Housing.

com
A competitor analysis of the Indian real estate online market

GROUP 3 - PGPEX8
March 2015
Submitted by :
Anirban Sengupta (7/8)
Hitesh Kumar Sakkerwal (16/8)
Mohit Singhal (24/8)
Rishi Shrivastava (38/8)
Sourav Gopal Jha (44/8)

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Introduction
In the past decade, real estate agents continued to be a crucial component in the home
buyer/rent search process. Home buyer/rent search process always happened through
brick and mortar model in India and was primary
source of revenue generation for many brokers in the
past. With the evolution of internet era in India since
last few years, this trend is now changing. People are
relying heavily on online sources for search process.
At the same time, people are encouraging real estate
agents to be associated with online portals and
providing complete information in transparent
manner. This paper explores the various dimensions (industry economics, industry
drivers, major market, major players etc.) of Indian online real estate portal market and
future of the same.

Industry Background - Where did the industry come from ?

Scale and growth of businesses such as online retailers (Flipkart, Snapdeal, Amazon
India etc.), online shopping (Jabong, Myntra etc.) is a symbol that consumers in India are
comfortable in doing transactions on the internet.
Indias internet login population which is already bigger than many countries total
population and growing at annual rate of more than 20% has also opened the door in
real estate market to explore the feasibility of going online.
Indian home buyers have always searched for the homes with local brokers but in a
vast country like India, people are not confined only to one place. As Indias young
population is exploring the path of metro cities and leaving its hometown, it is very
inconvenient for the people to explore the home through brokers once they reach into a
different city. Internet has provided a way to look for the properties in India without
leaving home and because of that, online real estate portal market has born in India.
Evolution of online real estate portals in India:
70% of future employment opportunities will be created in tier-1 and tier-2 cities so
greater demand of properties
No single platform to satisfy all the needs of buyers
Expansion of suburb areas near the metro cities

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Following are the few Indian online portals which are competing in the same space:
housing.com
magicbricks.com
sulekha.com
makkan.com
99acres.com
indiaproperty.com
Online portals work on the principle of aggregator model where people can find, look,
compare and book the properties from different real estate players (Amrapali, Marvel,
Supertech , etc.). Online portal has come into existence from traditional brick and mortar
model and same model replicated into online world. Online portal industry provides the
same features of purchasing funnel model where buyers can create their own sets
(awareness set, consideration set, preference set and purchase) based on the number of
attributes. Desperate to boost housing sales that have flagged as India's economy stuttered in
recent years, property developers are tying up with portals to push transactions online with special
promotions.

Business model of online real estate portal market works in similar way as traditional
model but additional features such as Analytics, Trends, periodic news etc. allow users
to be more familiar with the complete purchase process as compared to traditional brick
and mortar model. Following is the business model for the online real estate portal market
in India:

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Online real estate portal industry came into existence because of following reasons
(why did the industry come?):
Before analysing the current state of online real estate portal industry, it is crucial to
analyse that how these portal impacts market. This analysis will also provide the
reasoning why online real estate portal industry came into existence.
To aggregate buyers/sellers and provide real time communication between
them
The primary reason for online portals to
come into existence was to provide the
same platform to buyers/sellers and to
initiate the real time communication
between them. As we have learned that,
multiple layers in any industry increases
transaction costs so same is applicable for
real estate as well. Traditionally in brick
and mortar model, people used to buy the
property through multiple layers (one for
searching, one for finalising the deal, one
for completing the legal formalities , etc.).
Online portals have overcome these
barriers and provided a way where transaction costs can be reduced and buying process
can be completed through the single platform.
To bring transparency/convenience to people while searching for
properties in same or different cities
Another reason for online portals to come into existence was related to bring the
transparency in the buying process. Online portals provide the convenience and
transparency at the same time, thus chances of conversions are high. Online portals
provide the following benefits to people:
Wide choice of listing (Convenience)
Better Information More information/images/videos (Convenience)
Easy to compare/shortlist properties (Convenience)
Visible buyers/sellers adding to comfort (Convenience)
Market Trends/prices/legal matters (Transparency)
Connects chats, webinars, telephone numbers (Transparency)
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Property
To add new value services
Search
In the traditional brick and mortar model, there was not the concept
Valuation
of value added services while looking for the properties.
Buying behaviour of people is changing rapidly and now
Legal
people are looking for value added services through same
Financial
service. Because traditional model didnt provide such kind of
services under single platform, therefore online portals found a
Renovation
blind spot for the same and came into existence.
Home
Ancillary
Current state of online real estate portal industry:
Home
It is important to note that state of online real estate portal
Services
industry is different from traditional industry as state will
depend on infrastructure provided by telecom companies in
terms of bandwidth, connectivity to remote points etc. Following analysis of online real
estate portal provides the current state of the industry in terms of world ranking, number
of visitors, daily page view, website links etc. Some other features such as analytics, trends
can provide competitive advantage to firms over others

