BusinessGUaRDian Real estate business is going online

There has been a significant increase in property-related online searches in the past four years.

As “online” becomes a popular buzzword nowadays, real estate, too, is trying its luck with the medium to capture potential buyers quite early in their investment decisions. Technology is already enabling services like street view, 360° view of a property’s neighbourhood, property walkthroughs and landscape photography carried out by drones – all of which help buyers, investors and lessees in their decision-making process. Though there has been a significant increase (by up to 65%) in property-related online searches in the past four years, it would be safe to say that “most property transactions are finally concluded offline in India”, according to Santhosh Kumar, CEO, Operations & International Director, JLL India. Searches for properties in India originate from anywhere in the country where there is sufficient internet penetration, including mobile internet usage. They also tend to come from other countries where NRIs reside.

So while a potential buyer will usually conduct an initial search online and shortlist certain properties in this manner, the buyer would still want to inspect the chosen property and negotiate other terms with the developer “personally”, a process which is cannot be done online in India “as yet”, according to Kumar. Understandably so, as the nature of internet marketing is such that there is a lot of misleading information there as well, caution property advisors. Also, a thorough due diligence of the legal sanctity of every identified property is a must, and this would only be possible online if all relevant documentation related to the properties were available online.

Stakeholders have high hopes on the recently passed Real Estate Regulatory Act which they feel is going to raise the transparency bar among developers. Till the Act is implemented on the ground, brokers are giving full offline support to clients who are interested in buying residential properties. They also educate the buyers about the legality of property documents. “In our partnership with Snapdeal, we have ensured that only those residential properties are listed that have been checked for all possible parameters needed to conclude the deal,” says Kumar.

Analysts say that besides the end-users, the investors’ community is also heading online with the only difference that while home buyers would still pay at least one visit to the property before parting with their money, investors are increasingly happy to keep the whole process online. Unlike people in older generations who used to buy their first house towards their retirement, the techsavvy younger generation is buying homes in their 20s and technology is just facilitating that process. The unfolding uncertainties unleashed by the Brexit vote implies an important downside risk for the world economy, according to the World Economic Outlook (WEO) released this week by the International Monetary Fund (IMF). Such downside risks have forced the Fund to cut its forecast for global economic growth for the current and the next year. The IMF foresees global growth to remain at 3.1% this year followed by 3.4% in 2017. The projections for both years are 0.1% less than what was estimated by IMF in April this year (without the Brexit vote). The prospects for India’s growth have also been revised down by 0.1% to 7.4% for both 2016 and the following year. “In India, (although the) economic activity remains buoyant, the growth forecast for 2016-17 was trimmed slightly, reflecting a more sluggish investment recovery.” The depressed global outlook might further dilute India’s already subdued exports performance, the IHS Markit report has predicted. “Since a sizable share of (India’s) exports go to the EU, weaker European demand would exacerbate and prolong the ongoing exports contraction, also constraining (it’s) growth.” With downside risks intensifying, IHS Global Insight has also lowered its outlook for India’s growth to 7.5% from 7.7% for the current financial year. It, however, adds that given the strong fundamentals and reliance on domestic demand, the impact of Brexit on India’s growth should be fairly limited and will depend on the extent of prevailing uncertainty in the markets, which would affect the rupee value, investment, and credit conditions. The Brexit vote implies a substantial increase in economic, political, and institutional uncertainty, which is projected to have negative macroeconomic consequences. The other important risk underlined by the WEO update is the likely meltdown of the European banking system which, economists feel, would send a much deeper financial shock far and wide. Since the Brexit shock occurs amid unresolved legacy issues in the European banking system, in particular in Italian and Portuguese banks, the fund cautions that the “protracted financial market turbulence and rising global risk aversion could have severe macroeconomic repercussions, including through the intensification of bank distress, particularly in vulnerable economies”. The IMF feels that emerging economies need to bolster their growth prospects through structural reforms. Analysts feel that India is keeping its promised pace with structural reforms with the ongoing rationalisation of fuel subsidies being lauded the most.