InfoEdge India’s 99acres.com incurred a loss in the June-2014 Quarter due to continued investments in sales teams, product development and advertising. Management believes that the loss is likely to increase if competition intensifies. The company has announced a QIP of Rs7.5bn primarily to invest in 99acres.com.
In the Indian Real Estate Online Space, competition from newer portals has increased over the past two years. Commonfloor has emerged as a significant competitor to established players in the online real estate space. We believe its high proportion of owner posted listings and a popular apartment / gated community management software have led to relatively more accurate listings than the older real estate portals. Additionally, Housing.com was able to gain market share with their innovative products which includes map based search and a fresher user interface while older portals are left with stale listings from realty agents.
InfoEdge Management indicated that the monetization of these portals is still much below than of 99acres.com. Also, after the recent product refresh, the mobile app of 99acres.com has caught up on the ‘user interface’ gap with its peers. Its recent launch of verification listings facility will also likely close another gap in its
product offerings versus the newer competitors.
Globally, the market for online real estate portals has evolved differently across geographies. In Australia (REA group) and UK (Rightmove), one player dominates the market with a traffic share of more than 60-80% and enjoy robust operating margins. On the other hand, in the US, competitive intensity is among the top-3 portal with Zillow leading the pack with a ~20% marketshare, Trulia and Realtor.com have considerable market shares (~10% each)..
InfoEdge management believes that in the long run, online real estate in India will be dominated by one player (similar to online job portals). Do you buy their argument ?