Housing.com’s reported Rs 250-crore advertising campaign, “Look Up”, launched in March this year, appears to have earned the company more than 4,000 visitors to its site in a span of two months (March and April), according to comScore data. While this is certainly the highest rate of growth among leading real estate portals, it is contrary to the company’s claim that it is the number one real estate portal, with traffic of 11 million visits, as per Alexa rankings and downloaded Google data.
Housing is well behind industry leaders Magicbricks and Indiaproperty in terms of total visitors. Magicbricks registered 6,860 visitors, whereas Indiaproperty clocked in 5,105 visitors, ahead of Housing’s 4,648 visitors. Traffic increased exponentially from 799 visitors on the Housing.com website since March, with it beating Commonfloor and 99acres in total visits in April.
The upside to the campaign was not just restricted to traffic, according to Rishabh Gupta, COO of the company. He said compared to December 2014, the company has been able to grow its network of developers from 3,000 to 10,500. Since April, the company has expanded presence to 40 more cities, penetrating 101 cities. “In December we were listing 1,000 properties a day and now we are listing 5,000,” said Gupta. According to a press release issued in March, the aim is to hit 10,000 listings a day in the next three months.
Despite such exponential growth, Housing is not likely to turn profitable even in its fourth year of operations. But Gupta does not seem worried. A former Flipkart employee, he said, “We are following a marketplace model so revenue is not our focus at the moment. We are investing heavily in building features, which will eventually make money.” For instance, recently it acquired a Delhi-based risk assessment company, Realty Business Intelligence, for Rs 10 crore. The company said the acquisition will help Housing verify its listings, enabling a higher degree of due diligence.
Some argue visits do not make money for portals, advertising income does. Although each company has its network of developers, income is heavily dependent on large companies with big advertising budgets. “Earnings mainly come from the top 20 developers and the top eight cities,” said Narsimha Jayakumar, chief business officer at 99acres.com, adding, “As much as 90% of the industry revenue is dependent on how well you serve this bracket.”
FE independently checked with 10 large developers who use web portals to showcase their projects. Not a single company had a clear preference of one portal over another. All 10 companies named Magicbricks or 99acres as one of their preferred sites, citing authentic lead generation. “Developers test out portals and list with the ones that give them most relevant leads that can turn into a sale,” said one developer who did not wish to be named. “These portals invest in a number of technological innovations and we partner with them to build the same in our micro site,” he added.
In the past eight to 10 years, real estate web portals in India have not quite figured out how to make money. 99acres is the only firm that turned profitable for one quarter back in 2012. “The industry is not large enough for five-six players to operate. Competition mandates high marketing cost and constant investments, which escalate employee costs,” said Jayakumar of 99acres. He added that on an average, a company in the sector ends up spending R120 crore-Rs 160 crore a year on marketing. Even though he did not disclose 99acres’ marketing cost, its 2014 revenue stood at Rs 76 crore.
The real estate portal business has witnessed an influx of competition in the past three to four years. Although older companies such as Magicbricks and 99acres have stuck to their original model of mainly being advertisement platforms, Commonfloor, a site that was launched in 2011, one year before Housing, believes in the ecosystem model. “About 70% of our revenue comes from services and advertisements related to selling properties; it occupies a much larger ticket size than the rental market,” said Vikas Malpani, co-founder of Commonfloor. But Housing is more focused on the rental segment. “We want rentals to contribute 40% to our revenue, sales to contribute another 40% and services to contribute the remaining,” said Gupta.
He also insists the management of Housing is building a different product. Traditionally a portal that primarily enabled customers to search for properties to buy or rent, Housing is now preparing to launch a bouquet of moving services to cater to the relocation needs of its users, an edge none of its competitors currently has. “Our competitors are primarily advertisement platforms; we want to be more than that, we want to create an ecosystem for anyone who wants to buy, sell, rent and resale,” said Gupta. This means buyers can not only look for properties on the site, but also draw up a lease rental, compare home loan rates and sign up with a bank, use relocation services, etc. The site will cater to all requirements involving moving house and be a one-stop-shop.
Each site is exhaustively spending to collect authentic data, ensuring updated active sales, improving customer experience and providing value-added services. Magicbricks and 99acres boast of a developer network denser than Housing. If Housing claims presence in 101 cities, 99acres claims presence in 200. If Housing claims it alone has the facility to draw up a rental agreement and apply for a home loan on its site, Magicbricks is armed by an advisory on legal and financial matters, locality trends, etc, which are relevant information for a home buyer. To combat Housing’s technological innovation “slice-view”, Commonfloor has developed its “retina” feature, which enables a virtual reality tour. Jayakumar added that developed market s such as the US, UK and Australia have maximum two to three players in the online real estate space. “We have already seen consolidation with Makaan and PropTiger and I expect that more might be on the way,” he added.
For Updates Check Company News; follow us on Facebook and Twitter