Parameters
World Ranking

Magic
Bricks

99Acres

Housing

Commonflo
or

Makaan

India property

2764

2079

5525

2726

10402

2677

231

146

513

176

779

172

22

24

20438

57

-1060

6227

881449

1100000

94981

881127

232394

785202

0.8

1.1

44.62

2.04

-11.39

66.99

402488

513779

43370

402341

106116

358540

Website back links

1451

2177

120

1495

730

914

Review (%)

79.1

68.9

76.1

77.8

74.4

77.6

234425

350379

348933

152143

3631

258258

All India Ranking

Site Rank Movement
Estimated traffic worth
($)
%growth
Daily page view

FB-Likes

The online real estate portal market is currently in disruption phase and focusing on the
following things as part of disruption process:
Expansion to tier-2 and 3 cities and because of that lot of workforce has added in
last 2-3 years
Currently portal market is focusing on product improvement and user experience
Enhancing security features as buyers or sellers dont want to see fake listing or posts

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Lot of focus on data and analytics to solve marketing problem. Additional features
such as heat map, estimated prices in near future will provide competitive advantage to
players operating in the industry
Future State1:
Most of the battle in online real estate portal industry will be based on the consumers
acquisition, revenue growth, marketing and analytics. Although consolidation has not
been started yet in this industry as industry is still in introductory phase but in near future
most of the players in the industry will look for the consolidation to eliminate other
players. Also foreign investors such as Google ventures, Murdoch , etc., have pumped
more than $200 millions into Indian online portals which can be seen as promising factor
for the industry growth. The next 2-3 years will be very crucial for this industry in terms
of scalability, acceptance by users, security and sharing. This industry can see following in
near future:
Significant jump in scale of buyers/sellers expected 40% revenue will come from
mobile
Tier 2 - Tier 3 markets expected to have around 25% share in total revenue
Content platform expected to become stronger and wider

http://in.reuters.com/article/2015/01/12/india-realestate-internet-idINKBN0KL06C20150112

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Porters Five Forces on the Real Estate Industry

In this section, well analyse online real estate industry using Porters five forces
analysis. Here, well consider various forces in industry and how they affect the players in
industry.

Following is the analysis of the industry on each of the factors mentioned in the figure
above.

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1. Threat of new entrants: We have decided to rate this force as High because
we see big threats of new entrants in this industry. Based on our analysis, we have
classified the potential competitors into four categories:
Firms who are not in industry but can overcome entry barriers
particularly cheaply: The entry barriers in this business are low for new entrants, due
to following reasons:
Low initial investment
Learning curve is not steep
Resources (skilled employees) are present in abundance
Market presents huge growth potential, seeing the increasing number of people
staying away from their homes for jobs and education
Increasing demands of independent brokers, which makes Online Real Estate
portals attractive to house owners and tenants / buyers
These low entry barriers and attractive growth opportunity makes it attractive for the
new firms to enter this industry. These firms can include anyone from big conglomerates
to the new emerging startups.
Firms for whom there is an obvious synergy from being in the industry:
In our analysis, we have figured out certain types of firms wholl have obvious synergy
from being in the online real estate industry. These firms can include following:
Online Travel Firms: This type includes firms such as Makemytrip.com and
Yatra.com. These firms have lot of customers who relocate from
one place to other. In the race of providing full fledged
solutions; these firms can enter into online real estate industry
so that their customers can find a complete solution with just one login.
Online Furniture retailers: One of the most important thing that lot of people
do on relocation is to purchase new furniture and curtains that suit the look and feel of
their new home. Online furniture firms such as Pepperfry.com
find an increasing number of such customers. By entering into
Online Real Estate Industry, these firms can provide their
customers with the choice of selecting furniture for their new home, and provide
suggestions based on the look and feel of new house (typically provided by the owners
while registering their house on sites). This facility will help furniture companies attract
more customers and will help them enable their customers to furnish their house before
moving in.

