Until recently, buying a property in India was far from straightforward. Investors and home buyers alike relied on print ads in local newspapers, their own eagle-eyed observations of local construction projects, and anecdotal details of a developer’s reputation.
A move to online home buying, however, has provided a breath of fresh air for consumers, who finally have access to images and information about properties on the market across the country, as well as, in some cases, the selling price.
The transparency involved in maintaining a sophisticated online presence has raised standards among developers, and in turn empowered buyers. Developers such as Tata Housing, Godrej Properties and Oberoi Realty, meanwhile, are able to successfully reach a vastly enlarged client base, and close deals from afar. An increasing number of enquiries from online have lead toconversion rates of up to 30 percent.
Online home buying still makes up only a small part of the industry, but it could be set to rise. “In India we’re experiencing more and more urban migration, particularly among people of working age,” says Ashutosh Limaye, Head of Research and Real Estate Intelligence Service for JLL in India. “In part due to the IT workforce that the country produces, the youth are at ease with online shopping in general.”
Plus, the average age of property buyers has come down significantly in the last two decades. “Until the 1990s, people typically bought their first house towards retirement—so in their late 50s,” he says. “Now, people are buying in their late 20s, just a few years into their career.” The consumer base is much younger and more tech-savvy than ever before, and expects to be able to shop online for all manner of goods and services—real estate included.
Another key driver of the online home buying market is the growing popularity of credit cards among people of all ages. “India as a society was for a long time quite uncomfortable using plastic money,” says Limaye. “But we’ve moved past that, and now even the older generation is comfortable paying by card.”
Attracting buyers from far and wide
It’s not only buyers who are searching for a new home who are heading online; investors are also showing a keen interest. And while home buyers still pay at least one visit to the property before parting with their money, investors are increasingly happy to keep the whole process online.
“Before the online trend, buying a house was a long and tedious process,” says Limaye. But now the move online is helping to streamline the house hunting process and improve transparency.
Almost every developer has a website divulging at least some information about available options, including a location map and photos of the current state of construction. Some list the property’s price; others withhold it. Negotiations are still common, but the leveling forces of a digitized marketplace are gradually replacing the barter economy of the past.
Limaye is curious, however, about whether the trend will continue. The residential market hasdeclinedof late, a factor which could account for the industry’s willingness to diversify into online sales. “It may be that developers have come up with these offers and upfront pricing online in an attempt to boost up the lean sales. However, once the market recovers, many developers could revert to traditional ways of working,” he adds.
Another challenge that remains for consumers is gauging the financial health of a developer, most of which are not listed on the stock exchange. But progress is being made in this regard. The Indian government recently passed the Real Estate Regulator Bill which comprises a bundle of measures aimed at making the market more transparent. Though the bill is aimed at assisting buyers, developers will undoubtedly benefit from a more trusting consumer base, and a greater integrity within the industry as a whole.
As rapid urbanization and rising household incomes continue to drive India’s property market, its cities face a shortage of 20 million homes, according to a new JLL study. India’s real estate industry is now watching with interest to see if this demand, combined with the policy changes, will help the online momentum to build – irrespective of market ups and downs – and potentially herald a new era for home buying in the country.