Real Estate Agency
The Definitive Guide
This is a complete guide to Real Estate Agency in 2024.
In this new guide you’ll learn:
- How to Start Real Estate Agencies
- A to Z About Real Estate Agency
- Lots More
Let’s get started.
Contents
1. Real Estate Industry Overview
1. Real Estate Industry Overview
1. Real Estate Industry Overview
1. Real Estate Industry Overview
1. Real Estate Industry Overview
1. Real Estate Industry Overview
1. Real Estate Industry Overview
1. Real Estate Industry Overview
Chapter 1
Real Estate Industry Overview
In this chapter I’ll answer the question:
- Real Estate Introduction
- Real Estate Market Size
- Real Estate Investments & Developments
- Real Estate Government Initiatives
Let’s get started.
Real Estate Introduction
The real estate sector is one of the most globally recognized sectors.
It comprises of four sub-sectors – housing, retail, hospitality, and commercial.
The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation.
The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.
In India, the real estate sector is the second-highest employment generator, after the agriculture sector.
It was also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term.
Bengaluru was expected to be the most favored property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.
Real Estate Market Size
By 2040, real estate market will grow to Rs. 65,000 crore (US$ 9.30 billion) from Rs. 12,000 crore (US$ 1.72 billion) in 2019.
Real estate sector in India is expected to reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021 and contribute 13% to the country’s GDP by 2025.
Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for India’s growing needs.
India’s real estate sector is expected to expand to US$ 5.8 trillion by 2047, contributing 15.5% to the GDP from an existing share of 7.3%.
In FY23, India’s residential property market witnessed with the value of home sales reaching an all-time high of Rs. 3.47 lakh crore (US$ 42 billion), marking a robust 48% year-on-year increase. The volume of sales also exhibited a strong growth trajectory, with a 36% rise to 379,095 units sold.
Indian real estate developers operating in the country’s major urban centres are poised to achieve a significant feat in 2023, with the completion of approximately 558,000 homes.
India’s real estate sector saw over 1,700 acres of land deals in top eight cities in the first nine months of FY22. Foreign investments in the commercial real estate sector were at US$ 10.3 billion from 2017-2021. As of February 2022, Developers expected demand for office spaces in SEZs to shoot up after the replacement of the existing SEZs act.
As per ICRA estimates, Indian firms were expected to raise >Rs. 3.5 trillion (US$ 48 billion) through infrastructure and real estate investment trusts in 2022, as compared with raised funds worth US$ 29 billion to date.
The office market in the top eight cities recorded transactions of 22.2 msf from July 2020 to December 2020, whereas new completions were recorded at 17.2 msf in the same period. In terms of share of sectoral occupiers, Information Technology (IT/ITeS) sector dominated with a 41% share in the second half of 2020, followed by BSFI and Manufacturing sectors with 16% each, while Other Services and Co-working sectors recorded 17% and 10%, respectively.
Around 40 million square feet were delivered in India in 2021. It is expected that the country will have a 40% market share in the next 2-3 years. India was expected to deliver 46 million square feet in 2022.
According to Savills India, real estate demand for data centres is expected to increase by 15-18 million sq. ft. by 2025.
In 2020, the manufacturing sector accounted for 24% of office space leasing at 5.7 million square feet. SMEs and electronic component manufacturers leased the most between Pune, Chennai and Delhi NCR, followed by auto sector leasing in Chennai, Ahmedabad and Pune. The 3PL, e-commerce and retail segments accounted for 34%, 26% and 9% of office space leases, respectively. Of the total PE investments in real estate in Q4 FY21, the office segment attracted 71% share, followed by retail at 15% and residential and warehousing with 7% each.
In 2022, office absorption in the top seven cities stood at 38.25 million Sq. ft.
In the first quarter of 2023 (January-March), net office absorption in the top six cities stood at 8.3 million sq. ft.
Fresh real estate launches across India’s top seven cities grabbed a 41% share in the first quarter of 2023 (January-March), marking an increase from the 26% recorded in the same period four years ago. Out of approximately 1.14 lakh units sold across the top seven cities in the first quarter of 2023, over 41% were fresh launches.
In the third quarter of 2021 (between July 2021-September 2021), new housing supply stood at ~65,211 units, increased by 228% YoY across the top eight cities compared with ~19,865 units launched in the third quarter of 2020.
In 2021-22, the commercial space was expected to record increasing investments. For instance, in October 2021, Chintels Group announced to invest Rs. 400 crore (US$ 53.47 million) to build a new commercial project in Gurugram, covering a 9.28 lakh square feet area. The transactions of commercial real estate doubled and reached 1.5 million sq. ft. in Q1 of 2023.
