Evolution of India PropTech

Over the last two and a half decades, advancement in technology has majorly transformed the real estate landscape just as it has revolutionised every other industry. By disrupting a linear, conventional and primitive real estate value chain in more ways than one, technology has created a robust ecosystem that eliminates the previous methods and models, giving rise to the tech enabled way of conducting real estate business and consuming real estate assets.

Exponential influence that technology continues to have on the real estate sector makes it a significant marker benefitting both buyers and sellers in the way properties are marketed, sold and assets are managed. The Indian real estate sector is expected to grow from $477 billion in 2023 to $5.8 trillion by 2047, according to a Naredco-Knight Frank report. The report also highlights the increase in private equity investments that are projected to rise to $54 billion, which would translate into a CAGR of 9.5 per cent between 2023 and 2047.

Waves of PropTech

Today, technology has led to the advent of a more focused area in real estate known as PropTech. Driven by factors that are distinctive of the real estate industry, PropTech has grown due to the real problems that it solves in the physical world. A variety of PropTech companies are being established that span across various segments such as real estate Customer Experience, CRM, Sales and Marketing, Construction Tech, Co-Living, Coworking, Property Management, Mortgage, Investments, Data analytics, Home services and Furniture space.

The evolution of the phenomenon called PropTech can be categorised into three broad waves:

• PropTech 1.0:

The first movers of tech adoption in real estate in 2000s riding on the back of dot.com boom, rise of personal computers and real estate boom. 

• PropTech 2.0:

The Internet penetration and digital adoption in the decade of 2010 saw multitude of PropTech startups coming to the fore across construction marketplace, shared spaces, digital marketing, CRM, furniture rentals and others.

• PropTech 3.0:

The advent of AI at the start of 2020 decade has placed at a pivotal point in its disruption journey with advent of generative AI and MetaVerse.

Let us delve deeper and have a brief look at each of these waves that have majorly contributed to the evolution of the PropTech industry and promise an even brighter future. The analysis is across technology trends in real estate enterprises and consumers.

PropTech 1.0:The first wave of property technology emerged in the 2000s and was characterised by the growth of online property listing websites. Then, the use of personal computers for real estate purposes was on the rise and the establishment of property analytics was considered the new promising venture. Real estate agencies started to adopt the online approach driving significant changes in the industry. It translated to increased efficiency, a major shift in how owners commoditised their assets and luring greater market share for early adopters. The real estate sector, which was characterised by its staunch linear approach to operations, gradually embraced technology albeit reluctantly. Real estate design development changed dramatically, with adoption of AutoCad and 3D modelling softwares for building designs. Real Estate had just commenced its journey of digital transformation.

Key players in this period were , real estate fintech, blockchain and data-driven analysis.

PropTech 2.0: The second wave of property technology was marked by the influx of online marketing. Listing moved to marketing, with real estate brands wanting to market themselves on digital media talking directly to their consumers. The popularity of technology innovations that offered more customer-experience focussed solutions was on the rise with real estate marketplaces and customer relationship management software gaining momentum.

With institutional capital pouring into the real estate sectors, enterprise resource planning software saw increased adoption among real estate developers. Building modelling and construction planning software were ubiquitous. Property management also underwent a transformation with proliferation of Building management systems and Internet of Things. Augmented Reality and Virtual Reality also saw adoption amongst enterprises and consumers alike.

The key factors that distinguish this wave from PropTech 1.0 are factors like shared economy and more asset classes getting listed and marketed on marketplaces. This wave lays more focus on leveraging technology to gain and provide better insights, facilitate the use of property through technological platforms and create better; faster and cheaper ways to buy and sell property. This transformed how buyers, sellers, real estate professionals and banks managed property transactions. Representing a significant change PropTech 2.0, transformed beyond discovery into property sale, management, and utilisation.

PropTech 3.0: The decade of 2020 presents the largest wave of tech led innovation in the real estate sector.

Three primary trends in the present decade. Real estate enterprises are omnipresent on digital media for brand communication and product sale across Tier I, II and III cities. From listing and marketing, tech has now enabled online fulfilment of real estate transactions. Chatbots, generative AI and Machine Learning defined enhanced consumer interface and interaction across all communication channels. Real Estate distribution networks are on digital channels for project sales with increased velocity. Enterprise resource planning softwares are laced with advanced data analytics tools and marketplaces for supply chain conversion.

The most significant change is enabling transparency of transactions through data analytics and blockchain technology. Land records, property transactions and consumer profiles can be now vetted and validated with records stored on blockchain.

There is a paradigm shift seen in property financing with regulated play of fractional ownership that will go on to decrease the real estate investment size, increase the velocity of property financing and provide access to better quality real estate assets for investments.

As we stand in 2024, on the cusp of another revolution backed by generative AI, Languange learning models and deep tech.

In 2024, we are in the third wave of PropTech evolution that originated in 2000s . Technology, is not just bringing change to this sector not in years or quarters or months, but by the day. The behaviour of enterprises, consumers and also the real estate asset is set to undergo a incremental change as we move ahead in this decade. Only those who can adopt and change will be able to build and unlock value in this drastically transforming and exponentially increasing India Real Estate Sector.