This document discusses the Indian real estate sector and the need for the Project INSIGHT physical space portal. It notes that real estate contributes about 10% to India's GDP but faces issues like lack of transparency in sales, limited funding for developers despite housing shortages, and low liquidity. It estimates the funding need for housing in India until 2017 to be $3.2 trillion with a $70 billion gap. The document then outlines the INSIGHT portal, which would enable group buying of properties, a resale trading platform, and dynamic price discovery online to increase transparency, sales velocity, and bridge the housing shortage by bringing more funding into the sector.
2. US$Potential estate sector in India.
contribute to about 10% of the country’s
Source: Emerging trends in real estate in Asia Pacific
Department of Industrial policy & Promotion India
Issues projects and transparency in RE sales.
Buyers -Lack of information about different
• Artificial hiking of prices by developer.
Developers -Limited institutional and non-
institutional Debt and Equity Funding despite
of a massive housing shortage.
• Low Sales Velocity
•Extremely low liquidity for both end users
and investors.
•Extremely slow price Discovery
$271 billion- Estimated size of the real
The real estate sector will alone
GDP.
2011published by PriceWaterhouseCoopers
CRISIL Research
Housing shortage = 26.53million houses
(2007-12), 33 million houses (2012-17)
Source: 11th & 12th Five Year Plan
Funding need =US$ 2.5 Trillion (2007-12)
Funding need =US$ 3.2 Trillion (2012-17)
Funding gap =US$ 70 Bn
Source: CREDAI(Confederation of Real Estate
Developers Association of India )
US$ 15.8 billion -Foreign Direct
Investment (2006-present) ,the Indian
real estate & housing sectors.
Source - Jones Lang LaSalle (JLL)
4
3
2 2007-2012
1 2012-2017
0
Housing need (units Funding need
crores) (Trillion USD)
Indian Physical Space requirement
3. uyerB
Clearing and
Settlement
S
ts
Buyer N
Group Buying
(Primary Market)
Resale Trading
(Secondary Market)
Property Transfer
Sold – GB buyer
Bought – Buyer 1List to sell
Builder
OR
Rating
Agency
Property Transfer
Sold – Buyer 2
Bought – Buyer 3
Buyer 2 Lis
GB Buying
Bilateral Bidding
HFCs Lawyer
Property Transfer
Sold – Buyer 3
Bought – Buyer N
Buyer 3 Lists
Broker
Broker Individuals Institutions
Individuals Institutions BUYERS
Buyer3
Discounted Home
Loans
Broker
sell at Discount
Buyer2
Broker
Primary market
GB Buyer
Logic of Price Discovery
Clearing &
Settlement
5. Resale Trading
Trading
Mechanism
The lowest bid
There will be multiple buyers
bidding for single property.
Sell price = Base price
+ Floor Rise
Logic of Price Discovery (…contd.)
6. Individuals and Institutions are able to form groups which is not possible OTC.
Thus they can avail Discounts from 10 to 30% on property buying and also
avail cheaper loans.
Higher transparency and liquidity which are major barriers in current RE
market.
A win -win situation for buyer - NO CHARGES to the buyer in fresh sales plus
substantial savings.
•
Buyer •
•
• Unlike OTC they will be able to indirectly group with other brokers, enabling
them to generate volumes that can be leveraged for discounts (presently a
stand-alone broker is unable to generate such volumes).
These Discounts will enable him to make bigger and faster transactions, which
will make it financially feasible for him to transfer the charge from the buyer
to seller. Thus charging the buyer ZERO brokerage.
Accelerated sales velocity – enabling faster capital recycling
Bridge the funding gap by generating larger cash inflows via bulk selling
Volumes help bridge the housing shortage and transparency improves revenue
generation
Broker
•
•
•
•
Developer
Government
• Excellent channel for faster and bulk selling of home loans.Banks/HFC’s
Multiplier Benefits
7. Broker driven
volume generation
Dynamic Price
Discovery
Process
Resale Platform
capture the value chain
flat sales by a
handover of the
developer
quick succession of
transaction across
where each buyer
profit margin
Logical extension to
that extends after fresh
developer until the
physical flat by the
Developer
Involves a relatively
multiple sale
three to four buyers
makes a speculative
Get Real Estate Brokers to play an
integral role in driving Group
Buying volume on a pan-India
basis
Enable brokers to group with other
brokers and buyers across
geographies to form a powerful
buying group
Why does this make sense for the
broker – Brokers are able to
achieve significantly attractive bulk
buying prices that they were
unable to achieve on a stand-alone
basis – this means higher broking
volumes that will drive brokerage
commissions downwards.
Entire offline process
of price negotiation is
taken completely
online
Negotiation / Price
discovery process is
clean, efficient, swift
and highly streamlined
Process is identical to
the bid-ask spread
seen on stock
exchanges
Participants – both
buyer and seller – are
allowed to set price
limits like in share
trading1
Unique Selling Proposition
