKS, ELECTRONICS, clothes... whats the next big thing For real estate developers, it could be buying property online.

While it may still be some years before online property buying becomes as commonplace as, say, purchasing household items, developers are now waking up to the potential of the World Wide Web, which was hitherto limited only to carrying out research, studying available options and checking for location and tentative prices of housing projects.

One in every two online real estate searches is related to buying property and thats the area real estate players seem to be focusing on. Tata Housing, for instance, recently joined hands with e-commerce major Snapdeal for its affordable housing brandTata Value Homesto offer about 1,000 houses in seven projects located in Mumbai, Bangalore, Chennai, Pune and Ahmedabad, which have been put up for sale on the portal. From 1-BHK to 3-BHK set-ups, the flats are priced between R18 lakh and R70 lakh.

The trigger was apparently last years Great Online Shopping Festival (GOSF). We piloted the online platform through our partnership with Google during the GOSF late last year and, since then, we have received an overwhelming response from consumers across the globe. We have been selling one house every two days through this medium and have managed to cross 700 units till date with a value of over R400 crore, says Brotin Banerjee, MD and CEO, Tata Housing Development Company, adding: Looking at the growth of e-commerce and increasing penetration of the Internet in India, we expect at least 30% of our sales coming through the online platform in the next three-five years.

What excites real estate developers further is a recent study by Google. As per the study, over the past four years in India, real estate transactions to the tune of $43 billion (around R2.6 lakh crore at current exchange rates) were influenced by research done on the Internet. When segmented, it was residential real estate that took the lions share of transactions at $31 billion (R1.8 lakh crore).

When developers dug deep, they realised that there are currently around 200 million Internet users in India and the number could grow to 500 million by 2015, as per consulting firm McKinsey & Co.

But why the Internet Manish Agarwal, managing director, Satya Group, and secretary, Confederation of Real Estate Developers Associations of India (CREDAI)-NCR, explains: Buyers profile has changed drastically over the years. Now, the age group of 28-38 years comprises the major chunk of buyers who prefer to make preliminary choices online and follow these up with physical visits to the project sites. All the leading developers are in tune with this trend.

While the case of Tata Housing may be unique, most developers are warming up to the potential of the Internet as a marketing medium and also the changing profiles of buyers who have become younger, more tech-savvy and are increasingly seeking information and transparency in dealings with developers.

Need of the hour

The Internet is the marketplace of tomorrow and sooner or later all businesses will have to move towards the e-commerce platform to stay in the game, feel experts. Today, almost everything is getting digital and the trend is tilting towards every business sector following it efficiently. Businesses, which do not respect this emerging trend, will eventually fall out of competition. There are several positives of adopting this mode. However, factors like unrealistic competition, lack of buyer interest owing to a traditional mindset of seeing is believing and price inflation can stem the growth of the sector, says Prashant Tiwari, CMD, Prateek Group, an NCR-based real estate developer.

Developers believe realty sales via the Internet will catch up very soon, as consumers would like to shortlist their preferred properties online before making any physical visits. This will save them and sellers a lot of time and will enable both parties to initiate deals that will offer favourable returns to both. Even developers have slowly started leveraging this medium to readily share the required information and respond timely to queries from prospective buyers. With active participation of developers, even buyers have gradually started trusting this medium. Additionally, with a proper mechanism and e-commerce strategy in place, the medium can directly help boost sales, says Nikhil Hawelia, MD, Hawelia Group, another NCR-based real estate developer.

Buyers boon

Owing to the traditional mindset of the Indian consumers of experiencing anything before buying, home booking through e-commerce is being supplemented by personal site visits before any deals are signed.

While on one hand, it enables developers to save investments on uncountable site visits, brokerages and human resources, it will, on the other, enable them to screen frivolous/uninterested parties and only initiate conversations with serious buyers.

P Sahel, vice-chairman, Lotus Greens Developers, explains, A growing number of real estate developers are starting to take a long-term view of how technology can be integrated into their assets to enhance efficiency and transparency, and to sustain relevance for users. The real estate industry is increasingly adopting tools such as e-commerce to beef up marketing and sales.

Besides transparency, there are various advantages of going through the e-commerce route, feel industry observers. It is an excellent tool for buyers seeking a quick overview of the market they are interested in, apart from helping end users research the credibility of development firms and various aspects of project details, including comparative analysis of prices, amenities, payment and construction schedules, etc.

