Real estate sales may be sluggish, but the sector is witnessing action in the start-ups and early-stage companies space. Consolidation is the likely answer for survival, experts believe.
Property consultancy JLL India also recently announced an independent real estate technology investment vertical to invest in start-ups and growth-stage companies developing technology solutions.
It has made its maiden investment in Foyr.com, a technology platform for visualising real estate spaces.
In the first 12-18 months, JLL plans to invest in approximately 10-15 such early-stage companies.
The year has also seen some M&A activity. Online classifieds firm Quikr acquired real estate portal CommonFloor and, more recently, PropTiger acquired 3DPhy, among other deals.
Pooling resources“Consolidation is primarily to survive, as many companies are passing through a bad phase, and sales aren’t happening.
“It logically gives you an option to survive by pooling resources and bringing in efficiency by working on your cost economics,” said Gulam Zia, Executive Director, Knight Frank India.
The sector is in the midst of tough times as new residential launches dropped 9 per cent in the first half of this year (January-June) compared to the same period last year, a recent report by Knight Frank India had said.
According to the report, unsold inventory levels have dropped 7 per cent to 6.60 lakh units in the first half of this year from 7.10 lakh units in corresponding period in 2015.
In August, real estate advisory portal PropTiger acquired Gurgaon-based 3DPhy, a start-up in the field of virtual and augmented reality and 3D visualisations.
Cyclical business“Real estate is a cyclical business. Currently, the market is witnessing a down cycle, but we are in it for the long haul. But we are making strategic bets which will give us a competitive edge in the long term,” said PropTiger CEO Dhruv Agarwala.
The advantage is that deals happen at attractive prices and companies which are selling have realistic expectations, Agarwala said, adding: “We believe that when markets become better, we will be in a pole position.”