India Inc. Interview: Building on Indian real estate

03-Mar-2016 #Digital India Source: India Inc

Vikas Wadhawan is Chief Financial Officer (CFO) at PropTiger.com and Makaan.com, which helps buyers navigate the complex Indian real estate market online. As part of India Inc.’s Start-Up India series, we explore the ins and outs of running a successful start-up in India, how overseas buyers can access this largely closed market and how the IoT is transforming this sector.

Does Start-up India hold promise for start-ups like yours?

Start-up India launched by the Central government is a welcome initiative. It will create a conducive environment in the country and encourage entrepreneurs to take risks.

New age business models are breaking away from the traditional moulds and the policy framework needs to evolve in sync with that. We think Start-up India is a step in that direction, simplifying regulatory and process hurdles.

While for companies like us, which are operational for over four to five years, some of these initiatives (i.e. three-year tax holiday, patent relaxation etc.) may not be applicable. But largely, this initiative will benefit entrepreneurs and the investor community. We hope that in coming months, we shall have more clarity on how we define a start-up and how the proposed incubators will work etc.

Is the start-up ecosystem building up in the country?

Over past few years, the start-up ecosystem in the country has undergone a major change. Apart from the growing investor confidence and a vibrant community of entrepreneurs, the society has started viewing entrepreneurship positively.

We have a young demography, a resilient economy and the entrepreneurial ethos are no longer limited to the economically well-off strata of the society. We see youth from different segments of the society coming up with interesting ideas and taking a plunge at entrepreneurship. In fact, the new generation of consumers is not shy of experimenting with their purchase habits either and appreciate business models that add real value.

In terms of recruitments, even experienced and well-qualified individuals are taking confidence in joining the start-ups. Hence, resolving the problem of availability of talent.

These pieces come together to build a thriving start-up ecosystem. Now with the welcome move from the government to recognise start-ups and launch incentive schemes, this ecosystem will get a further boost. This will not only help the country to move to the next trajectory of economic growth, but will also create much needed jobs for the youth.

Is the real estate sector in India an easy market to navigate online?

Well, the real estate sector is obviously not as easy as some of the other sectors. In India the sector remains highly unregulated and fragmented with multiple local variations in regulatory and legal documentation.

Buying real estate for most Indian families is the biggest economic decision of their life and involves multiple stakeholders (i.e. family members) and a long decision cycle. Most first time buyers have limited knowledge about the market and the legal and documentation process involved in real estate. Additionally, there is a general perception of lack of trust and transparency.

Nowhere in the world, including developed economies, the real estate transactions have moved online completely and we feel that in India as well, the real estate sector will always be a good mix of online and offline experience. Online is playing an increasingly important role in the search and discovery phase (according to a Google survey, more than 50 per cent of the real estate transactions are influenced by internet in one way or the other). However, post search and discovery, the transactions gets consummated offline.

How does your firm help in this process?

We, at PropTiger, strongly believe that home buying, being the biggest purchase in most of our lives, should be a pleasant experience for the customer. We are committed to create the best online platform to help customers during the search and discovery process.

Data plays an important role during this search and discovery process and hence, we have an in-house datalabs team that gathers and curates data to assist the customer.

Once the search and discovery process is over, there are multiple offline touch point ranging from site visit, legal documentation and mortgage. For buyers, our assistance does not end at search and discovery (which is small piece of the puzzle), we have a team of experienced real estate professionals that handhold the customers during the offline journey for a great experience. We are investing heavily in building tools and technology to help the consumer during this offline journey and make the experience transparent and pleasant.

What are the areas that attract most global buyers?

From a point of view of foreign funds, the recent relaxations in FDI norms provides a window of opportunity. The new FDI policy will allow foreign investors to invest in mid-sized projects as well and they can expect 15-20 per cent IRR on a five to seven-year horizon.

Developers are currently in need of liquidity, which means investors stand to get better deals. To begin with, a fund may look for opportunities in major commercial hubs including Mumbai, Gurgaon, Bengaluru, Pune and Hyderabad. In medium to long term as Smart Cities begin to gain traction, there will be a new wave of investments flowing into these cities. Many funds are keeping a close watch on policy developments on these fronts and as we get more clarity with time, we shall see funds flowing in.

Vikas Wadhawan is a member of the Institute of Chartered Accountants of India and a Certified Public Accountant from State Board of Accountancy, Colorado. He is also a certified Business Valuer from Institute of Chartered Accountants of India. He specialises in M&A, Venture Financing, Finance, Treasury, Processes, Restructuring, Legal, Secretarial, Investor Relations.

Read Full Article..
Tagged: , , ,
Array
(
    [0] => post-template-default
    [1] => single
    [2] => single-post
    [3] => postid-10040
    [4] => single-format-standard
    [5] => do-etfw
    [6] => wpb-js-composer js-comp-ver-3.6.14.1
    [7] => vc_responsive
)
10040true