Vivek Agarwal is the Co-founder and Principal Partner at Square Yards, a leading Indian technology-enabled online to offline transaction and distribution platform for primary real estate.
Since its launch four years ago, Square Yards has expanded to over 2000 employees, has a presence in 42 Indian cities, completes 1,000+ real estate transactions and another 600+ of loan transactions each month, and claims to have an annual revenue run rate of USD 30 million.
PPW spoke with Agarwal to uncover the secret behind the platform's success.
Why was Square Yards founded?
Square Yards was founded in October 2013 by Tanuj Shori, a capital market professional and IIM Lucknow alumnus, and Kanika Gupta, a wealth manager, who were based in Hong Kong at that time. The husband-wife duo spotted a huge opportunity in Non Resident Indians (NRIs) who want to invest in Indian real estate but who neither get access to unbiased information to do research prior to making an investment decision, or get the requisite support & post transaction services.
Our mission is to deliver superior real estate transaction experience across the globe by building the finest and the largest tech-led distribution network. We aim to bring about a complete transformation of the entire value chain in the real estate discovery and transactional space. We also believe that real estate is an under rated investment product. Even though ~40-50% of wallet size globally goes into real estate, it is still predominantly looked as an end use and emotional decision. We started off with the belief that real estate is the most significant investment decision one makes in their lives. However, because of lack of adequate information and investment-lead research points, many potential investors desist from making investments internationally or are unable to look at property from a risk-reward perspective.
How does the platform work?
Square Yards is a technology-enabled O2O (online to offline) transaction and distribution platform for primary real estate. It markets & sells properties of Grade-A property developers to home buyers and investors across the globe. For every property transaction, it charges a commission (ranging from 2% to 10% of the property value) from the developer and its services are absolutely free for the customers. Similarly for mortgages, it charges the partner lending bank a commission on the value of loan disbursed.
We have pioneered the Online to Offline (O2O) commerce for real estate customer acquisition and service delivery. Our web portal offers deep research, data driven insights and unmatched decision tools that help investors zero in on a location or project. The offline channel sets up a meeting with the customer, assists in property research, coordinates site visits, helps in evaluating options and inventory selection, finally closing the deal with the developer. The in-house mortgage team then steps in to provide loan advisory and documentation facilitation and post sales, the client is assigned a dedicated relationship manager to assist in payments, builder-buyer documentation, and concierge services eventually hand-holding the customer till property possession. This brings unprecedented transparency in the entire ecosystem while delivering best-in-class user experience.
Is it easy to expand across the property value chain in India? How has Square Yards achieved this?
Unlike other classified and listing-based real estate portals that are just focused on initial property research, we differentiate ourselves by offering 360 degree services & superior experience during the entire property buying journey – from initial online search to deep on-ground research & site visits to final transaction closure and also extending to facilitating mortgage, personalized post sales services & portfolio management.
Monetization opportunity in the classified segment in India is very low (market size ~ $125mn) but it had attracted a disproportionate share of investments in the last few years. This space consequently got overheated and witnessed a wave of consolidation activity. On the other hand, the transactions brokerage segment is the largest segment of the market with an addressable market size of USD 3.7Bn growing at 16% CAGR.
In spite of being the largest player by revenues & transactions, we command just 2% market share in this segment. This goes on to show the size of the opportunity we have and the fact that we are just scratching the surface right now. Globally as well, transaction players have grown faster to become much larger in size compared to listing platforms. For example, Lianjia in China – a similar player to us - has grown to USD 6.2Bn of valuation much ahead of its listing platform peers in China.
Square Yards began four years ago with 3 employees and there are now over 2000. How has it grown so quickly?
We have never shied away from hiring good sales leaders who can build and manage large teams. Aggression is impressive and much needed in an organization that is growing as fast as ours. But the overarching ambition has always been to create a concept so disruptive that it alters the very paradigm on which traditional structures and systems work.
We went aggressive towards scale and diversification - setting up operations in major Indian and NRI cities and in just a span of 4 years, we have been able to consolidate largest market share in the Indian primary residential market. Besides creating an organization with stable and strong processes - 2000 employees and a presence in 42 cities across 10 countries - we enjoy an annualized revenue run rate of ~USD30million, with ~1500+ transactions per month. To add to its pole position in real estate aggregation, we are also one of the largest mortgage distributors in India, with monthly loan disbursals worth USD40-50mn.
What do you think has made Square Yards such a success?
While many business ideas may be alike, we believe what sets the business apart from the rest of the pack is execution and the people behind that execution. Another cornerstone of our success is the fact that we have managed to maintain a fine balance between profitability and growth by being flexible and dynamic with our business model. With our capability across 10 countries, and significant and innovative use of technology, we are positioning ourselves to lead efforts on global real estate investments. Most of the global aggregators are localized players, which gives us tremendous opportunity to be innovative and disruptive in our offering and capture market and mind share.
Were there many direct competitors to Square Yards before it launched?
Yes, there were existing competitors before we launched but none of them could scale up to an international level. Our superior execution capabilities have helped us to become the biggest player in the primary residential market surpassing many others who came before us.
Do you have other information you would like to share with our readers?
Apart from continuing focus on Indian real estate, which should remain a lion’s opportunity (with 10x growth plans over 2 years), Square Yards is investing aggressively into international real estate, which is one of the fastest growing and most profitable segment of the business. It is currently building an international agency network of certified agents on a multi-level revenue sharing model. Square Yards would gradually expand to 25+ international markets to fulfill its vision of becoming the largest global aggregator of primary real estate.