MUMBAI | BENGALURU: Following the mushrooming of online real estate startups, the segment is headed for a consolidation that will lead to monetisation and stronger business entities, the latest being the merger of CommonFloor with Quikr's realty vertical.
Other instances include PropTiger's purchase of Makaan-.com and Square Yards' acquisition of three companies in the past year. Last week, ET reported another possible deal, with Housing.com said to be in talks with Snapdeal and News Corp for a stake sale.
The segment has attracted over $250 million, or Rs 1,600 crore, in investments over the past two years, a period when realty sales were the slowest in India. The investments were made by Helion Ventures, Nexus Venture Partners, SoftBank Group, Accel India, Horizen Ventures, Qualcomm Ventures and Nirvana Ventures.
"We will see more such mergers happening now as it is mostly driven by the synergetic value created by the two companies for achieving goals faster. The mergers will be more for acquiring products," said Alok Goel, managing director of SAIF Partners.
"Profitability is dependent on the stage at which these companies are now. India is still at an early stage. Further existence of too many players also reduces margins." Although part of the consolidation is taking place because of a founder's inability to take the business to the next level or sustain it in challenging market conditions, which some say, isn't good enough.
"There should be a strong rationale for a move like acquisition. It should be driven by the objective of bringing out synergies between both the entities," said Dhruv Agarwala, chief executive officer of PropTiger.com.
"Our acquisition of Makaan-.com, which specialised in secondary market, aligned well with our primary segment offerings. This year, we will see more instances of consolidation moves."
For realty advisory Square Yards, which acquired Realizing. in, Luxe Real Estate and Oryden Tech Labs, the acquisitions filled strategic gaps in providing end-toend tech-enabled transaction services. During the year, Square Yards registered triple-digit growth, achieving a pre-tax profit and revenue touching Rs 100 crore.
Investors were enthusiastic and confident during the initial rounds of fund raising by these startups and now the companies themselves are looking for stronger partners to achieve growth.
Article Source: http://economictimes.indiatimes.com/wealth/real-estate/Realty-sector-heads-for-consolidation-with-mushrooming-of-online-real-estate-startups/articleshow/50505760.cms
No comments:
Post a Comment