With the emergence and acceptability of e-commerce marketplace in India, the domestic real estate sector, especially in urban India has also seen a beeline of developers looking to sell their residential housing projects online. While Tata Value Homes became the first real estate developer to tie up with an e-commerce portal to offer its products for sale on Snapdeal in August 2015 — offering houses ranging between Rs 31 lakh and Rs 70 lakh — the numbers are growing by the day even as the sector continues to remain under stress with high inventory and limited demand.
What was started by Tata, was later emulated by players like Godrej Properties, DLF, Purvankara Developers and Mantri Realty, among others. This week Wave Infratech and Raheja Developers went digital. While Wave announced its tie-up with Snapdeal and Housing.com to sell its properties in Wave City Centre and Wave City in Noida, Raheja tied up with bookmyhouse.com and claimed online bookings for around 500 apartments within two months.
While developer’s are queuing up for selling their projects online, industry experts say that is more a tool to reach out to customers and make them aware about the projects and only reputed developers who command trust in the market can succeed in selling their projects online. Some suggest that homebuyers should keep the reputation of developer in mind before signing up for an online purchase.
The e-commerce take-off in India can be clearly linked to the discounts that have been provided by players like Amazon, Snapdeal, Flipkart, among others, on sales of fashion, electronics or FMCG products.
The same model seems to have been adopted even for the real estate sector.
A Tata Housing official, who claimed that online sales for the company have been in excess of 1,500 units and have accounted for almost 15 per cent of the total sales over the last two years, added that online sales jump several fold on days when there is a special offer or a high intensity campaign going on.
“If on normal days we witness 4-5 bookings, on days when there is a special offer, it jumps to more than 100,” said the official with Tata Housing. He further added that they witnessed a big surge in demand on days when the offer of “an additional room with booking within the limited period” were given.
It is also important to note that the same offers are not made available for off-line sales and they are exclusively made available for online purchase.
There are more players looking to use it as a platform to push sales in a quick time through lucrative offerings. Earlier this month Antriksh Developers launched its Urban Greek project in New Delhi through Square Yards, a real estate advisory firm, and is learnt to have sold 357 flats online worth Rs 250 crore in just 19 hours. Biswaroop Padhi, co-founder of Square Yards, said that Antriksh offered to sell flats under a ‘no loan’ offer where one could buy the flat at a booking amount of Rs 10,000 followed by a down payment and offered the buyers to pay the remaining amount in monthly installments of 0.9 per cent of without any interest over the next five years.
While homebuyers are attracted towards such offerings, many say that only a few reputed developers will be able to sell projects online.
“The most important parameters are reliability and trust on the developer, which is missing in the industry. Only a few players command that trust and so, those who lag on reputation and have seen delays in delivery or quality of development will find it tough to succeed on this platform,” said Gulam Zia, national director, research at Knight Frank. He added the homebuyers should stick to reputed developers while buying projects online.
Is it only about sales?
No, industry insiders see this as a way of generating leads because in India people like to see the project site and also like to see the progress of the project before buying a house so it is very difficult for this to succeed in a big way except for a few players that have high reputation.
“On an average, homebuyers make 4-5 visits to the site and the property and take between 30-45 days before finalising their home purchase. They like to visit the property and a lot of times want to see if the project has progressed in a months time. For most of the developers who are trying online sales, it is at best a lead generation tool for prospective buyers,” said AS Sivaramakrishnan, head residential services, CBRE South Asia.
Even developers tend to agree with this. Girish Shah, chief marketing officer of Godrej Properties, said that online is another channel of distribution to reach out to customers and the idea is not to push sales and compete on numbers. “This is platform that we see as a tool to reach out and connect with our prospective customers. Now a days, everyone is familiar with Flipkart, Snapdeal and Amazon and so if we are there on these platforms it provides great reach and presence. Also if someone has thought about the project and has decided to make the purchase, we would see it through,” said Shah.
There are some who feel that more and more developers signing up to sell their projects online will bring in better practices within the industry. “Earlier, developers would not divulge the end price of a unit till the end but when they go online they provide all the details including those relating to the pricing. Also more and more players coming in will just widen the market,” said the Tata Housing official.
While online sales of residential properties are taking off in India, experts point that even in the Western countries there is a limitation to its success because homebuyers like to see the project and then buy. “In Western countries the situation is better because sales commence only after a sizeable construction has happened, unlike in India where the sales begin even without a brick being laid on the ground. So, buyers can buy online after they have seen the development and location of the project in those countries,” said Sivaramakrishnan. He however said that there is no example where a portal has led the majority of the sales in a project.
For a sector that is still awaiting the arrival of a regulator and which has seen homebuyers approaching all possible avenues for resolving their issues with the developers, it will be a daunting task for real estate players to sell their projects online. Homebuyers over the last few years have suffered from delays in project delivery and so trust deficit comes on top for the entire sector barring a handful of developers.
Also, while the government has been pushing electronic payment mode for all sorts of transactions, players within the industry feel that 2 per cent charge on credit card transaction is a big dampener.
“In order to make online transaction in real estate to be a success, the need to pay a 2 per cent fee needs to be done away with. These are high value transactions and can put-off the buyer. It would make a lot of sense as it would promote transparency of payment
in real estate transactions,” said Shah.