Tectonic Shift in Realty Business Operations
The COVID-19 pandemic has triggered the biggest ever crisis for the real estate sector. This has dealt a crippling blow to real estate marketing which will in turn change the dynamics of brokerage business in the days to come.
The real estate sector has seen major regulatory disruptions over the last few years by way of demonetization, RERA and GST. The sector had hardly emerged from these shocks that it has been rudely shaken by the massive disruption caused by the COVID-19 induced long lockdown.
The real estate marketing and brokerage business has not seen such a massive hit before. While it is too early to gauge the extent of impact on realty transactions, a study by Magicbricks.com predicts 30-40% fall in transactions for this year. With realty sales coming to a naught due to Covid onslaught and with uncertainty prevailing over how long the pandemic will last, , the real estate brokerage industry will be headed for consolidation.
Going forward, the real estate marketing/brokerage business will see tectonic shift in business operations, throwing up massive challenges but also opening up newer opportunities and making operations more efficient and transparent.
Much before the COVID-19 onslaught, real estate brokerage business over the last few years has seen its significant transition to digital operations. A shift from purely relationship based business to tech-driven data based business Many companies had set up tech-enabled platforms and mobile only aggregation platforms.The industry had even come up with digital payment solutions that mitigate the risk of fraud transactions by holding funds in a secure, online neutral KYC authenticated escrow account.
However, the transition to digital brokerage operations has been rather slow in the past. But this long lockdown has forced real estate marketing companies to rethink their business strategy and step up their digital operations at a much faster pace.
The benefit of brokerage industry's digital foray is too visible in the current crisis situation.In the wake of on ground marketing activity coming to standstill, some developers and real estate marketing companies have successfully leverage digital platforms to notch up substantial sales during lockdown. Anarock digitally sold 240 homes and 62 office units worth Rs 252 crore . 360 Realtors sold more than 112 units worth Rs 105 crore. Lodha Group sold 300 apartments across multiple projects in Mumbai region since the start of the lockdown. Investors Clinic clocked Rs 400 crore sales in March 2020. " This has been made possible due to technological innovations adopted by us in the last one year. We have taken 100% technology route to keep our business rolling in the lock down". Today, with massive drop in walk in customers, most customer acquisitions will move online. Going forward, specific tools like VR, Live streaming site visits, usage of Chat will become more prevalent and will be necessary to engage buyers. The digital first approach by builders and brokers helps reduce transaction time and make selling faster.
The marketing experts believe that post-COVID, buyers will also move their requirements online, the transactions will be concluded faster. In view of the new tough work environment ,dynamics of brokerage business will also undergo significant change in the days to come. Brokers will seek to generate additional income through property management and other ancillary services and freelance part time agents would look for other pursuits.
Leading realtors like Ankit Kansal, founder 360 Realtors is of the opinion that brokerage houses will need to work in tandem with developers and act as strategic partners to arrive at optimal solutions. On structural front, new regulatory changes are expected with regard to safety standards, property management, social distancing, layout management and much more. In coming times, brokerage houses will need to learn new changes and incorporate these in their business model. IPCs, according to marketing experts, are expected to explore commission/fixed pay model, infra, revenue sharing support to have small brokers work for them to save n their fixed cost in terms of salaries of their ground staff.
Going ahead , developers will devote more time and money on getting business from channel partners. Lot of companies with large manpower will go for downsizing and unorganised players will follow IPCs/ICPS in using CRM and mobile app tools. Digital marketing and online property portals would be the preferred choice of brokers and developers. In view of the pressures to sell, the marketing strategies will also see changes, with channel partners turning deal makers from mere enablers. The marketing and brokerage professionals have to master the art of maximising ROI across diverse business segments in times of financial constraints .
Following this COVID- induced massive disruption, brokerage business will see consolidation in the coming months. Will we see the monopoly of big, players with financial muscle, while smaller and weaker players will exit from the scene. Realty experts expect pandemic to shake up real estate brokerage market with big players enjoying strong fundamentals benefiting while smaller players will find sustenance difficult. As such smaller brokers will have to work with larger channel partners. Post COVID, the role of IPCs, ICPS will increase and bigger players with organized sales force and robust technology support and deeper marketing acumen will be able to successfully navigate and thrive.
All said and done ,brokerage industry shaken by COVID-19 will undergo significant changes in the months ahead and all stake holders have to quickly adapt to the transformation on the planning, strategy and operational level to stay relevant in the business and meet emerging challenges to stay float.
The writer is Editor, PropTOQ real estate magazine