The biggest benefit is that it is cost-effective. By way of e-commerce, it becomes cheaper for a developer to reach out to a wider consumer base. Unlike traditional marketing and sales strategies, e-commerce helps developers transcend the barriers of geography. Online sales can be a good way for developers to offload part of their inventory and can be especially helpful in reaching overseas buyers and in tapping the NRI segment, Sahel of Lotus Greens adds.

Also, what attracts customers is that once they go online, they can watch videos on YouTube, read reviews and look up specific brands on search engines.

Real estate professionals know their customers are uber-connected and informed. To tap this market, we have included property details like pricing, location, recent launches, construction updates and 3D project walkthroughs, which are user-friendly. A buyer can easily find the details of the property and, if interested, can connect with the developers. Website are created in a manner that they provide an easy guide for potential buyers in terms of the information they need in a transparent and direct manner. This saves potential buyers a lot of time when they are going through the home-buying process, says David Walker, MD of SARE Homes.

Target areas

As per developers and experts, this trend is likely to pick pace, especially for small-ticket purchases. However, it will take some time before the Web can become the primary source of information and pre-purchase. This is natural for any emerging technology/trend, wherein, initially, customers explore the new medium for gathering information and only later start to transact through it.

At this point of time, we see the Web as an information dissemination medium, which is being widely used by customers to shortlist a set of projects they would like to buy from. We expect NRI customers to be the first movers towards online purchase of homes, says Ashish Jerath, VP, sales, NCR, Emaar MGF Land.

Till now, the Tata Value Homes project on Snapdeal, says the company, has received phenomenal response across metros, as well as tier I and II cities. So far, Tata Housing has booked 85 apartments through Snapdeal from the day of the launch. On the other hand, through the Google online shopping festival, we sold over 50 units with sales totalling over R25 crore in just four days. Through our online campaign, National Home Buying Day, we sold 240 flats worth around R100 crore during the four-day initiative. Through our website, we have managed to sell around 300 apartments over the past nine months, Banerjee of Tata Housing Development Company says.

Loose ends

For a majority of Indians, buying a house carries a lot of emotional baggage and even if they book a property online, they will still want to visit the location and satisfy themselves on all counts. So even though e-commerce in real estate shows a lot of promise as a potential marketing and sales tool, it remains to be seen whether it can really offer sustainable competitive advantage for developers.

S Sivaramakrishnan, head, residential services, India, CBRE South Asia, says, With the residential real estate market being largely unorganised and very local, buying property online without any physical site visit, micro-market inspections, negotiations and personal interactions with developers and project marketing teams is a fairly unlikely scenario. Till such time that Indias real estate sectorwith special regard to the housing segmentbecomes organised, regulated and transparent, online platforms are hardly going to replace the conventional property buying cycle that is currently prevalent.

Thus, unless it is a globally-renowned brand, it will be difficult to cultivate the maximum potential of the medium. In other words, end users may prefer online purchase of property mostly in the case of developers who enjoy credibility and a good track record.

However, one thing that buyers should keep in mind is the risk of false transactions online. Ravindra Chamaria, CMD of Kolkata-based Infinity Group, explains, Not many developers have been effectively able to use this medium so far, as customers living in far-off cities or other countries remain concerned about the authenticity of the transactions.

Adds Ajay Aggarwal, MD, Microtek Infrastructure, Another disadvantage is that this hassle-free mode could also become a tool for unprofessional and unscrupulous developers, says Ajay Aggarwal, MD, Microtek Infrastructure.

Therefore, buyers need to be assured of a safe and secure payment procedure. This aspect is something that most developers have not yet actively worked on. Tata Housing Development Company, though, has taken note of this. We have decided to integrate a secure payment gateway to enable ease of transaction and safety for consumers across the globe, says Banerjee of Tata Housing Development Company.

The road ahead

There is no denying the fact that digital technologyfrom mobile devices to new media platformswill empower buyers and revolutionise the entire property transaction process, from the way buyers investigate property to how they sign the contract.

It can be expected that as certain product categories become more commoditised, consumers will, in the absence of significant differentiators, opt more willingly for online purchase of property.

However, experts feel the advantages of the online medium are related more to the purchase of retail products and services. Real estateespecially in Indiais another ballgame altogether. Only when the complete pertinent documentation and various other factors that go into a successful property investment are available online for a project, will it make sense for consumers to consider such a route for investment. The availability of all the information required for a foolproof property purchase would obviously depend on whether the developer or partnering bank have made them available online or not. As of now, the online route would make most sense to express interest in an offering and to avail of a site visit. However, as a rule of thumb, no kind of property purchase makes sense without personal inspection, extensive study of the related documentation and informed inputs from a professional advisor, says Anuj Puri, chairman and country head, JLL India.