angeldemon_007
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NEW DELHI: Jitendra Rathod had spent almost three months looking for an apartment in Mulund, a fast growing suburb in central Mumbai.
He knew that developers were struggling to find buyers and were sitting on huge inventories, so he expected a good discount. Much to his surprise, no builder was willing to budge an inch.
Rathod's luck changed when he joined a group buying portal that brings buyers together for bulk deals. A few rounds of negotiations later he bought an apartment from the same builder at a price 10% lower than what he was offered barely two weeks ago.
"Two weeks ago the builder, Samta Builders, said it couldn't offer me anything below the 15th floor. Now I have got a flat on the 5th floor," he says, regaling in his newfound power.
GrOffr, a real estate group buying site which helped Rathod buy his dream home, is barely a year old. In that period, it says it has managed to sell homes worth Rs 147 crore to about 100- odd buyers, and helped them save about Rs 27 crore. It doesn't charge the buyer a penny.
Instead it makes money from the commission it gets from the builder for selling their apartments. Co-founder Sandeep Reddy says he expects revenues to grow from Rs 1 crore in the last fiscal year to Rs 5 crore in the current fiscal year-he is expanding into other cities-so much so the Ind IAN ) Angel Network (IAN) recently invested $1million in his small outfit.
The crisis in the realty market has thrown up a big opportunity for so-called group-buying firms of which GrOffr is possibly the veteran in the business.
New players such as Gemi- Deals.com, dealflats.com, 21flats.com, groopoffers.com have popped up overnight. These firms work on the principle that if builders can form cartels and not bring down home prices, consumers too can get together and negotiate a deal.
While buyers obviously benefit as they get a discount, many builders are happy to work with such firms. This is because builders, famously reluctant to bringing down prices in a difficult market, can generate business without having to advertise the discount.
"Developers are willing to give a discount today but they will not want to put that on paper," says Raj Iyer , chairman of Groopoffers.com, which claims to have sold about 45 homes in the last six months and has helped customers save 10-12% on the price. Groopoffers recently raised Rs 2 crore from a group of angel investors.
Most of these portals use social media such as Twitter and Facebook to reach out to buyers, apart from emails and SMSs. GroopOffers' Facebook and Twitter pages are updated regularly with new deals and offers. "The idea is to keep the cost per acquisition low," says Iyer.
The company has also tied up with some companies so that they are on the company's intranet. What has worked for GrOffr till now is word of mouth. "Now, with angel funding in place, we are planning to hire an online agency and get more active through viral marketing on Facebook," says co-founder Vikhyat Srivastava.
Most builders ET got in touch with refused to comment on the new trend . Shiv Priya, executive director of Amrapali Developers in Noida, near Delhi, however, said that his company has entered into discounted bulk deals for the last one year with large corporates like Samsung, Alstom, NTPC and ONGC .
"We are doing built-to-suit residential projects for certain communities like defence personnel, religious groups and alumni of IITs and IIMs. We can address the price points better in such deals." said Karthik Bhaskaran, senior vice-president for sales and marketing at the Bangalore-based Century Real Estate Real Estate in the doldrums Sales of apartments in the bigger cities around the country have been in the doldrums for a while as buyers are anticipating a slump in prices.
Builders have, however, remained stubborn, and have refused to bring down prices-many think if they do so, prices will crash. According to consultant Jones Lang LaSalle, unsold residential units in projects that are completed or are nearing completion within the next 6- 12 months in Mumbai and NCR-Delhi are as high as 25% and 16%, respectively, of the total number of units.
In other top cities, including Bangalore, Chennai and Kolkata, the numbers range between 12% and 19%. Real estate research firm Liases Foras says approximately 471.9 million sq ft of residential stock, which is one-fifth the size of Chandigarh, is lying unsold in the country's top six markets.
Rising home loan rates and the crisis created by disputes over land acquisition in areas such as Noida have also accentuated the problem.
