Elevating the overall real-estate experience (in Bengaluru)

Bengaluru real-estate market has been fascinating. When I moved here early last year, I was mostly greeted with a ton of To-let boards outside independent houses and therefore didn’t take me too long to find an apartment (& luckily enough I locked in my rent for 3 years). But this year it’s been a whirlwind in the opposite direction (25l deposit house, need to score 90%+, high pedigree LinkedIn profiles) almost anyone I speak to have complained on rising rentals & the prices of newer projects are now at-par or just slightly behind the per sqft rates of Mumbai suburbs. Newer gated projects (with amenities which folks in Blore seem to go crazy over) are very few in number and within the CBD throttled by the availability of land.?

Re-sale market is broken

However, where I think the market is broken is in the re-sale housing segment. Again, speak to folks in your circle who have tried selling their older houses, even in buildings which are just 10-15 yrs old struggle to sell and usually keep their property on the block for multiple years. Eventually most seem to end up selling at a very steep discount to the price of new projects in the same locality and in worse cases at a loss to the original purchase price. This in-turn creates a more interesting circle where folks who have moved here for work don’t end up purchasing houses as they understand selling is hard & therefore just rent, further bolstering the rental yields (in an up-market at least). While it may be easy to blame the ‘lack of amenities’ on this lack of marketability & illiquidity of older houses, I think the problem is more nuanced.?

Distrust among the broker network

What’s missing in Bangalore seem to be a robust broker ‘network’. Don’t get me wrong, there are a lot of brokers here, I’m sure you would’ve come across the lengthy list of ‘brokers that worked for me’ in twitter. What’s missing though is the network, each broker works only in their limited locality and funnily enough seem to work only on those properties where they own both sides of the relationship (buy & sell side). That makes it almost impossible to work on resale houses so they usually just work with ‘newer’ projects (where they don’t have to care about one side of the relationship) and mostly have to work only on sales, thereby further pushing the same few projects (resulting in a widening price differential). I have experienced those rare scenarios where a sell-side broker shares his/her listing with a buy-side broker, but herein again ‘sharing of photos/videos’ is prohibited and the buy-side broker flies blind with no-idea of the property till they visit together with the client.

This lack of trust is fascinating & solving for this potentially could fundamentally change the real-estate dynamics in this market (or for that most Tier-1 markets in the country). Compare this to Mumbai (which is probably the most-evolved) you can go almost to any broker in an area and they’ll have almost 75% visibility of everything that’s on sale or rent in that area. Brokerages get shared amongst buy & sell-side so amicably and they never get broken. Also, what’s important is the broker also enjoys a much deeper relationship with the client, thereby end up being in a position to actually advice them on the price/marketability etc.?

Better market liquidity versus a 'Digital marketplace'

I fundamentally don’t think what’s missing in the market is the lack of a digital marketplace. No-one is complaining that they are unable to see the homes online before they buy/rent; sure, it’s a nice value-add but you have to see it physically anyway and there the role of a broker is extremely important. I feel that there is an opportunity to leverage the existing broker eco-system and just make them more efficient. It’s unfortunate that Rahul Yadav had got not one but two attempts at solving this problem and also potentially made it harder for others to raise capital for this sector.?

There's so much money that flows through real-estate and it's probably the single largest asset for 90%+ Indians and it still remains widely inefficient. I think thus far most platforms have just copied what's worked in US/China. Instead I think we could take more inspiration from the likes of Namma Yatri to build something that's really suited for the stakeholders in India, ground-up.

If you're building anything in prop-tech, do ping me directly at rohit@wehventures.com.