It has today been revealed that News Corporation, Rupert Murdoch’s multi-faceted media operation, has acquired a $30 million stake in Indian property start-up company PropTiger. This is the latest in a number of online investments by large media companies with many experts suggesting real estate websites could be something of a goldmine in the future. When you put together the fact that the Indian economy is enormous, the population is huge and real estate is becoming more popular, perhaps we have the perfect scenario?
Why is there so much interest in online property portals?
The traditional real estate buy/sell business model is currently under huge pressure although it will never be totally replaced by its online counterpart. Many people will always want to speak directly to experts, be shown around potential property purchases and also have somebody ready to answer their questions. However, there are many investors in the worldwide real estate market who are more than happy to do their own paperwork, do their own research and manage their own investments from start to finish. But is this really enough to attract the multi-million dollar investments we are seeing today?
Low base cost
Perhaps the greatest attribute of the Internet today is the fact if managed correctly, start-up costs and running costs can be minimal compared to traditional business models. This is perhaps more evident in the property sector than many others because the greatest cost is advertising and promoting properties and the website. The vast majority of online instructions are carried out automatically, listings can be updated in an instant and there is certainly more flexibility in the online business model compared to its off-line counterpart.
Quote from PropertyForum.com: “What questions should we ask when hiring a realtor?”
This does put pressure on profit margins but the reduced start-up and running costs certainly give the better managed property portals significantly more scope to reduce their charges. In many ways the success of any individual property portal will depend upon the volume of transactions the website is able to create, similar in many ways to a stack them high and sell them cheap strategy in low-cost supermarkets.
What does the future hold for India?
The Indian economy is one of the largest in the world, the Indian population is huge and while there has been significant improvement in the wealth of the population, in many ways this is concentrated on a relatively small section of society. Real estate wealth is also concentrated on a very small area of India leaving significant development opportunities in terms of the wider population and some of the less popular and untouched areas of the country.
One other attraction which seems to have caught the eye of News Corporation with regards to this particular investment is the fairly complicated set of real estate regulations introduced by the Indian authorities. The opportunity to put the information required at the fingertips of both domestic and international real estate investors, list individual properties and bring parties together to conclude a deal has the ability to create monster property portals if managed correctly.