NoBroker to expand to 20 cities in six months to boost supply2 min read . Updated: 26 May 2015, 12:27 AM IST
The online realty website is in discussions to raise a much larger round of funds compared with its previous raise
Bengaluru: Online realty website NoBroker, which raised $3 million from SAIF Partners in December, will expand to 20 cities in six months from four to boost supply in its battle for market share with Housing.com, CommonFloor and MagicBricks.
Unlike its rivals, NoBroker connects customers directly with flat owners. As its name suggests, the company avoids dealing with middlemen.
Indians in the top 25 cities pay roughly $4 billion in brokerage for renting houses, and this amount is growing annually by 25%, according to NoBroker’s estimates, which are based on census data.
“There hasn’t been much focus from real estate sites to solve the rental problem in India," chief executive officer Amit Agarwal said. “Customers still face core issues such as not knowing whether the inventory they’re seeing online is spurious and whether it is still available. We want to solve these issues at a reasonable cost. On an immediate basis, our aim is to capture half the rental market ($4 billion) and eliminate up to 90% of the brokerage within that. In two cities (Bengaluru and Mumbai), we’re already saving ₹ 12-15 crore in brokerage costs every month."
After the company received $3 million from SAIF Partners in December, NoBroker started marketing on radio and buying billboard ads. Over the past four months, NoBroker has increased its tenant and owner base as well as supply of listings by more than seven times, helped by its marketing efforts, Agarwal said.
The company currently has more than 100,000 customers—a combination of flat owners and tenants—and is adding roughly 1,500 customers together in Bengaluru and Mumbai every day, he said. On the supply side, NoBroker is adding about 500 house listings daily, he said.
Earlier this month, NoBroker launched in Pune and Chennai and plans to add 16 more cities this year.
NoBroker is in discussions to raise a much larger round of funds compared with its previous raise, Agarwal said. He declined to give details about the company’s proposed fund raising.
“As we’re expanding aggressively in to more than 15 cities this year, we’ll need funds primarily for marketing and for building our product. We’ll be doing a lot of radio ads and other mass advertising. This is primarily for getting more listings online and building trust in our brand. For tenants, online marketing such SEO (search engine optimization) and Facebook works much better as they’re Internet-savvy users," Agarwal said.
“There will definitely be consolidation. It’s a very big market and there are many companies with different business models trying to solve the housing problem in India. Some of these won’t be successful and they will have to merge with the bigger players," said Harish H.V., a partner at Grant Thornton, a consultancy.
Over the past 18 months, investors have committed more than $350 million to real estate sites such as Housing, CommonFloor and MagicBricks, attracted by the potential to tap a largely unorganized and huge market. However, as with most other e-commerce niches, there is no clear winner among the real estate sites yet and analysts expect consolidation among these companies over the next two years.