As real estate in India continues its upward trajectory, the brokerage venture is becoming increasingly attractive

The Indian housing market is sized at around USD 222 billion, out of which the primary real estate amounts to ~ USD 70 billion. The size of commercial real estate is around USD 34 billion, making the total size of the real estate around USD 256 billion.

The market is huge, fueled by the massive aggregate population, spurred rate of urbanization, and aggressive investments by the government in infrastructure development. This also brings a spotlight to the primary brokerage industry in India, which is soaring. As per the industry estimates, the size of the primary brokerage market in India is close to USD 1.75 billion. Adding the secondary market, it amounts to USD 4.79 billion (~ INR 35,000 Crores).

The proliferation of professional brokerage houses, ICPs, and portals.

As real estate continues to grow in India, so does the interest in the brokerage venture. Recent years have seen the proliferation of bigger brokerage houses, institutional channel partners, and realty portals. This has been organizing a relatively unorganized industry, which was run mostly by local property dealers. Organised player comprises ~ 20% of the market, and are expected to further grow at a staggering pace.

Today's property market thrives on factors like customer convenience, a shift from the past. Success in real estate advisory demands commitment to transparency, speedy execution, and adeptly managing customer concerns. Achieving this necessitates significant investment in technology, analytics, operational capacity, and enhanced marketing skills.

For individual brokers it is difficult. Larger organised players with a full stack technology approach can deliver better.

Another factor that is changing the nature of real estate transactions is the pressing need to offer multiple services under one platform. Today homebuyers want more than just a home. They want easy access to loans, legal work, CRM updates, etc. Again, the scale would matter.

The Franchise Route

The transaction space in India is further evolving, with the increased popularity of franchise models. The demand for real estate franchises picked up in the wake of the pandemic, when businesses started gravitating towards asset-light models, and Indian real estate was also not an exception.

The franchise routes offered a conducive approach to lower down CAPEX and OPEX, without affecting the sales momentum.

Even after the pandemic, when the markets have largely opened, the Franchise model of doing business remains highly relevant. It should be noteworthy that the Indian real estate remains largely unorganised, despite the institutional players making notable progress. Around 80% of the market is run by local brokers, freelancers, and small-time advisories. These people enjoy a tremendous relationship in their network yet their small scale of operation has undermined their growth and evolution.

These smaller entities lack the institutional style approach and bandwidth that bigger players enjoy. This affects their overall growth.

Enabling smaller advisors as franchises of larger entities is a prudent strategy to bridge gaps. This grants them access to advanced business models, robust ecosystems, technology, marketing support, and operational expertise. Franchises can enhance efficiency, broaden reach, and facilitate access to high-quality deals. For larger advisories, it offers a means to expand networks, enter new markets, and capitalise on individual relationships. This approach is also beneficial for professionals from related fields like the stock market or personal finance, providing an opportunity to enter the lucrative real estate market with the support of established advisories, saving them from extensive groundwork and initial investments.

(The writer is the National Head, of Franchise-360 Realtors; views are personal)