360 Pano
Transcript of 360 Pano
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NATIONAL INSTITUTE OF DESIGNINDIAN INSTITUTE OF MANAGEMENT AHMEDABAD
360 Pano
A report submitted to
InstructorProf. Rakesh Basant
Prof. Jignesh KhakharProf. Bhavin Kothari
Prof. Deval
Academic Associate
Vijaya Rajeshwari
In partial fulfillment of the requirements of the course
NTADBM
On15th August, 2012
By
Akhil B
Kushal A
Sanjeev V
Saurabh B
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Contents
Indian Real Estate Industry
Rental Industry
Recent trends in lease rentals
What is 360 Pano ?
Why 360 Pano ?
Technical specifications of the product
Revenue Model
Exhibits
References
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Indian Real Estate Industry
Ever since the liberalization the Indian Real Estate industry has played a very important role in the
Indian economy. The real estate industry has acted as a signal of the growth and prosperity ofseveral regions within the Indian Territory. Currently, the real estate and the construction industryare playing a very crucial role in driving the Indian infrastructure sector forward.
The Indian real estate industry has traditionally being dominated by smaller and unorganizedplayers without access to institution capital. With the growth in the industry this scenario changed
and currently it reflects the consumers expectations of high quality. It is only recently that this
sector began to organize with the advent of larger players like DLF, Phoenix, etc.
Through the years, Real estate industry has shown a phenomenal growth in several regions in
India. There have been several factors responsible for the stupendous growth of the Indian Real
Estate Industry. These are:
1. Continuous growth of population: India has the second highest population in the world and
a robust population growth rate on a large base. India is also a younger demography with
an average in the mid 20s. This continuous growth in population ensures that demand for
real estate always outscores the supply and keeps the industry lucrative.
2. Migration to Urban areas: Owing to the large rural and urban divide in India, more and
more Indians are migrating to the urban areas causing the demand to increase exponentially
in the urban areas.
3. Ample job opportunities in the service sectors: With the rise in the services sector, several
employment opportunities were created leading to a rise in demand for real estate
4. Growing income levels: With the growth in the Indian economy, the purchasing power of
Indians is a lot more than what it was before. With the increase in purchasing power, more
and more Indians are investing in Real estate sector leading to the increase in demand in
this sector.
5. Rise in Nuclear Families: With increasing migration towards the urban areas in search of
better opportunities, more and more Indians are moving away from the joint family culture
and embracing the nuclear family culture. With the rise in nuclear families, the demand for
real estate is also increasing
6. Availability of finance: As the banking sector evolved in India, it also helped the increase
of demand of the real estate industry because of easier availability of finance for thecommon people
Due to the above factors the demand for new houses and real estate has generally increased
faster than the supply leading to a continuous increase in the prices of houses.
Exhibit 1 shows the trajectory of the housing growth in India.
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Due to the gap in supply and demand there is a significant housing shortage created in the
market. Another major reason for the gap in housing is the unorganized nature of the industry.
It is because of this that we also see sharp crests and troughs in the prices of real estate
Exhibit 2 the past and estimated gap in housing the years to come.
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Rental IndustryThe booming of the real estate industry has created several smaller ecosystems operating
within the real estate industry. House rental industry one is such industry. The rental industry
can be split into two parts namely,1. Commercial Rental
2. Residential Rental
Due to Indias economic progress and changes in the business environment, commercial rentalindustry has boomed significantly in the past few years. In the past 10 years, several new hubs for
IT, ITes industry have developed across the country such as, Bangalore, Pune, and Hyderabad.
Residential Rental industry derives its demand from the population growth, population influx and
supply of housing properties. This industry had witnessed a slowdown in the last couple of years
due to global crisis but has not started picking pace again. The residential rental industry whichgrew at 28% CAGR from 2005-08 slowed down to a growth of about 14% during the economic
crisis. The following chart shows the approximate market size of the rental retail market.
Exhibit 3 shows the estimated market size of the retail rental industry. The estimates that the totalretail rental industry would be approximately Rs 27.6 Trillion in size with organized retail
accounting for approximately 7.3% i.e. Rs 2 trillion. We can also note that the industry is more
towards being more organized in the years to come. The percentage contribution of the organizedretail rose through the years from 5.5 percent in 2007-08 to 5.6% in 2009-10 to estimated 7.3% in
2012-13.
Recent trends in lease rentalsOwing to the increasing demand and curtailed supply, the lease rentals had consistently gone upbefore 2008. From 2005 2008, the lease rentals shot up by 95%. But after that, due to the
economic downturn, the lease rentals saw a sharp downfall of around 45%. It is expected that the
lease rentals would correct and begin to grow at a similar pace again. Exhibit 4 shows the above
mentioned trends in lease rentals.
Comparing the lease rentals of top 10 cities during the 2009 2010 economic downturn through
exhibit 5 we can estimate the maximum fall the lease rentals can take when times go really bad.Hence, the western region with the exception of Pune and southern region should see stable growth
in the coming years without any chances of a steep decline. Northern region with the exception of
Chandigarh should also see stable growth.
