Foreign investors are pouring money into India’s real estate portals amid expectations that the market slump may come to an end soon.
India’s internet legion has lured property portal investment from the likes of Rupert Murdoch’s News Corp. and Japanese telecoms-to-media firm SoftBank Corp., Reuters reported.
Last week Google Inc.’s Google Capital unit invested an undisclosed sum in a site called Commonfloor.com, the news agency said.
Overseas investors have already put more than US$200 million into such portals, spurred by Prime Minister Narendra Modi’s vow to provide a house to every Indian family by 2022.
“Scale and growth of businesses like [online retailer] Flipkart are a proxy that consumers in India are comfortable doing transactions on the internet,” said Mukul Singhal, principal at India-China fund SAIF Partners, which has invested US$10 million in Proptiger. News Corp has a US$30 million stake.
The need for long-term capital for start-ups like Proptiger and Housing.com also makes India more attractive for foreign investors compared with China, where local money dominates, according to one investor, speaking on condition of anonymity.
Indian home buyers by tradition work with local brokers. But in a vast country with a property market already estimated by KPMG to be worth US$121 billion in 2013, the internet offers prospective buyers the ability to compare house prices hundreds of kilometers away without leaving home, the report said.
To fulfill his pledge, Modi has made the listing of real estate investment trusts easier. He has also paved the way for more foreign investment in construction, and eased land acquisition rules.
“Real estate in India is very messy,” said SAIF Partners’ Singhal. “There is a lot of information arbitrage and asymmetry… no credible pricing data and that is why there is a strong case for technology-based solutions.”
Investment in property portals jumped fivefold to US$193 million last year, according to data from Venture Intelligence. The research firm also expects India’s housing market to grow to US$158 billion by 2020.
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.
Developer Tata Housing, part of the US$100 billion Tata group, in November sold homes worth more than 500 million rupees through a partnership with Housing.com. Buyers could see 3D models of the units, make a token payment online and complete the remaining purchase offline.
Such websites, which charge subscription fees or a percentage of the sales price, still account for a fraction of home sales in India.
But things are changing fast in a country whose internet community is bigger than Indonesia’s 250 million population and growing at an annual rate of more than 20 percent.
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