How Real Estate Technology Can Facilitate India's Massive Upcoming Housing Demand
India's urbanization rate is projected to shoot up by 55-60 per cent in the next 10-15 years and the nation will need over 75 million homes
An unprecedented feat of digital transformation has ushered in India’s realty sector, often infamously called out for its resistance to tech adoption. The coronavirus pandemic has brought in a sudden leap in the digital adoption with global disruptions that have upended business environments, altered economic realities and modified consumer behaviors.
While this scenario was imminent, it also highlighted the truth that the real estate sector cannot afford to play at the edges of emerging disruptions any longer and has to wear the digital garb to handle India’s massive urbanization spree and the upcoming housing demand that has erupted all of a sudden.
India’s urbanization rate is projected to shoot up by 55-60 per cent in the next 10-15 years and the nation will need over 75 million homes, with the bulk of the demand coming from the affordable housing segment. By 2050, India will add 900 million urban dwellers to its cities. Four of the India’s cities namely Ahmedabad, Bangalore, Chennai, and Hyderabad are on the brink of transforming into megacities by 2030.
Looming affordable housing shortage
But with over half a million clueless brokers currently filling the dark void of supply and distribution systems, is India ready to accommodate this massive surge of urban millennials pouring into its cities? The country’s mammoth urban housing shortage paints a sorry truth though. India has nearly 11.09 million vacant urban housing units, among which 10 states and Union Territories contribute to 78 per cent of the total vacancy levels, a real-world example of the proverb: water water everywhere, not a drop to drink.
India is home to the largest population of millennials and quadragenarians that are migrating to tier 1 cities to fulfill their dreams, thus accelerating urbanization in prime urban suburbs. However, skyrocketing prices of land and real estate properties in urban areas have snatched the hopes of majority of urban folk to buy a home, who are now forced to stay in rental accommodations typified by poor housing stock, congestion and dismal hygiene facilities.
Though affordable housing is a high-potential segment, it has not been tapped to its full potential by private development companies. If India wants to provide impetus to its Housing for All by 2022 mission and meet its urbanization goals, it must build homes at relentless speed and make homes affordable to the end buyer. So where is the roadblock? Affordable housing is a low margin, high volume game that reaches viability only when aided by a transparent, credible, and fast distribution system that efficiently bridges the demand and supply divide. While people working in the real estate sector are indispensable to make this work, technology is the only thread that can sew this entire fabric together into a vibrant, and effective distribution mechanism.
The Disruptive Influence of Tech in Real Estate Distribution
Indian real estate’s tech revolution started in 2007 with the arrival of technology-based portals. Since then, the industry has witnessed a few waves of technological innovations and with the integration of newer technology, it has become simpler for real estate companies to sell more properties and today, a real estate company can sell homes even without physically meeting a consumer.
The emerging disruptions in the real estate sphere to improve market access, efficiency, product quality, assured delivery timelines and consumer experience have all taken a leap lately, pushing out conservatively managed, orthodox real estate business models into oblivion. The new breed of integrated digital real estate players is highly focused on consumers, making data asymmetry, opacity, and inventory ambiguity things of the decaying past. This ensures that demand for housing is in good health, even as the supply side consolidates and products standardize, allowing good transformation to sweep the sector.
The proof is also in the numbers, as top digital integrated players rapidly gained market shares with the use of digital assets, 3D tours, AR, and online transaction modules, even as the orthodox side of real estate balked under the stress of lockdowns. That is a sure sign of things to come; as India rapidly urbanizes and millions of homes have to be distributed among an equal number of home seekers, technology is the only proven path to achieve that, albeit with its share of evolution. Indian real estate players are privy to that and are increasingly developing and deploying next-gen technologies including Internet of Things, Artificial Intelligence, Building Automation, Big Data and Blockchain to add some zing to the prowess of digital real estate sector, in a bid to go full stack in the truest sense.
On the other hand, focus on new building and construction technologies, digital business models, real estate automation, cloud-based solutions and investment instruments are undergoing deeper exploration and adoption to accelerate project delivery and ensure property value optimization. This acquisition of futuristic technologies, disruptive business models and market mechanisms will serve as a catalyst to address urbanization pressures and accrue major gains for the property sector.
Emerging real estate tech models for Rentals and Property Management
Apart from the proptech players disrupting the real estate picture in India, rental management platforms are also taking the reins to tackle India’s massive upcoming housing demand. With the establishment of Model Tenancy Law and AHRC, the rental management platforms have got a solid foundation to organise and service the home rental business by formalizing standards and making available the huge stock of vacant houses for the rental market through the use of technology.
The housing sector faces a monumental challenge in providing suitable and affordable accommodation for millions of homebuyers as well as preparing to address its insurmountable demand. Changing consumer expectations and accelerating urbanization have warranted the adoption of real estate technologies to ensure faster delivery of cost-effective products and services through easily accessible real estate touch points; and delve deeper to haul out innovative disruptive technologies to reimagine how we build and distribute housing, which we think is only path to emerge victorious from the housing crisis for good.