A $45bn proptech listing on NYSE, most valued housing company in the world, and a parallel in India

Global proptech industry has its watershed moment this month. China’s KE Holdings, also known as Beike Zhaofang, which owns property brokerage brand Lianjia, got listed on the New York stock exchange raising US$2.12 billion. Its American depositary shares (ADS) rose sharply on the listing day and subsequently taking the valuation of the company to around US$45 billion. This also made Beike (Lianjia) the most valued property related company in the world and also China’s 7th largest internet company after ecommerce and social media companies like Alibaba, Meituan, Tencent etc.

Lianjia, founded in 2001 in Beijing, provides both online and offline real estate brokerage transactions and services. In 2019, it handled more than 2.2m housing transactions, with a transaction value of ~US$300 billion, and generated revenue totalling US$6.5 billion. It counts SoftBank, Tencent, Hillhouse Capital and Sequoia Capital among its largest investors.

Back home in India, another real estate brokerage platform Square Yards is build an integrated ecosystem of real estate services like what Lianjia built in last 20 years. Founded in 2014, this start-up has made significant strides to emerge as the number one player in the Indian real estate with an annual gross transaction value of US$1.2 billion – larger than the most real estate developers in the country.

Lianjia was the inspiration behind Square Yards, says its Founder Tanuj Shori. Years back, while on frequent China trips, he was amazed at how an intermediary has disrupted the space, and was convinced that India should see something similar. Every time he put more money in Indian real estate, he realized the model and process is completely broken – gravity of it – India was a USD100bn unorganized market, with largest developer at ~1% market share, no large distributor, ~1mn small brokers, no regulator, no data transparency and the list goes on.


Lianjia faced a similar set of hurdles when it started. China’s real estate of early 2000s was a complex industry with long value chain characterized by lack of standards, low service efficiency and poor experience for both customers and service providers. Over the past 18 years, it transformed the industry by reinventing and building the housing data dictionary, industry infrastructure and standards, which paved the way for enabling digitalized transactions and services.

Lianjia and Square Yards both started with a bigger mission to transform the broken real estate distribution systems in their respective countries and disrupt a fragmented industry. But will India’s real estate market become large enough to offer companies like Square Yards the opportunity to scale up like Lianjia? To understand this, we must look at evolution of China’s real estate market and a parallel with where India stands today.


India and China – Identical Real Estate Markets on the Same Timeline but Years Apart

A quick look at the crucial numbers that determine a nation’s present and future housing scenario illustrates that China of 2002 is a mirror image of what India is today, when Lianjia had just started operations. Private developers entered the Chinese market in 1978 and Indian private developers came only in 1990, creating a 12 to 15-year time lag for Indian realty and the gap exists today. Back then, China was urbanised to an extent of 33% and had a GDP of US$1.8 trillion. In comparison, India today is 34% urbanised and has a GDP of US$2.1 trillion. The 2002 Chinese real estate market saw 1 million real estate transactions and was a US$110 billion space, akin to India’s present-day real estate market pegged at US$110 billion, churning out 1.5 million annual transactions.

As China rapidly urbanised from 33% to 56% in just 2 decades, migration to Chinese cities exploded and so did the need for housing. Today, China’s real estate brokerage market size is estimated to be around US$35 billion with over 2 million brokers closing 14 million transactions annually. India is likely to witness a similar explosion in rural-urban migration and with urbanisation projected to reach 55-60% over the next 10-15 years, India would need over 75 million homes to be built, with the bulk of this volume explosion taking place in the mass market segment.

With that housing demand projection, India’s real estate market brokerage space could be worth US$40 billion. While 2-decade old Lianjia from China is making waves in global investment circles, 6-year old Square Yards, is perhaps the only full stack eco system play in India that’s making all the right moves to capture the next 20 year cycle.

Square Yards’ Integrated Ecosystem

Intelligent Search & Discovery to Seamless Transaction Experience for Consumers – Square Yards’ consumer tech, uses a combination of research tools like heatmaps, recommendation engines, data decision tools to help consumers easily discover the best neighbourhoods and properties.. The platform offers an integrated consumer experience that boasts around 2 Million+ property seekers, 75k+ digital enquiries and 1500+ property and mortgage transactions every month. On the transactions front, Square Yards facilitates online booking engine with 3D views of the apartment complex, fully secured online payment gateways, digital signatures on application forms and online escrow & registration services to make property ownership paperwork process easier than conventional sales.

Best in Class Agent Tech in the Industry – Each of Square Yards’ 3000+ strong sales force is equipped with state-of-the-art mobile apps to enable them to setup digital meetings with the clients, discuss properties virtually over video calls using 3D walkthroughs, share collaterals at the tap of a button and use proprietary transaction enabling tools. The proprietary agent tech has made Square Yards’ inhouse agents more efficient – achieving 3X more closures compared to an average agent in the industry.

Powering Independent Brokers with Technology, Social & Marketing Tools – Square Yards is using its technology and industry expertise to help support thousands of individual property brokers across the country, by providing them a powerful mobile platform, Square Connect. With unique features that combine business, social and networking functions on one platform – Square Yards is positively influencing the lives of 150,000+ individual brokers across India, making them all a part of an extended Square Yards distribution team – creating a sales engine larger than any country has ever seen.


Digital Mortgage Tech Solution for Paperless Sanctions & Disbursals – Square Yards’ subsidiary Square Capital has collaborated with some of the India’s leading banks to develop digital mortgage capabilities that provide immediate and complete paperless sanctions linked to credit bureaus and banks’ loan origination systems. The solution not only serves captive home loan applications originating from Square Yards’ real estate transactions but is also be offered to various lending marketplaces and real estate developers on a SaaS model.

Building Rental and Property Management Platform – Square Yards acquired Azuro in 2020 and completed its full stack service spectrum with rentals and property management services that are being offered to more geographies & customers. In the last 3 months alone, Square Yards has signed exclusive partnership with developers to execute and manage close to 5000+ apartments for rentals and property management services. Square Yards views secondary real estate as its largest growth driver that can potentially become bigger than all of its existing businesses in a few years.

Foray into SaaS with Edge – Enterprise SaaS is another big opportunity Square Yards is working on. It Launched an enterprise SaaS product called EDGE – A full stack solution giving enterprises access to Square Yards’ proprietary tools and automated workflows for their sales, marketing, transactions, mortgage and post sales service functions. In the last six months, EDGE has found a solid foothold in the market, with some of India’s top developers lapping up 1,000+ user licenses.

An ecosystem full stack platform can combine synergies and tap the immense potential

Lianjia’s success reiterates that the value in an all-encompassing, digital strategy and transformation plan for the real estate industry is immense. Real estate is an industry with a long and complex value chain and only when enough of the links in the chain begin to feel affected positively by a domain player, a market leader emerges.

Yes, It’s a 30x differential between China and India markets, and Square Yards still has a long way to go but it is making all the right moves in terms of the market approach, tech adoption, consumer focus and vertical integrations. Will the Indian economy harness demographic dividends and truly rise to emulate China’s growth engine? Today, answers to such questions are at best, guesses but the reason that companies like Square Yards are likely to continue grow is evident on one intrinsic reason – that at their very core, such companies address fundamental questions of how we experience and extract value from real estate, and that may not change for a long time.

Disclaimer: This article has been produced on behalf of Square Yards by Mediawire team.

A $45bn proptech listing on NYSE, most valued housing company in the world, and a parallel in India A $45bn proptech listing on NYSE, most valued housing company in the world, and a parallel in India Reviewed by TechCO on 8/28/2020 Rating: 5

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