The rental real estate industry has a great potential of growing with the growth in Indian economy
if the industry becomes more organized and transparent. In order for the industry to get more
organized the need of the hours is to disseminate information from where it rests right now i.e.brokers to the other major stakeholders i.e. tenants and lenders.
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What is 360 Pano?
360 Pano is a mobile application which would help users create walkthroughs of their house. They
would be able to download the application for free and by clicking pictures of their house using ourapplication create a 360 degree panorama of their houses. These walkthroughs can then beuploaded on the internet for other users to browse and access. This software would help users
walk through the entire house from the convenience of their homes without having to physically
go anywhere
Why 360 Pano?
The rental real estate sector is currently extremely unorganized wherein a lot of power rests with
the middle men (brokers). Both landlords and renters have to rely heavily on brokers for lendingand renting houses and are made to pay heavy brokerage fees for the same. Listing sites such as99acres.com and makaan.com, which had made an attempt towards organizing this market and
disseminating information, have not been very effective due to several reasons. The listings on
these sites are at several times outdated and sometimes dont even exist. These sites also list only
the address of the property and no information about the actual house, how the rooms are, howthey look from inside, etc. is not provided. These sites are also cluttered with several
advertisements and make browsing on them difficult. It is because of these reasons that the despite
the presence of technology in the real estate space, people still heavily rely on brokers. Exhibit 6 &7 show the cluttered nature of listings and the excessive advertisements of the listing website
making browsing difficult and an unpleasant experience. Another major problem faced by tenants
is that of high lead time and the physical search time. Through our interviews with several tenantswe estimated that the average lead time to find a house for a tenant is approximately 10 days. Also,
in the current setting if a person wants to rent a house in a different city than the one he is currently
present in, he has to be physically present in that city. The tenant is also not sure whether he isgetting the best price and the best house in that area because he has to heavily depend on the
information given to him by the broker. There are also heavy chances of tenants being taken for a
ride by brokers because of insufficient information.
The current system of leasing also has several problems for a landlord. A landlord currently has to
show his house to several tenants physically causing a great deal of discomfort and inconvenience.
He also has to pay the broker a high brokerage fee which is recurring in nature. He also dependsheavily on the skills of the broker. So if the broker is good only then can he expect to get a good
deal for his house.
360 Pano would also change the routine in which houses are rented in the current system. The
following diagram shows the way in which houses are rented in the current system.
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With 360 Pano we are planning on changing the cycle of renting a house to something simpler and
more convenient
As can be seen from 360 Pano, a prospective tenant would be able to view and shortlist flats
online. He can take a virtual tour of the entire flat while sitting at home and shortlist them.Through our own site rentus.in we would provide the facility of booking the flat online.
For a landlord this would be a great tool to sell his house faster on the net with the inconvenience
of physically showing the house each time.
We estimate that this tool would help reduce the lead time by approximately 5 days.
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Technical specifications of the productThe main product that will be distributed to users(renters) would be an app thatallows the user to use their phone camera to create a 360 degree panorama. This willbe done by turning on the camera feed, capturing images, doing a pattern map at theedges, and stitching the images whenever there is a match.
The app would be available for all popular platforms such as iOS, Android, WindowsPhone, Blackberry.
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Revenue ModelWe would be charging a fee based revenue from the users depending on the number of
walkthroughs. Discounts would also be provided for more number of usages. We have divided the
users into 2 categories Individual house owners and brokers.
Brokers would be given a significant per usage discount compared to individual house owners. We
propose the following fee structure for the next 5 years.
In Thousands 2013 2013 2014 2015 2016 2017
Fee from Individual Flat
Owners per Flat
100 200 250 400 500 700
Fee from Brokers per Flat 50 100 200 500 500 500
Based on these numbers we estimate the following returns
In Thousands 2013 2014 2015 2016 2017 2018
Revenue from flat
owners
INR1,200
INR4,080
INR8,670
INR23,582
INR50,113
INR119,268
Revenue from Brokers INR3,750
INR
9,000
INR
21,600
INR
64,800
INR
77,760
INR
93,312
Operational Costs INR3,465
INR
9,156
INR
21,189
INR
61,868
INR
89,511
INR
148,806
Marketing Costs INR1,300
INR
2,000
INR
4,000
INR
5,000
INR
6,000
INR
6,000
PBT INR185 INR1,924 INR5,081 INR21,515 INR32,362 INR57,774
PAT INR120
INR
1,251
INR
3,303
INR
13,985
INR
21,035
INR
37,553
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Exhibits
Exhibit 1
Source: Crisil Research
Exhibit 2
Exhibit 3
Exhibit 4
Exhibit 5
Exhibit 6
Cluttered nature of the listings on 99acres.com
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Exhibit 7Excessive Advertisements on listing sites
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References1. Indicators of real estate cycle: Implications for India -
http :// www .isb .edu /ICREI/File /RealestateresearchpaperChina .pdf
2. Indias Real estate sector http :// www .cci.in /pdf /surveys _ reports /real-estate -sector -india .pdf
3. India Real Estate Overview Crisil Research
http://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.isb.edu/ICREI/File/RealestateresearchpaperChina.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdfhttp://www.cci.in/pdf/surveys_reports/real-estate-sector-india.pdf