Housing-PropTiger merger: NewsCorp betting big on India's realty market

After leading in Australia, and emerging second in the US with Realtor.com, NewsCorp is looking to tap India’s growing economy and the millions of aspiring homeowners to grow in the online real estate listing market. 

The PropTiger (in which NewsCorp is the largest investor) and Housing.com merger fits well with this strategy, allowing it to gain millions of users and extending its offerings of rentals. 

Since it was  founded in 2011, PropTiger has helped transactions worth $1.5 billion, while Housing has around four million page views a month, attracting users looking for property on its platform.

India’s online real estate technology start-ups have gained attention from investors in recent years. In 2014, around $222 mn was invested in 11 companies and saw Housing raising $90 mn from investors led by SoftBank.  

In 2015, the sector saw $61 mn in 30 deals and around $60 mn in 20 deals in 2016, according to data from Tracxn. 

The past two years also saw consolidation in the sector, as investors found that making money required patience and long-term investment. “While a lot of money is being spent for building the business, the space itself is very fragmented from the revenue point of view. The industry is still in an evolving stage, is still very early from the offerings, in terms of markets you can address. There is a lot of segmentation that can happen,” said Devangshu Dutta, chief executive of Third Eyesight, a consultancy.  “Within that, you need a lot of money to build the business and acquire the customers. A lot of deep pockets and  a management team that can execute the business is needed.” 

Which is where NewsCorp’s expertise in real estate comes in. It has deep pockets and experience in established markets that it could bring in as the real estate market gets more transparent and mainstream in India. 

“Clearly, there is a compelling commercial purpose to the deal. We also firmly believe in providing transparency, analysis and insight, so that all Indian families, regardless of traditional background or means, will have a better understanding of the property market,” said NewsCorp chief executive Robert Thomson. 

NewsCorp, through its digital advertising firm for property, REA Group, has invested $50 mn in PropTiger. SoftBank threw in an additional $5 mn in the merged entity.

PropTiger competitors include 99Acres and MagicBricks, owned by Bennett, Coleman & Company.

“Currently, the percentage of people using tech-enabled or online portals for real estate is less than one per cent in India. However, going further, a lot of tech-savvy people will depend on this medium only,” said Farook Mahmood, president, National Realtors Association and chief managing director of Silverline Realty. 

“While the merger doesn’t make an impact on the overall industry because of the low online percentage, it would make a difference for the online players, as their base would grow.”