"With a huge amount of unsold inventory in the market today, the market is assumed to be heading for a correction in the next 18 months. As a result, there are a whole bunch of potential buyers that are sitting on the fence. Developers today are holding on to their prices but are very much willing to give discounts for serious buyers," says Deep Malhotra , founder, GemiDeals.com.
"The trend of group-buying sites in the real estate sector is unique to India," says Anuj Puri, chairman and country head at Jones Lang LaSalle India.
"Earlier, builders used to sell to investors in bulk. Now this position is being taken up by group buyers who get a similar kind of price benefit," he adds.
Others say it has also been happening because there is demand in the market which is latent right now as builders aren't bringing down the prices as per the expectations of the market. Reddy and Vikhyat Srivastava, who worked with Kotak on different real estate projects, set up GrOffr.com in 2010 to leverage the power of group buying in the real estate sector.
Initially, says Reddy, they pre-negotiated prices with developers based on minimum sales. This model has now evolved into one where buyers on their website dictate who GrOffr negotiates with. "We put up various projects with details on out website.
If there are a large number of buyers interested in a particular product, we then negotiate with the developer," he adds. Recently, they have started another programme where real estate agents can also help them negotiate deals with developers.
"Developers are coming to us on their own now," says Malhotra, who has tied up with about six developers to date and is targeting others who have a lot of unsold inventory lying around. This paper reported recently that group buying-where websites elicit deep discounts on lifestyle services ranging from restaurants and movie tickets to salons and holidays in particular cities by committing a minimum number of customers- is gaining popularity among Internet users and local merchants in metros as well as smaller cities.
Between them, around 20 groupbuying sites in India have 12.7 million users, or more than the population of Mumbai, the country's most populous city with 11.98 million people, according to Census 2011.
One-third of the deals are in non-metros such as Coimbatore, Guntur and Bhubaneswar. Group buying came to India only in late 2009. Since then it has been growing by leaps and bounds.
Today, there are more than 500 group-buying sites worldwide. Internet giants Google and Facebook recently entered the field with Google Offers and Facebook Deals.
Home buyers log in to portals for bulk deals - The Economic Times
He knew that developers were struggling to find buyers and were sitting on huge inventories, so he expected a good discount. Much to his surprise, no builder was willing to budge an inch.
Rathod's luck changed when he joined a group buying portal that brings buyers together for bulk deals. A few rounds of negotiations later he bought an apartment from the same builder at a price 10% lower than what he was offered barely two weeks ago.
"Two weeks ago the builder, Samta Builders, said it couldn't offer me anything below the 15th floor. Now I have got a flat on the 5th floor," he says, regaling in his newfound power.
GrOffr, a real estate group buying site which helped Rathod buy his dream home, is barely a year old. In that period, it says it has managed to sell homes worth Rs 147 crore to about 100- odd buyers, and helped them save about Rs 27 crore. It doesn't charge the buyer a penny.
Instead it makes money from the commission it gets from the builder for selling their apartments. Co-founder Sandeep Reddy says he expects revenues to grow from Rs 1 crore in the last fiscal year to Rs 5 crore in the current fiscal year-he is expanding into other cities-so much so the Ind IAN ) Angel Network (IAN) recently invested $1million in his small outfit.
The crisis in the realty market has thrown up a big opportunity for so-called group-buying firms of which GrOffr is possibly the veteran in the business.
New players such as Gemi- Deals.com, dealflats.com, 21flats.com, groopoffers.com have popped up overnight. These firms work on the principle that if builders can form cartels and not bring down home prices, consumers too can get together and negotiate a deal.
While buyers obviously benefit as they get a discount, many builders are happy to work with such firms. This is because builders, famously reluctant to bringing down prices in a difficult market, can generate business without having to advertise the discount.
"Developers are willing to give a discount today but they will not want to put that on paper," says Raj Iyer , chairman of Groopoffers.com, which claims to have sold about 45 homes in the last six months and has helped customers save 10-12% on the price. Groopoffers recently raised Rs 2 crore from a group of angel investors.