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 Firms for whom competing in the industry is the obvious extension to

their corporate strategy: We have put firms such as OLX and
eBay under this category. These two are the most used destinations
for customers to sell their old items. An obvious extension is to sell
real estate properties (house, lands etc) on these sites. Moving in this
direction, OLX has already started offering house rental and
purchasing feature on its site. Although the features are currently not
as rich as those at online real estate sites such as housing.com, but it is just a matter of
time before these firms will enter in this space.
Customers or Suppliers who may integrate forward or backward: In this
category, we have out big real estate developers such as Kolte Patil Developers and Marvel
Realtors. Currently, they offer real estate properties such as
Apartments, Independent duplexes, office spaces and lands for sale.
The availability of ample amount of real estate properties and low
entry barriers of online real estate industry makes it attractive for
them to integrate forward - either by starting their own online real
estate portals or by acquiring any firm already in this business to
take one more step ahead towards customers. Also, they can move towards property
rental services along with sales. As theyll have their own properties, they will enjoy good
control and credibility among customers.
Keeping all these factors in mind, the team has concluded that threat of new entrants
in high in this industry.
2. Threat of substitutes: The industry faces Low threat of substitutes. In our
analysis, we have figured out substitutes such as Hotels and service apartments, which are
used at substitutes by a very small section of customers. This small section primarily
comprises of higher income segment and business travellers who get their stay sponsored
by their organisation. We have considered very low threat from these options because they
do not provide permanent / long term stay options to customers. Typically, the usage of
these substitutes by customers is limited to a stay ranging from a few days to a few
months. Apart from these substitutes, we could not figure out any other substitute for a
house. Hence, we have characterised threat of substitutes as Low for online real estate
industry.
3. Buyers Power: The industry finds an increasing of buyers / customers with
increasing number of competitors who provide similar services in it. The demand of
online service of rental / purchase of properties is increasing due to the emergence of
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trend where people stay away from their home due for job and education. Also, the
increasing number of nuclear families presents a huge growth opportunity for firms in
online real estate industry. This increasing number of buyer lowers their negotiating
power.
However, low entry barriers and attractive growth potential will induce more and
more players to enter into this industry. One example is OLX, which has recently
expanded its portfolio in online real estate industry. Its just a matter of time when other
firms, discussed in point 1 of this discussion, enter into this industry. This increasing
number of firms in this industry increases buyers negotiating power. Due to these factors,
we have characterised buyers power as Moderate in this industry.
4. Suppliers power: The suppliers in this industry are the property owners and
brokers. Online real estate industry provides them the facility to reach out to a bigger
chunk of potential customers across the globe. Also, this platform frees house owners
from the increasing demand of brokers in monetary terms, as now house owners can
directly contact the prospective tenant. This lowers the suppliers negotiating power.
However, the increasing number of players in this industry gives suppliers an option to
choose from various online portals to reach out to customers. This increases their
negotiating power with the firms. In order to get more deals for their customers, the firms
have to get more and more suppliers on their portal by designing attractive deals for
suppliers. The Chicken egg phenomena will ensure more customers with more
suppliers and vice versa. This increases suppliers negotiating power. Hence, we have
characterised this force as Moderate.
5. Intensity of Industry Rivalry: The online real estate industry sees an increasing
number of competitors, competing for an increasing number of customers. We have
figured out following points which helped us determine the intensity of industry rivalry:
Attractiveness of Industry: Online real estate industry presents an attractive
growth opportunity to players. With the proliferation in corporate jobs, lots of youngsters
from small towns are migrating to metro cities away from their family. These jobs require
people to keep changing their locations in every 3-4 years, which increases a sustainable
demand of houses in big cities. Also, this corporate culture of frequent relocation keeps
the demand sustainable. Additionally, with an increase in awareness related to higher
education, students have to migrate from their home to other cities. An online option for
finding houses for rent / purchase makes it easy for these people to relocate. Hence, this
industry is currently very attractive for new players to enter, which increases the rivalry.

