04/09/2018
The startup idea is to establish an online platform, which aggregates real estate brokers. The platform will provide tools and information for agents to be more productive and knowledgeable; the platform will also facilitate information transfer between agent communities and the real estate developers, who can directly access the end consumers through the brokers who use the platform.
Market Definition
According to an estimate, globally approximately 210,000 companies operate on the residential brokerage and management field. These businesses generated $200 billion in revenue last year. The same report also estimated that 35,000 companies were operating in the commercial brokerage and management field last year, generating $35 billion in revenue.
Talking about the GCC region, for more than a decade, real estate has played a central role in the economic growth of the GCC region. As per AT Kearney report, it has supported the 5.5 percent annual growth in the residential population of the region. As of December 2015, $2 trillion of real estate construction projects were in GCC pipeline, accounting for almost 70 percent of all construction in 2016 and 2017.
Based on another report by Dubai Land Department, the total value of commissions earned by brokers registered by the Real Estate regulatory agency reached Dhs1.8 billion in 2016 from 32,932 transactions.
Competitor Analysis
Most of the current real estate portals are working on B2C model, ignoring the fact that most of the end customer sale still happens through on-field brokers. Through this model, one will be able to tap into the existing network of agents, producing more value for all the stakeholders.
Broex is the early mover in the segment in India and has secured 1 million in seed funding last year. They are getting an excellent response for broker community and running their operation in Delhi-NCR, Mumbai, Bangalore, Pune, Mumbai, Pune, Ahmedabad, and Jaipur.
Pain Point & Target Audience
Currently, the brokers do not have an intra-broker platform, through which they can reach out to multiple agents in a cost-efficient manner instantly. The brokers do not have access to larger deal flow, their only source of information is the current listing sites, where the owner or other property agents are directly listing the properties. There are many properties, which don’t get listed immediately and are traded through a close network of confident brokers.
The online portals are technology friendly, have better user experience and make recommendations by researched data. In the race to modernization, the brokers seem to have been left behind. The end consumer has better access to real estate reports than the brokers, thereby diminishing their credibility. The brokers do not have access to tools and knowledge, which can make them compete with other online portals; they are increasingly being seen as technologically challenged and lacking in market trends.
The brokers need a platform which can aggregate market insights and give them tips, data points, and market trend information in advance so as to be better prepared for deal-making. The platform should make it easier for the brokers to scout for and close deals faster.
Value Proposition
This platform will empower real estate brokers with tools to negotiate deals faster and compete effectively with other online portals. With this platform, the Broker will remain updated on real estate trends and will be able to compete effectively with online portals. Brokers will also get access to the wider market through fellow agents for their customers/investors.
Real estate developers can use this platform to launch their new projects and reach directly to the large pool of agents across different cities; this tool will also help them to get early feedback about the market response, before launching the product to the end consumers by spending mega bucks on promotional events and advertisements.
Business Model
The essential services like market information, the deal listing should be provided free of cost to the brokers. Additional services like an app for managing contract cycle, CRM tools, and other instruments to enhance the productivity of the brokers should be charged as a subscription fee on a monthly basis.
Way to market
The first step is to start collaborating with real estate associations, to get the database of brokers. After that run a short survey amongst the end users to identify top pain points and develop a beta product strategy. It may be a good idea to scout for a knowledge partner, who can supply real-time information for your consumption and relay, it’s best to rely on other providers and outsource this to experts so that you can focus on the core application.
Milestones
The first couple of years in this business should be focused on creating an active community of brokers who use the application on a daily basis. Based on the feedback and by tracking usage pattern, the startup can create the upgrades for which it will charge its customers and start converting its user base into paid users. Typically a good business running on the Freemium model can turn 3- 5 percent of its free users to paid users.
Investment Needed For Prototype
For testing & building the prototype, pitch to raise $200K- $250K from angel investors or incubators like FasterCapital, EnablingFuture or even global investors like 500 startups. There should be no office rentals or salary payout; the entire budget should be apportioned for customer acquisition and technology.
Team Capability
You would need to have a real estate expert and a tech expert as co-founders. The real estate expert will bring his expertise in the real estate industry to help the tech expert in creating the platform.
Investors / Expert Take
Overall, the private equity investors threw a projected $1.5 billion at real estate tech startups in 2015; as per reports from CB Insights. That’s a big leap from $1.1 billion in venture/ private equity funding in 2014 and represents a threefold increase from 2010 numbers.
While most of the real estate technology startups are based in New York City, or at least in the US, there is an untapped market for such emerging products globally. International juggernauts like Jones Lang LaSalle, Cushman & Wakefield, and CBRE have been in the brokerage business for generations and would be keenly watching this space as it has the potential to topple their applecart it picks up steam.
