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Indian PropTech The USD 100 Billion Opportunity

15 Feb 2024
Indian PropTech The USD 100 Billion Opportunity

Like a ship anchored to a familiar port, and hesitant to venture into new waters, India’s real estate sector too has remained fixated on traditional or legacy modes of operations for far too long. It now sits on the cusp of dramatic technological change, thanks to the debilitating impact of COVID-19, accelerated digital adoption and changing consumer behaviour. The global pandemic has cracked open the industry’s pain points, forcing market leaders to step up tech adoption to levels not witnessed before. The transformation in the country’s real estate landscape due to the application of new best practices has not only made businesses unrecognisable from their former avatar but also contributed to building up efficiencies and scale.

The stage is therefore set for the overall Indian real estate market to grow to $1 trillion by 2030, from $200 billion in 2021. Amidst the ongoing upheaval, proptech or property technology, a subset of the industry, has emerged. Market reports show that Indian PropTech startup firms garnered more than $3.2 billion in funding across 255 deals between 2009 and 2021, underlining the huge success of the nationwide startup ecosystem initiated in 2015. Not only has there been a rise in the number of PropTech startups – from two in 2016 it has skyrocketed to an impressive 1,400 in 2022 – but substantial funding has been secured for such ventures pointing to growing investor confidence. Customer focus on increasing convenience, smart city initiatives, and the growth of the rental market is expected to further propel expansion of this sector.

PropTech: The Savior!

The growth of PropTech, which is essentially a marriage of property with technology, has led to critical real estate sector issues such as lack of transparency and trust. Adoption of PropTech is echoed across the entire real estate value chain including discovery, transaction, fulfilment, and utilisation. According to a report, more than 75% Buyers use digital channels to search homes, about 50% homebuyers use virtual tours before buying a property, 70% share of sales & marketing budget spent on digital strategies, 44% real estate agents use automated tools for lead generation and customer relationship management.

In my view, the Midas Touch of digitisation and technology has significantly changed the face of the real estate industry, impacting the business operations of every stakeholder, including tenants, developers, brokers, and investors.

Key categories of PropTech

PropTech solutions are making an impact on rentals, distribution business and capital allocation. It impacts key stakeholders of developers, financers, channel partners, buyers, renters and property managers.

PropTech 2030 will be a USD 100 billion opportunity emerging from solutioning of challenges and opportunities across these key stakeholders. It will encompass Construction Tech, Sales and marketing, Family rentals, Co-living, Co-working, Home services, Capital allocation and Land. The opportunity for PropTech in rental real estate stands at USD 14 billion which includes family rentals, co-living, co-working, home services and property management. The distribution of real estate will be a USD 23 billion and include sales and marketing, broker aggregation, CRM and lead generation businesses. The opportunity for capital stands at USD 4 billion including fractional ownership, neo reality investments, and loan recommendation services.

Emerging Tech

Continuing technological advancements have revolutionised and reshaped the nature of real estate operations and interaction with customers. This is reflected in improved transparency, efficiency, and empowerment of buyers and investors.

It would be useful to look at the principal benefits of applying some of the solutions:

  • Improved discovery:
  • Digital transformation is facilitating the creation of online real estate marketplaces, connecting buyers, sellers, landlords, and tenants in real-time, making transactions faster, efficient, and location independent.
  • Convenience of online tours:
  • The use of Virtual Reality (VR) and Augmented Reality (AR) technology has ushered in the convenience of showcasing properties online for customers who cannot be physically present to view them. These apps not just help buyers take virtual tours of potential real estate from the comfort of homes but are embedded with features that allow for space visualisation and interior designing by overlaying digital information onto physical spaces.
  • Personal real estate assistant at your service:
  • Chatbots, which make use of AI-powered algorithms, further contribute to user convenience and experience by providing prompt responses and facilitating effective property searches. Personalised property recommendations based on customer preferences, budget, and location ensure customers can see properties that align with their specific needs.
  • It is all about making informed decisions:
  • The use of Big Data and predictive analysis offer insights into property values and investment opportunities, thus empowering buyers and investors to make informed decisions.
  • Sustainability is the new black:
  • There is growing public empathy about reducing carbon emissions for a green future, and PropTech fosters sustainability through various tools, which assess property health. Homes and offices are becoming smart with IoT-enabled devices enabling automation, energy efficiency, and security.
  • Ease of managing transactions:
  • Real estate transactions can be quite a tedious and overwhelming experience both for buyers and sellers leading some to become averse to going through the entire process. Blockchain technology streamlines property transactions by providing a secure and transparent platform for recording property ownership, managing contracts, and facilitating peer-to-peer transactions.
  • Improved network:
  • Digital transformation is facilitating the creation of online real estate marketplaces, connecting buyers, sellers, landlords, and tenants in real-time, making transactions faster, efficient, and location independent.
  • Construction technology:
  • These are exciting times for the real estate sector with constructors deploying various tools to raise the efficiency bar of projects. These include drones deployed to monitor construction, 3D Printing, aluminium formwork, and other technologies incorporated.

    Challenges and Opportunities for Businesses

    While PropTech holds immense prospects for India, the real estate industry has been found to move at a snail’s pace. If businesses are laggard at present, it largely owes to resistance from stakeholders hesitant to embrace digital innovations. Further, the sensitivity of customer data exposes market players to vulnerabilities, making the presence of robust data privacy and security measures crucial to establish customer trust. The other limitations include the high initial investments required for technology development. The collaboration gap between traditional real estate players and PropTech startups serves to stonewall the growth of PropTech businesses.

    Under the leadership of Hon' Prime Minister Shri Narendra Modi, India witnessed major policy push across four key areas, including the digitization of land records and real estate transactions under the Digital India Land Record Modernisation Programme (DILRMP), transparency in real estate transactions under demonetization and Goods and Services Tax implementation , regulation of real estate development and licensing of service providers under RERA (Regulation and Development) Act, 2016), and reforms of the rent control act under the Model Tenancy Act 2021. As a result of this and increased confidence on the Indian leadership, the sector has attracted USD 26.6 billion in foreign institutional inflows between 2017 and 2022.

    The good thing here is that a foundation has been laid to provide an environment conducive to growth. PropTech’s potential to further maximise its reach in the Indian real estate industry is immense. As technology continues to evolve, real estate technology firms will have greater opportunities to create transparency, efficiency, and customer-centricity in the market to drive the business forward. There is a greater need for industry players to realise that tech adoption is a necessity for growth and not just an option.

    Indeed, the winds of change are blowing. It’s about time India’s real estate ship, rigidly anchored in old legacies, sets sail towards a dynamic, more innovative, digital future.

    Embracing the PropTech revolution

    Considering the evolving real estate landscape, Aurum PropTech has developed an integrated ecosystem with a range of Technology, Services and Capital led solutions that address key industry challenges and opportunities.

    Through an integrated data strategy Aurum operates technology businesses rental real estate, buy and sell real estate sector and financing of real estate.

    With the right tools and systems in place, you can collect and track data about your properties and tenants, as well as gain valuable insights on market trends and other external factors that may impact your business.

    Aurum PropTech’s integrated ecosystem now collectively, boasts of 13+ products and services, 3,40,000 engaged customers, 2,000 crores plus GTV, 520 SaaS customers, 4,300 RaaS customers, 7,500+ channel partners, 600+ real estate developer relationships and a presence in 15 plus cities. The ecosystem is now structured under technology primarily encompassing enterprise tech, services – encompassing consumer tech and capital – focussing on fintech applications for real estate matrixed across the real estate value chain of development, monetization and consumption.

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