Budget 2016: Online players want government to push ‘Housing For All’

While the Real Estate sector is facing a slug in the market, the scenario is a little bit different for online players. Despite realty sales being the slowest in the past two years, the online real estate sector has attracted a whooping investment of $250 million or Rs, 1600 crores. Consolidation of the market has been the main reason behind its growth. In the last one year we saw the merger of CommonFloor and Quickr and acquisition of Makaan.com by PropTiger.

The online game is played mainly by two players, investors like 99 acres, Magic Bricks and Housing.com and transaction players like Squareyards. In the last two years, while classified players struggled to find a good monetisation model, the whole value shifted to the transaction sites.

“Last year we actually grew more than 225%,” said Vivek Agarwal, Principal Partner, Squareyards.com who acquired three companies in the last few years.

Challenges

1. Cost of property is skyrocketing due ever increasing tax limits.

2. Lack of any uniform GSP forces the online portal to provide separate provisions for each state.

3. The usage of technology is limited.

“Most of the work is done manually and hence becomes cumbersome for online portals,” said Sudarshan Purohit, CEO and co-founder of Zenify.in, online real estate player.

4. The sector is not corporatized yet. It is still dominated by small players.

“The first thing we are expecting is to gain an industry status,” said Vivek.

5. While building, too many clearances need to be done which are often delayed and not transparent.

Expectations

1. “One of the things that we are looking forward is more exemption in the housing loan limit,” said Agarwal of Squareyards. Right now we get certain part of our housing loan exempted from taxes but the way costs have moved up, the small part has become insignificant now.

2. Also, the housing loan exemption is not applicable for the units which are under construction. But looking at these companies’ customers’ profiles, we will see most of them invested in construction property but they can’t take the exemption till the property is actually constructed.

“We want this exemption to be extended to construction property also,” said Vivek.

3. They certainly hope that Real Estate Regulatory Bill is passed. Once that bill is passed it will open many doors for the online real estate sector. The builder will then have to put online all the details with the regulatory authority like the license status, land acquisition status, details of environment clearance etc.

“Things will become more organised. When the information estimation goes away, the information will become structured structured. Hence, portals can put all the information online from where a customer will get all the details with a single click,” he said.

4. Most of the demand on the online portals is from the budget and affordable segment which ranges from 20 lakhs to 70 lakhs. Once this government pushes ‘Housing for all by 2022’, the online sector will get a major boost. This will also attract NRIs to invest in India. As a consequence, the online sector will grow at a breakneck speed for these portals are the major source of information for the buyers abroad.

“We sold about 780 units in the affordable segment in three weeks in Bangalore, most in the range of 20 lakhs. The customers were both from India and abroad,” said Vivek.

5. “We expect more investment in Technology of this sector, about 1 billion,” said Sudarshan.

6. More transparency in the process of getting clearances, relaxation of FDI norms, 'industry' status and passage of regulatory bills are the other things they expect from this budget to cash in the most from the available opportunities.

(Image credits: indiatimes)