Sudhir Pai – CEO, Magicbricks
Started as a small industry, today Magicbricks is India’s No 1 property portal and has been adjudged as the most preferred property site in India. The National Real Estate Development Council (NAREDCO) awarded Magicbricks the title of “Best Real Estate Portal” at the 12th National Convention and Real Estate Awards 2014.
Magicbricks an online real estate portal that provides a platform for property buyers and sellers to locate properties of interest and source information on the real estate space in a transparent and unambiguous manner.
Sudhir Pai is the CEO at Magicbricks. He holds a degree in Electronics Engineering from Goa University and MBA from Symbiosis Institute. Mr. Pai spent five formative years in the FMCG industry between Marico and HUL, prior to taking charge at Magicbricks.
Team ABT reached out to Mr. Sudhir Pai to know his views on the current trends in the Real Estate Industry & the plans of Magicbricks, captured below.
Tell us about the journey of Magicbricks and its evolution?
We have just completed a decade in this business. Till about 2012, this remained a small industry, still finding its feet. The industry has taken off in the last 5 years and we’ve seen a sustained period of strong growth and product evolution. We’re now India’s largest Property Portal boasting of over 15 Million Traffic every month, 1.5 Million active properties listed at any given point of time, and generating over 4.5 Million property enquiries every month.
With this kind of scale, we believe that Magicbricks now hosts over two-thirds of the available properties in the market; and that about half of the property-seekers in the market would be influenced by us at some stage of their buying/renting process.
Online portals have now taken over from traditional media as being the primary source of information regarding properties. The main reason why most consumers have switched online is that online portals have successfully aggregated the majority of supply and demand in the market. Besides successfully building scale, Magicbricks has also brought in a host of products that help consumers at every stage of the home buying process. We now have a price-discovery tool called as Propworth, an active online forum, an assisted search service, a home loan facilitation service, various property services to cater to legal services, Vaastu, etc.
We’re now 30% bigger than our closest competitor by revenues; and over 70% bigger in terms of traffic. We seek to build a strong organisation and that would further scale up by 5X in the next 3-4 years. This year, we plan to grow by launching a series of new business lines around commercial real estate, the rental segment, luxury & NRI segments as well as by integrating products such as home loans, Experience Centres and assisted selling services.
What are your views on the current trends in the Real Estate Industry in 2017?
Real Estate is at cross-roads today, at an inflection point. We’ve seen a wave of policy and environmental changes that seem set to change the face of Real Estate in the coming quarters and years. De-Monetisation, RERA, GST, PMAY, changing consumer preferences – each of these are high impact events which will make structural, permanent changes to the real estate industry.
The real implications of RERA can only be gauged over a period of 2-3 years, but certainly it is expected to boost consumer confidence and therefore, transactions, in buying real estate. Recent Magicbricks data suggests that a demand revival might be just around the corner. The number of active property seekers has gone up by 51% in the last year with 5.3 lakh active property seekers in June this year.
Your views on the impact of demonetization on the market liquidity.
Demonetisation is now not a big influencer but it did have an impact on the market for first 3-4 months. While there was an expectation of a price correction on part of buyers which did not happen, but both buyers and sellers stayed away from transactions for variety of reasons. We did see buyer interest coming back in the Jan-Mar quarter with strong spike in search queries, a similar uplift in transactions is expected in coming quarters.
Our PropIndex report for Jan-March 2017 – the immediate quarter post demonetization – also revealed that though the overall market scenario remained weak but there was little evidence of any major price correction in the secondary market. However, we believe now the category has moved on and there is likely a gradual improvement in consumer sentiment as well.
Tell us what do you think about the Implementation of RERA? Are there any areas unaddressed?
RERA is a much needed initiative that is going to have positive & ever lasting impact on the industry in the long run. It will help bridge the gap between buyer’s expectations and final delivery by infusing transparency and thereby will help rebuild the credibility.
However, the initial confusion around provisions & implementation issues have led to some hiccups for the industry. Several States are / were very late in drafting their own law / notifications and appointing regulators. This contributed to slow offtake of approvals and even today only a small number of projects have secured the approval.
What are the challenges that you currently foresee for your business?
We can thump our chests on having succeeded on the aggregation front i.e. being able to get a majority of buyers and sellers on our platform. The next level challenges that we need to solve are to do with curation, identity and with being able to get both buyer and seller to ‘do more’ with the platform beyond the discovery piece. Besides, there are also challenges on monetisation – the online property business has been typically under-priced in order to gain initial penetration, now that we are past this phase, we need to determine how we are able to charge a fair fee and avoid cannibalisation of revenues as they shift from traditional media to Online.
Competition is good, especially if it helps raise investment in the category, if it expands the markets and if it improves customer experience. Unhealthy competition could be a source of worry as such competition merely raises costs, is value-eroding and is a distraction in being able to build a rock solid industry. Frankly, I don’t see more than 2-3 players who are building a business with strong fundamentals that will sustain for the long run.
If you would do one thing differently what would that be?
The industry acquired supply by under-pricing it or giving it away for free. Almost all players in the industry offer free listings to all individual customers, and significantly under-priced listings to property agents. This has resulted in abundant supply, however it created a separate problem of listing quality and under-monetisation. We’re now aiming to fix this problem on Magicbricks. However if there was one thing to be done differently, it would be a more calibrated scaling of supply such that these side-effects could be avoided.
What would you like to achieve in the coming years?
We would like to build a business that’s 5X the current scale in the next 3-4 years. In order to achieve this, we would like to fire up 3 Horizons of Growth. One, scale up the core platform such that we are able to aggregate over 80% of the available buyers and sellers in the market. Two, develop our platform such that it works across the buying journey of the property seeker. Three, develop an entire ecosystem that improves the overall buying experience through services such as Home Loans, Home Décor, Property Services such as Vaastu/Legal; services etc.
Buying a home is one of life’s top-3 decisions for most consumers and we want to make Magicbricks a significant part of that decision.