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 Low fixed costs: Online real estate industry requires very less amount of initial
investment. This low investment lowers the entry barriers, enabling new and small players
to easily enter the market, which ultimately increases the industry rivalry.
Switching costs: The switching cost for customers is negligible currently. With
minimal differentiation in the kind of product, customers find it easy to hop from one site
to other in search of best deal. The only way through which these costs can be raised is
providing differentiating service. E.g. Housing.com provides a user friendly interface, with
the capabilities to search and sort houses on the basis of price / rent, amenities, type of
locality, additional facilities and closeness to major points in city. These features are
currently not available in such a user friendly form at any other site. However, this
differentiation is not sustainable. Hence, we have concluded that switching costs are low
for customers, which increases the industry rivalry.
Information Complexity: The players in this industry need the information
about real estate properties available in a particular region. They need to contact the
home owners and provide exciting deals to them. This information is not very complex to
get and interpret. This low complexity of information results in increased rivalry in
industry.
Product Differences: The product in this industry (an online service to help
people find best deals in real estate sector) has very low scope of differentiation. The only
points of differentiation are the additional services provided by the firm, which are easy to
imitate for competitors. Hence, the rivalry is further increased due to low product
differentiation.
Brand Identity: Brand identity is the only factor that can help firm get credibility
and differentiation. However, since most of the players in the industry are fairly new with
very less brand equity, there is currently no differentiation in this regard. This further
adds to the intensity of rivalry in the industry.
Based on our analysis on above factors, we have concluded that this industry faces high
intensity of rivalry.

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housing.com
About the Company

A group of twelve students from the Indian Institute of Technology, Bombay founded
Housing.co.in in June 2012, currently having nine founders. The company bought the
domain Housing.com and the number 03-333-333-333 in September 2013 for a total of
$1M.
housing.com has raised four rounds of funding since it's founding in 2012. The
company raised $2.5 million in Series A funding from Nexus Venture Partners in June
2013. The company used the funds to create its Data Science Lab and to expand to four
cities: Bangalore, Gurgaon, Pune, Hyderabad
The company raised another $19M in venture funding, led by Helion Venture
Partners, in April 2014. Softbank has led a $90 million investment in housing.com along
with Falconedge and other investors in December 2014.Housing.com closed two
undisclosed rounds of funding in February and March 2013. The rounds were led by
Network18 CEO, Haresh Chawla, and Zishaan Hayath, the co-founder of Chaupaati
Bazaar.

Product
housing.com lists properties submitted by users, either brokers or owners, on an
interactive map. Search results are filtered by available rooms, lifestyle ratings, child
friendliness index (CFI), and area-based pricing.
In December 2013, the company launched a new option for users to search for paying
guest rentals (PGs) in cities.In February 2014 the company introduced a feature called
Housing New Projects, which showcases 3D models of buildings superimposed on Google
maps. The feature incorporates interactive aerial views and floor plans of upcoming
project sites.
The company has mapped approximately 150,000 houses in India.With the Agent
Map, users can contact real estate agents using four different search types: general, sub
locality, building, and landmark.

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Unique Selling Proposition - Data science lab (DSL)

housing.com's Data Science Lab (DSL) has generated a
number of "Heat Map" algorithms and demand flux maps
based on these filters.The CFI heat map shows child friendliness
in a particular area and it measures neighbourhoods on three
different criteria: number of schools, number of hospitals and
parks, and proximity of these facilities to the area (figure on
right, green means
u n f r i e n d l y, r e d m e a n s
friendly). The algorithms also
demonstrate price variations
in properties across
the city.
These are called
price heat maps
figure on the left.
Every City is
represented on a
heat map so that the
customer can zero in the locality that suits his or her
demand. In the below heat map of the rental rates, red
being expensive and green being inexpensive.
There are a plethora of other analytics available for
free on the website, like the demand supply map which
lets the user know the listings available for a locations
and the number of searches for the same location,
shown right, giving a clear picture of locations which
are in hot demand and the ones where finding an
empty house will be easy.

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housing.com also provides many options to filter the choice of houses apart from the
regular number of rooms, budget, posted by and locality, like the lease type, i.e., if
bachelors are allowed in a society, the furnishing the house offers and the amenities the
house comes with. Zeroing in on a house using housing.com thus becomes very simple. To
add to this, housing.com provides a housing lifestyle rating to each listing to enable users
to choose better. It is an algorithm that quantifies the overall experience of living in a
given apartment. The algorithm takes into account the most basic needs and sought after
luxuries, and weighs them according to their importance. Several factors are considered
while imparting individual scores to each of the four verticals. The algorithm in place
uses around 50 such parameters. These ingredients then go into the recipe that churns
out the Housing LifeStyle Rating a number that stands for all those other tidbits that
actually define the experience of living. The final product of the algorithm the rating,
is a number ranging between 0 and 10.
housing.com also has more photographs of the listings, with all of them verified, than
any other competing website, and all these features can be accessed using a single window,
without leaving the main page.

Housing.com is also available as apps for Android and iOS.

