PropTiger has helped 11,000 customers buy houses worth $1.25B since Feb'11: Co-founder Dhruv Agarwala
PropTiger.com, owned and operated by Delhi-based PropTiger Realty Pvt Ltd, is one of the new crop of real estate search and booking portals in India. Unlike most property listing ventures, which tend to be dominated by new or secondary market property listings from third party brokers, PropTiger is an online broker itself for new properties. The firm, which has attracted funding from SAIF Partners and Accel Partners, is now looking at entering the secondary transactions market. Techcircle.in met with its co-founder Dhruv Agarwala who talked about the milestones achieved by the company, the extension of the business with entry into secondary market transactions, fresh fund raising plans and more.
Here are the edited excerpts:
Tell us about your operational milestones.
Our business model is very different from the typical real estate portal who you hear of like 99 Acres or Magic Bricks, which are listing sites. In other sites when a customer comes looking for property, he finds a listing from a broker and then they essentially have to work with the broker to find the property they want. Ultimately sites themselves don't get beyond anything but these people finding the broker on the site.
Ours is an end to end service wherein people come to our website, find the property that they are looking for and when they leave a lead, the PropTiger sales person, who is an employee, handholds them through the entire process of buying a new property.
So in our case how we measure ourselves is the number of properties sold, the value of the properties. Since inception in February 2011 till date we have sold more than Rs 7,600 crore (around $1.25 billion) worth of properties to 11,000 customers.
What sort of inventory do you have on your site?
We showcase over 30,000 properties on our website and these numbers constantly increase over time. It is unlike a listing portal wherein lets say the same property would have multiple listing because you have multiple brokers having listings for the same property. In our case there are no external brokers. Having said that the properties are not exclusively available to us so there are other people trying to sell same property either through other online portals or offline.
What is the revenue model that the company? Do you also plan to expand your revenue stream?
Unlike the other portals which make money from broker listing ads, we make money from transaction fees paid to us by the developers. We do not charge the customer. The percentage varies from city to city but on an average it is 2.5 per cent. In Bangalore and Chennai it tends to be 2 per cent; in Delhi NCR it is 4-5 per cent but then there are customer discounts which are available so as an average it comes to around 2.5 per cent.
We also have revenue from home loan side where we put customers get in touch with home finance companies and then we get a fee for making an introduction. The fee typically varies depends on the number of transactions. Anywhere from 0.25 per cent to about 0.5 per cent.
How about ready-to-move-in properties?
At the moment we are not helping the customers buy ready-to-move-in properties so that is something we would like to add over a period of time. It may happen in the next 6-7 months. It is an extension to our business because there are customers keen to move into ready-to-move-in properties as opposed to new properties so we want to cater to that segment also. Our estimate is that one third of the customers are looking at ready-to-move-in and two thirds at new properties.
We are going to start with a pilot in Bangalore, in the next couple of months and then we would extend it across cities.
It would mean getting brokers on the site after-all? How will you charge for transactions?
In the case of secondary market when we do enter the market, the match will be made between the customer and the other brokers. The entire service will be monitored very closely by PropTiger.
However, unlike other portals it would be different, as we are not going to charge them for listing. We would charge only when the actual transaction takes place. Here the consumer will have to pay as there will be no developer involved. Typically in the secondary market there is 1 per cent sell-side brokerage and 1 per cent buy-side fee. So both the seller and the buyer pay and we will get a part of the money due to the broker when third party brokers wil be involved.
Do you have plans to expand into rental properties as well?
Rental is still some time away. Ultimately we want to play across the residential space, but it will take time.
Which cities are you present and how is it going to expand?
We have feet on street in eight cities that is Noida, Gurgaon, Ahmedabad, Mumbai, Pune, Bangalore, Chennai and Kolkata. Then we have data and projects in cities for close to 15 cities not all of which is necessarily out on the website as of today. In the next 12 months we plan to take our primary market to another 7-8 cities. So Jaipur, Chandigarh and Kochi are potential cities while Hyderabad, a large market where we are not present, is another natural choice for expansion.
Earlier we were focused on tier I markets but with the announcement of 100 smart cities and relaxation in FDI norms for smaller projects in the new budget we will get to see a lot more happening in tier II cities. There is a fundamental change in the economic landscape which has prompted us to look at the tier II markets.
We now see even horizontal e-com firms trying to sell houses online. Is there room for more players and does it affect vertical players like you?
We are in a $1.2 billion dollar space where I mean the property brokerage market in India. This space has immense runway because still 99 per cent of this is offline. So there is massive headroom for us to grow. Other players are all vying for the online display advertising as well as the online listing space, which today is not more than Rs 250 crore and even if you take the offline advertising market for the real estate, it is about Rs 1,500 crore.
Horizontal players already exist such as OLX and Quikr in the renting space and frankly what we found is that the 99acres of the world and the other portals doing rentals have held their own against the horizontal players. Real estate is an important purchase decision for an individual. Rentals may not be as critical because ultimately you have room to get out very quickly but still it is an important choice because ultimately you are committing yourself to staying at a particular space for the next 12-24 months. So people do want physical involvement and just simply going online doesn't help. That is where we come in.
So what we find is that as far as the Snapdeals of the world coming in, they will have their own place but ultimately who do you think will be happy to put Rs 30,000 for a home which is non-refundable? In a country thriving on cash on delivery and free returns of small ticket products non-refundable charge of Rs 30,000 for something like a home... you know the jury is still out. Is it a serious threat to us? I don't think so.
How about new features on the site?
We want to focus our attention on data and good pictures. Construction updates we already do where our photographers go and take pictures of the under construction projects. We can add all sort of things such as 3D etc but we are very mindful of costs. We will do things selectively going forward.
Currently you have 300 agents. How does your hiring plan look like?
We will see that expansion happening as we enter into new cities but immediately in the existing cities we don't intent to grow that. If you look at another 12 months when we go to another 7-8 cities we probably would increase it by 50 per cent.
Do you see opportunities for inorganic growth at the back end?
No immediate acquisition plans. Ofcourse we will always consider companies if they provide exciting enough technologies. We would look at visualisation software whereby companies would help us display the property in a manner which is more interesting for the consumer. There are companies which have interesting ways to show floor plans, you have static 3D design, you have the panoramic view, so there are companies who help us grow on the ground faster on some of these. We might look at such companies.
You have raised $7 million so far. How about fresh funding?
As we expand the model, we have to go to other cities, expand from primary to secondary we will need to raise more capital and we will be doing that in the course of the next three to four months. We are going to start raising in the next couple of months. We have not explicitly decided upon the amount but it would be greater than $20 million. This would go in expanding our primary market business building out our secondary market business as well as the brand building.