With builder supply tilting sharply towards premium homes, almost 80% of buyers looking under Rs 1 crore in metro cities like Hyderabad and Gurgaon now find nothing to buy. In a conversation with Anees Hussain, Saurabh Garg, co-founder and chief business officer, NoBroker, talks about the squeeze on affordable housing and the policy fixes needed. Excerpts:
There is a lot of talk about supply volumes moving towards the premium segment. What is your reading?
Yes, in the last three to four years, the affordable and middle-class segments have been pushed out. In Hyderabad or Gurgaon, almost 80% of people looking for a house under Rs 1 crore cannot find anything. In Bengaluru, it is 40 to 45%. Builders have prioritised premium, larger apartments. Even middle-income IT couples can’t afford a home today. We launched a vertical called Affordable in primary sales to aggregate sub-Rs 1 crore supply, but the options are shrinking.
What could regulators do to address this segment?
Bring back GST benefits for affordable housing and lower GST on construction costs. The definition of affordable housing is stuck at Rs 45 lakh, which is too low. It needs to move to Rs 75-80 lakh so more people benefit. Inflation is eating into pockets, making it harder to buy. Infrastructure also has to play a role so people can live outside the city and commute easily. Mumbai has done better through projects like Lodha Palava or Marathon where connectivity is available in 1.5 hours. In other metros this is still a work in progress.
Meanwhile, how is overall demand holding up?
Prices have risen 70 to 80% almost everywhere, and many investors have left, saying capital gains no longer add up. But end-user demand is intact, and NoBroker is a very end-user-driven platform. On rentals, the post-Covid mismatch has eased and rental inflation has moderated to 5 to 7%. Therefore, overall demand remains robust.
What is the scale of your business today?
We sell around 6,000 houses a month in resale and 800 in primary, and rent out around 70,000 a month. In resale we sell Rs 4,000 to Rs 5,000 crore a month, and this March we crossed Rs 1,000 crore in primary sales in a single month, our highest ever.
Until FY24, revenue from real estate formed the majority. How has the mix changed?
Right now around 55-60% comes from real estate, which is resale, rental and primary. The rest is from home and financial services, with some from NoBrokerHood and ConvoZen.NoBrokerHood, our society management business, is helping funnel premium users into real estate and home services. And ConvoZen, the AI tool we built for our own call centre, is now sold to other companies. The overall mix should stay broadly the same.
Where are you on profitability?
Our objective is to become PAT positive by the end of FY27. Two things are driving it. We narrowed focus to five or six verticals and went deeper, which brought efficiency. And ConvoZen, which was built in-house, has let us do far more business without adding much manpower, since the AI cost is roughly a 20-25% of the human cost. It became good enough that we now sell it outside. It sits within the NoBroker parent, and over 50 companies use it.
There is a view that you have drifted from your zero-commission thesis by charging owners and tenants. How do you respond to that?
Even now, almost 94% of users use NoBroker for free, and can contact nine owners or sellers at no cost. The 6-7% who pay are paying for extra help, like a relationship manager to filter calls. The fee is between Rs 3,000 and Rs 8,000, far less than a broker would charge. We don’t expect this percentage to go up dramatically.
What are your IPO plans?
The money we have raised so far is enough to reach profitability. We might do one pre-IPO round and then look at an IPO in the next two to three years.