According to the Economic Times Housing Finance Summit, about three houses are built per 1,000 people per year compared with the required construction rate of five houses per 1,000 population. The current shortage of housing in urban areas is estimated to be ~10 million units. An additional 25 million units of affordable housing are required by 2030 to meet the growth in the country’s urban population.
INVESTMENTS/DEVELOPMENTS
Indian real estate sector has witnessed high growth in the recent times with rise in demand for office as well as residential spaces.
The Private Equity Investments in India’s real estate sector, stood at US$ 4.2 billion in 2023.
The Private Equity Investments in India’s real estate sector, stood at US$ 3.4 billion in 2022.
India’s real estate sector saw a three-fold increase in foreign institutional inflows, worth US$ 26.6 billion during 2017-2022.
Exports from SEZs reached Rs. 7.96 lakh crore (US$ 113.0 billion) in FY20 and grew ~13.6% from Rs. 7.1 lakh crore (US$ 100.3 billion) in FY19.
In July 2021, the Securities and Exchange Board of India lowered the minimum application value for Real Estate Investment Trusts from Rs. 50,000 (US$ 685.28) to Rs. 10,000-15,000 (US$ 137.06 – US$ 205.59) to make the market more accessible to small and retail investors.
FDI in the sector (including construction development & activities) stood at US$ 56.03 billion from April 2000-March 2023.
Some of the major investments and developments in this sector are as follows:
- The sale of luxury homes in India increased by 130% in the first half of 2023 compared to the corresponding period of the previous year. Between January-June 2023, 6,900 luxury homes costing Rs. 4 crore (US$ 488,011.96) and above were sold, as opposed to 3,000 in 2022.
- In India’s top eight cities, housing prices rose 7% year-over-year due to strong housing demand supported by persistent purchaser demand and steady borrowing rates.
- The Indian real estate sector witnessed strong private equity (PE) investments of US$ 1.92 billion in Q2 of 2023, demonstrating investor confidence in the market. According to the most recent Investment report from Cushman & Wakefield, this was 63% higher than the previous quarter (Q1 of 2023) and 60% higher than the same time last year.
- In July 2023, Delhi-NCR emerged as the third biggest city in the Asia Pacific in having flexible office space stock beating Beijing and Seoul, while Bengaluru retained the top spot, according to real estate consultant CBRE.
- Transactions for office spaces in April-June 2023, which totalled 14.8 million square feet, represented the highest quarterly figure recorded since Q1 2021.
- During the first half of 2023, institutional investments in the office sector increased by 2.5 times year-on-year, reaching US$ 2.7 million.
- In FY23, Delhi-NCR received 32% of the total private equity (PE) investment in the real estate sector.
- Sales in the luxury residential market scaled by 151% year-over-year (y-o-y) in the quarter from January-March, 2023.
- Housing sales in top seven Indian cities stood at 1.14 lakh units in Q1 of 2023, an increase of over 99,500 units compared to the same period of 2022.
- In Q1 of 2023, Bengaluru, Delhi-NCR and Chennai together accounted for two-thirds of quarterly demand. At 27%, flexible workspace was the biggest contributor to demand.
- As of June 5, 2023, 119.7 lakh houses have been sanctioned and 74.75 houses have been completed and delivered to urban poor under the Pradhan Mantri Awas Yojana-Urban (PMAY-U).
- Between January-July 2022, private equity investment inflows into the real estate sector in India stood at US$ 3.27 billion.
- Home sales across top eight cities in India surged 68% YoY to reach ~308,940 units in 2022, signifying a healthy recovery in the sector.
- Retail real estate segment attracted institutional investments of US$ 492 million in 2022.
- In the third quarter of 2021, the Institutional real estate investment in India increased by 7% YoY. Investment registered in the first nine months of 2021 stood at US$ 2,977 million, as against US$ 1,534 million in the same period last year.
- In November 2021, Ascendas India bought Aurum Ventures’ 16-storey commercial tower in Navi Mumbai for Rs. 353 crore (US$ 47 million), making it the largest deal of a standalone commercial tower by a global institutional investor during the past few years.
- REA India-owned online real estate company Housing.com tied up with online legal assistance start-ups LegalKart, Lawrato, Vidhikarya and Vakil in 2021 to offer legal advice and assistance to homebuyers.
