Bengaluru: The undeniable boom in residential realty comes with its own set of issues for home-seekers. Yet, amidst dipping stock markets, realty has gained stature as a more bankable asset class, says Akhil Gupta, Co-Founder and Chief Product and Technology Officer (CPTO) at property technology (proptech) company NoBroker. In a conversation with DH’s Anushree Pratap, he also touched on the lopsided development of properties impacting rents and why for all the promotions new localities near upcoming airports are yet to catch the imagination of buyers. Edited excerpts:
Considering the dip in housing sales, are more people looking at renting?
It is not that people are looking more at renting. The rate at which rents increased just after Covid was not sustainable, and is no longer continuing. But rents have increased, so people have actually started buying more houses. There is still good demand, though it has decreased a bit compared to the year before, and has also tamed down compared to the post-Covid surge.
In fact, there is a shortage of supply in terms of properties, at least in Bengaluru. For example, Prestige doesn't have anything sub-Rs 4 crore currently available. Whatever they have launched, they have been able to sell within a few months.
Residential real estate has primarily been end-user driven. Is it becoming more of an investment asset lately?
The stock market has been coming down over the last 8-10 months. Previously, people were assuming that buying a house will give you 3-4 per cent returns in terms of rental yield, 3-4 per cent in terms of annual appreciation, and it is more lucrative to put your money in stocks and you will forever make 20 per cent annual return - which is not true. Now, people will get negative returns. Once you start getting negative returns or less than 10 per cent in returns in the stock market, people will want something which is more sustainable and more predictable, which is definitely real estate. So people will diversify and are already diversifying to buying houses.
Another driving factor is the change in capital gain tax in the recent Budget. The long-term capital gain tax is now 12.5 per cent on property. So, if you buy a property, keep it for two years as an investor and sell it, you don't have to pay as much tax as you were paying earlier.
Rent for 1 BHK in Bengaluru is hovering around Rs 30,000, with no sign of correction. Do we blame the techies and start-ups for this? Do we need regulations on house prices and rents?
You will have to blame it on techies and start-ups because they are the ones who are paying it - but, the reason is that there is no supply. Nobody builds 1 BHKs, at least in Bengaluru. If you talk about the Sarjapur area, there are hardly any buildings that have 1 BHKs. And now with disposable income increasing, people are preferring 1 BHK houses to PGs and shared accommodations. But with less supply of 1 BHK houses, rents have gone up.
You cannot regulate. This is an open economy, correct? It is simply governed by supply and demand.
Bengaluru, Mumbai, Noida, all have airports coming up. How has the realty pick up been around these projects?
Wherever there is an airport, you will see price appreciation near the airport. People will move towards the area. But that will not happen as soon as the airport opens, it will take some time. So far, we have not seen this.
NoBroker is seeing rapid growth in its financial services segment. Is this a result of unaffordability of residential realty?
More activity is happening in real estate, more houses are being bought, so people need loans. 90-95 per cent of houses in India are bought on loan. People need more loans, for paying the initial deposit, personal loans, and so on, which is fueling financial services. Additionally, there has been an uptick in the number of people taking loans because it has become digital. Earlier, they had to go to banks but now, it is easier to get loans. Hence, people are leveraging this.
What is NoBroker’s growth strategy for 2025, initial public offering (IPO) timeline, and revenue proportions amongst verticals?
We are focusing on profitability and going deeper in our existing cities. We will become profitable in the next 12-18 months and after that, we will expand. IPO also definitely, after profitability. Our revenue is split equally across the three verticals.