As we usher in 2020, let us understand the situation. In an interview, Amit Kumar Agarwal, CEO, NoBroker.com explains the situation to Rajat Mishra. Edited excerpts.
In the current scenario with the crisis still not over when it comes to the real estate sector, does it make more sense to buy a house or to rent it?
As of now real estate in India is more of an end users’ market. If buying a property for investment purpose, one has to factor in a lot of considerations such as budget, city. It makes more sense to buy a house for end use now because there is a lot of unsold inventory and builders are offering a lot of benefits and discounts to offshore it. We have also seen greater demand for ready to move in properties.
Has the time for institutional rental housing come? Can it rescue the sector out of the mess?
Given the current state of Indian real estate, there is certainly room for institutional rental housing. The idea is to make unsold inventory attractive to investors and renting out unsold inventory helps accomplish that by showing rental yield to the investor. It is being done by many leading developers and we have also tied up with many builders for the same.
Unsold inventories are piling up continuously. What are the behavioural changes among consumers, even when the rate of property is not high leading to unsold inventories?
There are three reasons that have contributed toward this behavioural change in consumers. A lot of this inventory was constructed keeping the investor interest in mind. Although now real estate is emerging out of the crisis, but over the past few years, investors had pulled back which has been the first major reason for unsold inventory piling up.
Secondly, the feeling of euphoria is missing from real estate as we are still coming out from a down cycle.
And thirdly, as a result of the first two, the end users have more choice. They have more bargaining power with hardly any pressure for faster decision making.
How platforms like you are in are playing a key role in solving thus crisis?
For buy and sell, we have inventory for resale and ready to move in properties. Both of these do not involve construction risk. We connect consumers directly and help save transactional cost. Our major thrust is on the absurdity of brokerage. We make the property inventory available to a consumer for which they have been paying obscene amount of brokerage. We are therefore, trying to bring symmetry to the vastly unorganised market.
We also use a lot of technology to help the consumer in the entire home-search experience. Our rent prediction feature helps consumers figure out if they are paying the right rent and we do this at micro-locality level. We have a feature called “travel time search” which helps consumers measure distance in time rather than miles so they can save up on commuting time. Our endeavour is to be a one stop shop for all renting, buying, selling and settling down needs and therefore we have services such as home-cleaning, packers and movers, rent agreement and very recently home loans as well. So we want to partner with them and make the home-search and shifting experience as smooth as possible.
In real estate what factors are aggravating the crisis?
Crisis in real estate is not aggravating as of now. Real estate is in fact coming out of the crisis. Transactions have gone up and in 6 months’ time, we are positive that the situation would be a lot better.
How do you see the Draft Tenancy Bill tabled by the Parliament? How is it going to play a key role in solving this real estate crisis?
I really appreciate the Draft Model Tenancy Bill. It would help greatly in making the system transparent for the owner as well as the tenant. Putting a body in place for addressing tenant grievances at local level is a laudable move as it would help in faster solving of cases. Also, capping the deposit which a very needed step especially in cities like Bangalore where humungous amount of money is charged as deposit is a very welcome step.
The Bill would definitely help streamline a lot of discrepancies in the rental sector adding ownership and accountability, which has hitherto been missing. It would also spell out a lot of grey areas.
Ownership vs renting, how do you see this growing sentiment of renting among consumers?
Renting has been at an all time high due to the many changes introduced by government in the sector. Consumers can stall the decision for buying until they have more clarity but renting as a sector has always done well.
Plus, as mentioned earlier, renting does not pin them to a city, or an area and today’s consumer is more on the go. Renting suits his needs and lifestyle. Consumers in urban cities are more of cosmopolitans and buying a house does not figure as high up on the priority list as it used to some time ago.
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