- Top three cities—Mumbai (~39%), NCR-Delhi (~19%) and Bengaluru (~19%)—attracted ~77% of the total investments recorded in the third quarter of 2021.
- India’s flexible space stock was likely to expand by 10-15% YoY, from the current 36 million sq. ft., in the next three years, according to a report by CBRE.
- To establish an investment platform for the Indian retail-led mixed-use assets, in June 2021, GIC announced to acquire a minority stake in Phoenix Mills’ portfolio (worth US$ 733 million).
- In May 2021, Blackstone Real Estate acquired Embassy Industrial Parks for Rs. 5,250 crore (US$ 716.49 million) to expand its presence in the country.
- To expand into the Indian real estate market, SRAM & MRAM Group collaborated with Area CAS Developers and Infrastructure Private Limited (Area Group), and Gupta Builders and Promoters Private Limited (GBP Group) of India. It plans to invest US$ 100 million in the real estate sector.
- According to Anarock, housing sales in seven cities increased by 29% and new launches by 51% in Q4 FY21 over Q4 FY20.
- Private market investor, Blackstone, which has significantly invested in the Indian real estate sector (worth Rs. 3.8 lakh crore (US$ 50 billion) is seeking to invest an additional Rs. 1.7 lakh crore (US$ 22 billion) by 2030.
- In 2021, working remotely was being adopted at a fast pace and demand for affordable houses with ticket size below Rs. 40-50 lakh was expected to rise in Tier 2 and 3 cities, leading to an increase in prices in those geographies.
- In April 2021, HDFC Capital Advisors (HDFC Capital) partnered with Cerberus Capital Management (Cerberus) to create a platform that will focus on high-yield opportunities in the residential real estate sector in India. The platform seeks to purchase inventory and provide last-mile funding for under construction residential projects across the country.
- In March 2021, Godrej Properties announced it would launch 10 new real estate projects in Q4.
- In March 2021, Godrej Properties increased its equity stake in Godrej Realty from 51% to 100% by acquiring equity shares from HDFC Venture Trustee Company.
- In January 2021, SOBHA Limited’s wholly owned subsidiary, Sabha Highrise Ventures Pvt. Ltd. acquired 100% share in Annalakshmi Land Developers Pvt. Ltd.
GOVERNMENT INITIATIVES
Government of India along with the governments of respective States has taken several initiatives to encourage development in the sector. The Smart City Project, with a plan to build 100 smart cities, is a prime opportunity for real estate companies. Below are some of the other major Government initiatives:
- In the Union Budget 2023-24, the Finance Ministry announced a commitment of Rs. 79,000 crore (US$ 9.64 billion) for PM Awas Yojana, which represents a 66% increase compared to the last year.
- In October 2021, the RBI announced to keep benchmark interest rate unchanged at 4%, giving a major boost to the real estate sector in the country. The low home loan interest rates regime was expected to drive the housing demand and increase sales by 35-40% in the festive season in 2021.
- Under Union Budget 2021-22, tax deduction up to Rs. 1.5 lakh (US$ 2069.89) on interest on housing loan, and tax holiday for affordable housing projects have been extended until the end of fiscal 2021-22.
- The Atmanirbhar Bharat 3.0 package announced by Finance Minister Mrs. Nirmala Sitharaman in November 2020 included income tax relief measures for real estate developers and homebuyers for primary purchase/sale of residential units of value (up to Rs. 2 crore (US$ 271,450.60) from November 12, 2020 to June 30, 2021).
- In order to revive around 1,600 stalled housing projects across top cities in the country, the Union Cabinet approved the setting up of Rs. 25,000 crore (US$ 3.58 billion) alternative investment fund (AIF).
- Government created an Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an initial corpus of Rs. 10,000 crore (US$ 1.43 billion) using priority sector lending short fall of banks/financial institutions for micro financing of the HFCs.
- As of December 31, 2022, India had formally approved 425 SEZs, and as of January, 2023, 270 SEZs are operational. Most special economic zones (SEZs) are in the IT/ BPM sector.
Is Real Estate A Profitable Business?
Real estate has traditionally been viewed as a highly profitable venture. It offers various pathways to profitability, whether through long-term rental income, short-term property flipping, or large-scale development projects. However, success in the real estate business requires strategic planning, market understanding, and the ability to adapt to changing market conditions.
10 Steps To Start A Real Estate Business
1. Market Research and Niche Selection
The first step in starting a real estate business is conducting thorough market research. This involves understanding the latest trends, identifying potential niches, and analyzing demographic data to determine where the best opportunities lie. Whether your interest lies in commercial real estate, residential properties, or a specific type of investment like fixer-uppers, choosing the right niche is crucial. It’s about understanding where you can add the most value and what type of real estate business aligns with your skills and resources.