Most of these portals use social media such as Twitter and Facebook to reach out to buyers, apart from emails and SMSs. GroopOffers' Facebook and Twitter pages are updated regularly with new deals and offers. "The idea is to keep the cost per acquisition low," says Iyer.
The company has also tied up with some companies so that they are on the company's intranet. What has worked for GrOffr till now is word of mouth. "Now, with angel funding in place, we are planning to hire an online agency and get more active through viral marketing on Facebook," says co-founder Vikhyat Srivastava.
Most builders ET got in touch with refused to comment on the new trend . Shiv Priya, executive director of Amrapali Developers in Noida, near Delhi, however, said that his company has entered into discounted bulk deals for the last one year with large corporates like Samsung, Alstom, NTPC and ONGC .
"We are doing built-to-suit residential projects for certain communities like defence personnel, religious groups and alumni of IITs and IIMs. We can address the price points better in such deals." said Karthik Bhaskaran, senior vice-president for sales and marketing at the Bangalore-based Century Real Estate Real Estate in the doldrums Sales of apartments in the bigger cities around the country have been in the doldrums for a while as buyers are anticipating a slump in prices.
Builders have, however, remained stubborn, and have refused to bring down prices-many think if they do so, prices will crash. According to consultant Jones Lang LaSalle, unsold residential units in projects that are completed or are nearing completion within the next 6- 12 months in Mumbai and NCR-Delhi are as high as 25% and 16%, respectively, of the total number of units.
In other top cities, including Bangalore, Chennai and Kolkata, the numbers range between 12% and 19%. Real estate research firm Liases Foras says approximately 471.9 million sq ft of residential stock, which is one-fifth the size of Chandigarh, is lying unsold in the country's top six markets.
Rising home loan rates and the crisis created by disputes over land acquisition in areas such as Noida have also accentuated the problem.
"With a huge amount of unsold inventory in the market today, the market is assumed to be heading for a correction in the next 18 months. As a result, there are a whole bunch of potential buyers that are sitting on the fence. Developers today are holding on to their prices but are very much willing to give discounts for serious buyers," says Deep Malhotra , founder, GemiDeals.com.
"The trend of group-buying sites in the real estate sector is unique to India," says Anuj Puri, chairman and country head at Jones Lang LaSalle India.
"Earlier, builders used to sell to investors in bulk. Now this position is being taken up by group buyers who get a similar kind of price benefit," he adds.
Others say it has also been happening because there is demand in the market which is latent right now as builders aren't bringing down the prices as per the expectations of the market. Reddy and Vikhyat Srivastava, who worked with Kotak on different real estate projects, set up GrOffr.com in 2010 to leverage the power of group buying in the real estate sector.
Initially, says Reddy, they pre-negotiated prices with developers based on minimum sales. This model has now evolved into one where buyers on their website dictate who GrOffr negotiates with. "We put up various projects with details on out website.
If there are a large number of buyers interested in a particular product, we then negotiate with the developer," he adds. Recently, they have started another programme where real estate agents can also help them negotiate deals with developers.
"Developers are coming to us on their own now," says Malhotra, who has tied up with about six developers to date and is targeting others who have a lot of unsold inventory lying around. This paper reported recently that group buying-where websites elicit deep discounts on lifestyle services ranging from restaurants and movie tickets to salons and holidays in particular cities by committing a minimum number of customers- is gaining popularity among Internet users and local merchants in metros as well as smaller cities.
Between them, around 20 groupbuying sites in India have 12.7 million users, or more than the population of Mumbai, the country's most populous city with 11.98 million people, according to Census 2011.
One-third of the deals are in non-metros such as Coimbatore, Guntur and Bhubaneswar. Group buying came to India only in late 2009. Since then it has been growing by leaps and bounds.
Today, there are more than 500 group-buying sites worldwide. Internet giants Google and Facebook recently entered the field with Google Offers and Facebook Deals.
Home buyers log in to portals for bulk deals - The Economic Times