'Sur-real' estate buyer behaviour

Real estate websites might have decimated the classified ads of newspapers, but they are yet to fully capitalise on the capabilities of data analytics

You  are ready to make the biggest acquisition of your life. You and your partner have saved up a significant sum and are eligible for a hefty loan from your employer. So you decide to look for your dream home. To do some serious research you dig into the most popular real estate websites. You type in your requirements: 2BHK, location, price range, old apartment (have to save on the hefty monthly maintenance fees)... You would also like to know if there are good schools, good restaurants etc. nearby. 
 
Lo and behold, 20 options are thrown up in a matter of minutes. For each apartment you are told the ‘listing price’ indicated by the home owner. You also are told how volatile the prices have been in that neighbourhood. When the same apartment was sold last and what was the price paid by the current owner. What was the price of a similar apartment that was sold in the last six months. Along with all this information you are also told what is the websites estimate of the price of the same apartment, say one year or three years ahead. The website also offers nicely “done up” photographs of the various rooms of the said apartment. You are also shown pictures of the building from road level, the lobby and more. The site mentions for how long the apartment has been in the market and how to fix an appointment to visit.

 
And you have 20 apartments to look at and form your impressions. The site also suggests some brand new buildings coming up in the area, sponsored links provided by builders.
 

Yes, Indian property websites, magicbricks.com, 99acres.com, housing.com and roofandfloor.com, are not there as yet with all that information, but if you are on a home hunting trip in any part of the developed world, you will go through pretty much what I have described above. The emergence of new-age websites such as Zillow.com, Trulia.com and Redfin.com in the US has transformed the whole process of home buying. The role of the real estate agent has undergone a dramatic change. The huge information asymmetry that traditionally existed between the buyer and the seller, with the broker playing the midwife, is no longer so steep. The process has become a lot more transparent (it is another matter that millennials are questioning the whole idea of home ownership, but that will be the topic of a future column).

 
JLL (Jones Lang LaSalle) in its Global Real Estate Transparency Report 2018 rated countries and cities on their “real estate transparency”. The top rated cities in the report include London, Los Angeles, Sydney, San Francisco and Manchester. The top rated countries are also predictable: UK, Australia, USA, Canada, France and the Netherlands. The report says that thanks to some of the initiatives taken by the Indian government in recent years, India improved its ratings to No. 35 and got rated as “semi-transparent”. China is just ahead at No 33 while Indonesia and Brazil are below India at No 42 and No 37 respectively.

 
The rise of a new breed of startups in what is called the proptech sector has transformed the real estate market in many parts of the world. Using data analytics and other digital tools these companies are able to provide users a lot of information at the click of a button. Proptech was barely a topic of discussion a few years back. However, due to digitisation efforts in various industries, the real estate market also attracted its own share of technology incumbencies. Forbes refers to proptech as “businesses using technology to disrupt and improve the way we buy, rent, sell, design, construct and manage residential and commercial property”. The article also speaks about the emergence of proptech 1.0 (online listing of real estate properties), to proptech 2.0 (use of data analytics and virtual reality to offer better services to customers) and now proptech 3.0 (experimentation  with emerging technologies such as drones, VR tools, blockchain etc.).

 
In India we are still trying to work with proptech 1.0, though I must admit that some of the property websites are offering photographs, even approximate pricing information. But by and large the information provided by the websites is still very patchy. Brokers call the shots and there is nothing like a “registered” real estate broker in India. Indian real estate websites may have decimated the classified ads of traditional newspapers, but they are yet to fully capitalise on  capabilities of data analytics. But with better regulation and transparency, we may see real prices and real sales records available in the public domain. And Indian real estate sector, which is a big job generator, will no longer be “sur-real” but will play a more “real” role in the overall growth of the economy.

 

The author is an independent brand strategist, author and founder, Brand-Building.com. He can be reached on ambimgp@brand-building.com