2. Crafting a Comprehensive Business Plan
A detailed business plan is your blueprint for success. It should outline your business goals, target market, financial projections, marketing strategy, and operational plans. This plan will not only guide your initial steps but also help attract investors or secure financing. It should be a living document, adaptable to changes in the market or your business.
3. Legal Setup and Compliance
Setting up your business legally is critical. This includes selecting the right business structure, such as an LLC or corporation, which can impact your taxes and liability. Ensure that you obtain all necessary licenses and permits and understand the real estate laws and regulations in your area. Compliance is key to building a sustainable and reputable real estate business.
4. Financing Your Business
Securing the necessary funding is one of the most challenging aspects of starting a real estate business. This may involve tapping into personal savings, obtaining a bank loan, or finding investors. Understanding your financial needs and options is essential, as is a solid budgeting plan that accounts for both expected and unexpected expenses.
5. Building Your Brand and Online Presence
In today’s digital age, having a strong brand and online presence is crucial. This involves creating a professional website, engaging in social media marketing, and possibly running online advertisements. Your brand should reflect the values and mission of your real estate business, and your online presence should make it easy for potential clients and partners to find and interact with you.
6. Networking and Relationship Building
The real estate industry is built on relationships. Networking with other real estate professionals, potential clients, and investors is essential. Attend industry events, join real estate forums, and consider partnering with other businesses. Building strong relationships can lead to new opportunities and referrals.
7. Property Acquisition
Acquiring the right properties is the heart of your real estate business. This involves not just finding properties but also assessing their potential for profit, whether through rental income, resale, or development. It requires a good understanding of the market, negotiation skills, and an eye for properties that offer good value.
8. Effective Marketing and Sales Techniques
Marketing your properties effectively is key to your success. This could involve a variety of strategies, from digital marketing campaigns to traditional advertising and hosting open houses. Understanding your target audience and how to reach them is crucial. Sales skills are also important, as you’ll need to negotiate deals and close sales effectively.
9. Managing Properties and Client Relations
If your real estate business involves property management, doing this efficiently is essential. This includes regular maintenance, dealing with tenants, and ensuring a steady income flow from your properties. Good client relations are also crucial; satisfied clients are more likely to provide repeat business and referrals.
10. Growth and Expansion
Lastly, consider how you’ll grow and expand your real estate business. This could involve diversifying into different types of real estate, expanding into new geographic areas, or scaling up your investments. Continuous learning and adapting to market changes are vital for long-term success.
Top 5 Benefits of A Real Estate Business
Steady Income Stream: One of the most attractive aspects of a real estate business is the potential for a consistent and steady income, primarily through rentals. This can provide financial stability and a cushion against market fluctuations.
Property Value Appreciation: Over time, real estate typically appreciates in value. This long-term appreciation can result in significant profit when properties are sold.
Tax Advantages: Real estate investors benefit from various tax deductions, including depreciation, mortgage interest, and property tax deductions, which can significantly reduce tax liability.
Diversification of Investment Portfolio: Investing in real estate is an excellent way to diversify your investment portfolio, reducing risk and improving overall financial health.
Inflation Hedging: Real estate is often considered a hedge against inflation. As living costs rise, so do rental incomes and property values, helping to protect your purchasing power.
Common Mistakes To Avoid
Underestimating Costs:. One of the biggest mistakes in real estate is underestimating the costs associated with purchasing, renovating, and maintaining properties. Accurate budgeting is crucial.
Overlooking Market Research: Failing to conduct thorough market research can lead to poor investment decisions. Understanding the market is key to identifying profitable opportunities.
Neglecting Legal and Tax Aspects: Ignoring the legal and tax implications of real estate transactions can lead to significant issues. Ensure compliance and take advantage of available tax benefits.
Poor Property Management: Ineffective property management can result in high vacancy rates and low profitability. Effective management is vital for maintaining property value and income.
Failing to Plan for Scaling:. Without a clear plan for growth, expanding your real estate business can be challenging. Strategic planning helps in scaling your business successfully.
Best Ideas for Real Estate Businesses
We’ve compiled a list of 15 great real estate business ideas to get you started. Whether you’re a seasoned real estate professional or new to the real estate industry, you’re sure to find something that piques your interest.