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Apart from helping landlords fix a better rent for their houses and renters find a better
home for in their budget, housing.com plans to provide end to end solutions like
preparation of rental agreement wherein the renter and rented would be supposed to fill
in some basic details on a predefined form, and housing.com will do all the paperwork,
calculates taxes and deliver the documents at the stakeholders doorstep.
Due to such great features, housing.com has become the worlds fastest growing online
real estate platform.

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99acres.com
About the Company

99acres is an online real estate portal owned by Info Edge (India) Ltd. The website was
started in 2005 and along with Magicbricks.com, is one of the older players in the online
real estate industry. The company has its headquarters in Noida, Uttar Pradesh. Info
Edge also owns the popular portals Naukri.com and Jeevansaathi.com.
Similar to a marketplace concept, 99acres is a forum where buyers, sellers and brokers
can interact. 99acres was one of the first companies to launch their mobile application
wherein users can browse, post and share property related information through mobile.
99acres has gained lots of accolades and recognition. The following awards have been
conferred to the company over the years
Corporate excellence award (Amity)
Web portal of the year
Most admired real estate website
The website for 99acres and their mobile platforms are user friendly and contain a lot
of information

Type to enter text

`"

Website

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Mobile Application

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The current market share as claimed by 99acres claim that they are the market leaders
in the industry with 40% market share, but that claim has been contested by
magicbricks.com who claim that the parameters for deciding the market share are not
standardised. Unique visitor numbers according to comscore2 are as below

In terms of costs incurred , 99acres would be primarily on advertisements and its sales.
The sources of revenue generation are its paid subscriptions , listings, advertisements and
sale and rental of properties.
99Acres reported a loss before tax of about Rs 10 crore in Q2 FY15.The CFO of Info
Edge, commented
The high teens growth rate in revenues of the core recruitment business in Q3 is in line with the
previous quarters of the financial year and it reflects consistency, stability and inherent strength of
our business. As a part of our stated strategy we have stepped up our investment in 99acres for a
long term value creation in this vertical. However, as a result the overall operating EBITDA has
declined by about 6 crores. This trend of higher investments in the operating expenses of 99acres is
likely to continue for the coming quarters.
Thus, there is a clear inclination towards future growth of 99acres owing to
competition from newer players like commonfloor.com and housing.com. Most of the
spending is understandably on the digital platform although they did invest in TV
2

http://blog.timesinternet.in/setting-the-record-straight-on-online-real-esate/

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advertisements as well. Their marketing strategy does not involve too many print ads.
Majority of the traffic is directed through Google Keywords (a tool provided by Google to
maximise revenues and footprints).
A quick SWOT for 99acres is presented below:

Strength

Weakness

First Mover Advantage

Genuine base of clients and brokers

Focused on Internet Market

Incumbency Factor

Opportunities
Brick and Mortar Real Estate
Resale Market

Threats
Impending housing bubble
Growing Competition

On expected lines, Info Edge announced its decision to invest Rs. 7.5bn in
99acres.com. Although it still has a majority of the market, there have been constant
efforts by 99acres to differentiate itself from its competitors like launching a new
verification listings on its website. The long term strategy for the company is to become
the single largest player in the market. It hopes to follow the Australia (REA group) and
UK (Rightmove) model.
But India, necessarily might not be the ideal market to implement the same logic ,
mainly becauseIn the numbers game, India presents a tougher challenge than the above mentioned
countries.
Variety and options is something that an India consumer likes to have. Therefore
even if 99acres goes ahead and gains market share, there is no guarantee that it will
play out in their favour.
Another reason which could be a reason of concern is how 99acres sees its
competition ahead. In a recent statement by Hitesh Oberoi, CEO of Info EdgeWhile 99 Acres doesnt appear to have been affected in terms of traffic share, theyve seen the gap
between 99Acres and its nearest competitor (MagicBricks) increase because the newer players are eating
into the number two players market-share.

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According to Hitesh Oberoi, the focus for 99acres would be on the below
Product
Brand Building
Data Quality
Scaling Sales Teams
One area where 99acres lacks behind the host of features that its competitors have
launched over the current period. Housing.com launched an agent map whereas
Commonfloor.com has augmented real estate listings
Another problem is the high attrition in 99acres. The current strategy is to increase
hiring by 20%.
The concern with 99acres.com is that its focused on the long term strategy, primarily
because the market is not growing at a rate it would ideally desire. But increasing
competition from newer players cant be ignored in the current scenario.

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