HDFC Realty is taking the broker aggregator route in a bid to reinvent itself as a technology-enabled marketing company that offers solutions across all segments of the real estate business — residential, commercial, retail, valuation, land and consultancy.
The 16-year-old company that is a subsidiary of HDFC is also expanding in Tier III and IV cities, which is a departure from the practice adopted by most other major players in the business, which focus on the top eight to 10 cities in the country.
“We have looked at various models, and realise that while digital (as a sales platform) will have a role, people will have to visit properties,” Vikram Goel, CEO, HDFC Realty, explained.
Goel, who has spearheaded the reinvention over the last four years, also feels that the franchisee model will not work mainly because many brokers are neither initiated, nor can they be audited.
So the model that the company is adopting involves aggregating the brokers to help build a network. To begin with HDFC Realty will engage with those whom they have a relationship (25,000-odd brokers are associated with parent HDFC) and since the initiative was launched, it has roped in around 2,500 brokers in Mumbai and Pune.
As this will be a success-fee based engagement, and the broker gets the majority of the success fee for closing a property deal, it will also benefit the company which will not have to pay too much to acquire a lead and servicing it in an industry where conversion rate stands at 2 per cent, he reasons.
In the second phase of this initiative the company plans to rope in Independent Financial Agents and subsequently housewives and retired people, too, on a success-fee basis.
On its plan to tap opportunities in smaller cities, Goel said that HDFC Realty has expanded into 38 cities in India as of now and the number will touch 50 in the next quarter.
“We have identified at least four industry sections — banking and NBFCs (non-banking finance companies), insurance, logistics companies supporting e-commerce and auto which want to grow beyond the top 10 cities but are facing challenges,” he observed.
“We are in touch with 15-16 and targeting at least 100 brands that are looking to expand in smaller cities,” he added.
Going forward, HDFC Realty plans on growing its sales process outsourcing (SPO) business, something it piloted a year ago. It mainly involves persuading developers to outsource sales and marketing to them. “This is a specialised field and we have the expertise,” he reasoned.
Currently, nearly 60 per cent of its revenues come from the residential space while commercial space accounts for 40 per cent of the revenue.