1. Real Estate Agent
A real estate agent is someone who helps people buy and sell houses. The selling process can be complicated, and a good agent will guide their clients through every step of the process. We won’t discuss how much money do real estate agents make in this article, but it’s a lucrative market, and good real estate agents can make a lot of money.
2. Real Estate Photographer
This profession can be a lot of fun. It’s a great way to meet new people and see new places. And, of course, it’s always exciting to see your photos in print.
3. Manage Rental Properties
This idea involves managing houses like single-family homes, apartments, or other renting properties. It’s a great career for someone who enjoys working with people and helping them solve problems.
4. Commercial Property Management
There are always businesses looking for someone to manage their commercial properties. This can be a very challenging and rewarding career for someone with good managerial skills.
5. Real Estate Investor
Many people think that being a real estate investor is all about making a quick buck. The reality is that many real estate investors are in it for the long haul. They’re looking at purchasing properties that will generate passive income and appreciate over time.
6. Real Estate Brokerage
This is a real estate company that helps people buy and sell properties. This can be a very profitable business, but it’s important to have a good understanding of the housing market.
7. Real Estate Marketer
A real estate marketer is someone who creates and implements marketing plans for a property listing. They work with agents and clients to create a strategy that will generate the most interest in a property.
Read More: 30 Real Estate Marketing Tips
8. Real Estate Appraisal Service
Appraisal service is a business that provides appraisals of real estate properties. These appraisals are used to help people determine the value of a property for a variety of reasons, such as insurance purposes or to estimate taxes.
9. Property Flipping Business
Investors who are successful in this business can make a lot of money by buying low and selling high. Since you don’t need a lot of money to get started, flipping is a great way to get into the real estate market.
10. Real Estate Developers
Real estate developers buy land to develop it into something else such as a new housing subdivision or a shopping mall. Many developers specialize in raw land, which is undeveloped land that has not yet been built on.
11. Real Estate Blog
Not only will you be able to generate income through advertising and affiliate marketing, but you’ll also build your social media presence. This is a great way to get your name out there and attract new clients.
Read More: 30 Worpress Real Estate Themes for Realtors
12. Real Estate Inspections
Real estate inspection businesses are in high demand. They ensure that the buyer is getting what they paid for and that the seller is disclosing any and all information about the property.
13. Landscaping Business
These businesses offer services related to the design and maintenance of outdoor spaces. This includes anything from planting trees and shrubs to mowing lawns and installing irrigation systems.
14. Cleaning Service
This business provides cleaning services to its clients. This can include anything from cleaning houses to office buildings. It’s a great business for someone who is organized and enjoys working with people.
15. Home Staging Service
Starting a home staging service can be a great way to make some extra money, but it’s also a very fulfilling way to work. Home staging is all about making a house look as appealing as possible to potential buyers. This can be done by rearranging furniture, adding in accessories, or even painting the walls a different color.
Real Estate Business Ideas Summary
| Types of Real Estate Business | Description |
|---|---|
| Real Estate Agent | Facilitates property buying and selling, acting as a mediator between buyers and sellers. |
| Real Estate Photographer | Captures high-quality images of properties for listings to attract potential buyers. |
| Manage Rental Properties | Oversees and manages properties on behalf of owners, ensuring they are maintained, occupied, and profitable. |
| Commercial Property Management | Manages commercial properties, ensuring they meet the requirements and standards for businesses. |
| Real Estate Investor | Buys properties with the goal of earning a return on the investment either through rental income, future resale, or both. |
| Real Estate Brokerage | A firm or individual facilitating the sale of real estate. They bring buyers and sellers together and act as their representatives. |
| Real Estate Marketer | Specializes in promoting real estate properties through various advertising and promotional strategies. |
| Real Estate Appraisal Service | Evaluates the value of a property, typically for purchase, sale, mortgage, or taxation purposes. |
| Property Flipping Business | Involves purchasing undervalued properties and reselling them at a profit after making necessary renovations and improvements. |
| Real Estate Developers | Buys land and constructs buildings or modifies existing ones for better utility and value. |
| Real Estate Blog | Provides content related to the real estate market, offering insights, news, and tips for buyers, sellers, and agents. |
| Real Estate Inspections | Reviews and assesses the condition of properties, ensuring they meet certain standards and criteria before a sale or purchase. |
| Landscaping Business | Enhances and maintains the aesthetic appeal of outdoor property spaces. |
| Cleaning Service | Offers specialized cleaning services for properties, ensuring they’re presentable for viewings or after a move. |
| Home Staging Service | Furnishes and decorates properties to make them more appealing to potential buyers. |
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