In what may signal to an impending consolidation in the online realty market, Delhi-based PropTiger.com and its rival in Mumbai, Housing.com have merged in all stock deal to become India’s largest online real estate services company.
Together, the newly merged entity will get fresh funding from global online real estate advertising company REA Group Housing.com’s existing investor Softbank. REA will invest $50 million in the joint entity, while Softbank will infuse another $5 million.
Housing.com has been on the block for over a year, following controversies surrounding leadership issues and fund crunch. With the merger, Dhruv Agarwala, co-founder and CEO of PropTiger, will take over as the chief executive of the combined entity, while both brands will continue to operate as separate entities. Housing.com CEO Jason Kothari, on the other hand, will exit the company to pursue other opportunities in the Indian Internet space. However, he will continue to act as an advisor to the joint entity till the end of next month.
Kothari was inducted into Housing.com by the Softbank board only after its co-founder and chief executive Rahul Yadav was sacked in 2015 for leaking crucial company information over email.
“The deal is a continuation of our efforts to bring best in class services to consumers and create a unified technology driven platform that is capable of serving all needs of consumers, developers and brokers with respect to buying selling and renting of homes,” said PropTiger’s Agarwala in a media statement.
Kothari, CEO of Housing.com said: “The joint entity will be well-positioned to establish market leadership in a large and rapidly changing marketplace.”
The joint entity will draw on strengths of PropTiger, Housing.com and Makaan.com to offer a holistic experience to all stakeholders - consumers, real estate developments, brokers and homeowners. PropTiger is the largest online residential real estate brokerage firm, having completed transactions worth $1.5 billion since its founding in 2011, while Housing.com is India’s is an online platform for buying and selling homes, receiving over four million visits every month. What is the problem plaguing online realty firms?
Even as the number of real estate portals in the country has been on the rise, experts tracking the sector said that they have still not been able to solve for consumer problems. Since there is no way to verify title deeds and real value of the property on an online portal, consumers often stay away from transacting on the site.
While realty websites have laid immense emphasis on acquiring ‘online’ customers – the first step when most of them have received private equity or venture capital funding -- in a later stage, they find it difficult to scale up. Most of the startups operating in this space thrive on advertisements from developers. But these measures alone are not sufficient to help them zoom into profitability or even break-even in a short to medium term. “Going forward, for a proper sustenance, online real estate portals need to chart out their path of monetization,” said a real estate analyst on condition of anonymity. Besides, the real estate sector is also going through a deep recession and it has not been able to revive very well after the boom period of 2007 that led to a crash in the sector.
Other real estate portals in the market include MagicBricks.com, Indiaproperty.com.