Top Trends That are Ruling the India's Proptech Market
According to IBEF, Indian real estate will exceed $1 trillion in value by 2030, up $120 billion in 2017
Real estate was one of the last industries to embrace digitization. However, proptech has leapfrogged into a norm today. The startups in the space have been grabbing many rounds of funding as well. NoBroker became the first proptech startup to turn unicorn in November 2021. Square yards, Aurum Proptech, Facilio, Stanza Living, PropReturns, Landeed, Homexchange are some of the startups that have raised funding since then. According to a recent report by Housing.com, Private equity (PE) investments in proptech firms increased by 35 per cent during the last calendar year to a record $741 million, driven by the increased adoption of technology in the real estate sector.
According to the Indian Brand Equity Foundation (IBEF), Indian real estate will exceed $1 trillion in value by 2030, up $120 billion in 2017 and by 2025, it will contribute approximately 13 percent to India's GDP.
Here are the key trends that are ruling this burgeoning proptech market, as shared by experts watching the space closely.
Saurabh Jain, co-founder and CEO, India, Livspace
Considering the unprecedented last two years, a few core trends have emerged which also mirror the tailwinds for Livspace's business and growth. There has been a fundamental shift in demand towards organized, digital brands. People have spent more time at home than ever. They rediscovered their relationship with their homes. Using it in different ways as home offices, gyms, and entertainment zones - homes became a sanctuary in uncertain times. Hence, now consumers are looking to redesign their homes to accommodate all their needs and create their dream spaces.
With the accelerated adoption of technology across consumer segments, there has been a substantial shift in customer behavior in an industry that was always high on touch and feel. Customers are now comfortable with virtual collaboration with their designer on video calls, visualizing their homes in 3D and selecting materials through the industry's first e-commerce-like material listings.
Akhil Gupta, co-founder, and CTO, NoBroker
The last two years have changed the way of functioning for all sectors and the real estate market is no exception. The real estate market has seen many ups and downs, and many new transformations. In the new normal, the companies are much more flexible than they were in pre-covid times. With hybrid working and work-from-home models largely accepted, home seekers are now looking for flexi-homes.
A lot of trends that emerged during the pandemic are now in reverse. For instance, people now want to live within city limits for easy commuting while earlier people were looking for bigger houses outside the city limits as work from home allowed for that ease. The rental market is also seeing inflation. Inventory crunch is one of the major reasons for rent inflation which is upwards of 12 per cent across cities. The opening of schools and offices has had a dual effect in terms of the pace at which tenants have returned to the metros.
Home ownership has been a key trend among millennials and other demographics. With the reduction in home loan interest rates and builders offering lucrative discounts in a bid to get rid of piled-up inventory, many end users have benefitted from the advantages.
Iesh Dixit, CEO and founder, Powerplay
"Hey Alexa, please put on the curtains and brighten the lights", is my 7:00pm hymn while I wrap up my work and start interacting with my smart home. That is where proptech has advanced into. Almost everyone today aspires to live in a smart home and voila! Every second construction project is smart-tech enabled.
While it did take some time for construction companies to get hands-on with technology and think beyond Alexa-enabled homes, the COVID-19 pandemic pushed every construction business owner to embrace tech in the business(operations) and not just the end product(homes/offices). Extreme digitization of business operations is an aftereffect of the COVID-19 pandemic. Many sectors which once functioned traditionally were forced to take a digital-centric approach during and after the COVID-19 pandemic. And it certainly seems like tech adoption has become a key to rapidly scaling the business. Similar is the story of the real estate and construction businesses. Many small and medium construction companies worked using outdated and traditional methodologies, which were the key reasons for the hindrance in their growth. However, post-pandemic many construction companies have started using SaaS-based products end-to-end. Thanks to digital literacy post-COVID, SaaS has emerged as one of the saviors for construction management and property management businesses across the country. From managing materials at the site to tracking work status, designing to managing property to performing sales, many construction companies have started using dedicated applications and platforms for faster and quality results. A few leading SaaS-based platforms provide benefits like - reducing construction cost and time, pre-empting risks, improving construction efficiencies, enabling faster and better decision making, increasing labor productivity, etc.
Karan Gupta, fund associate, Auxano Capital
The proptech market saw a sudden halt in investment in 2020 due to COVID-induced reasons. As the work from offices and real estate investment regain momentum the space is regaining momentum. The emerging trends in the proptech space include IoT-led businesses. The government has also catalyzed the growth with its new policies around 'Greener Developments'. Integration of IoT devices is the backbone to the desired outcome. IoT devices focused on smart control for lighting, water consumption, space utilization, HVAC, waste management and design. Startups are enabling up to 20 per cent saving in electricity consumption without impacting the effectiveness leading to cost efficiencies and contributing to a greener environment.
Further as the companies opt for a hybrid work model, the requirement for office spaces has reduced but at the same time, it has increased the requirement for a tech-led ecosystem to enable effective and efficient utilization of the reduced space. Use cases include timely booking space for team catch-ups in the office and meetings.
Startups are cropping in the design tech wherein they are integrating Metaverse in the process of conceptualization, designing and execution for home/office and large-scale public infrastructure projects. The integrated environment leads to cost and time efficiencies. Further, it creates a whole new environment for all the stakeholders in the value chain to seamlessly interact and experience the overall aesthetics and utility in real-time and remotely. These companies are disrupting & redefining the existing ecosystem for architects, designers, contractors and consumer good brands.
Ankita Sood, head of research, Housing.com
Proptech in India has witnessed a strong upward trend, especially in the last two years driven by the pandemic-induced digital acceleration. In 2021, the private equity investments in Proptech firms reached an all-time high of $741 billion, registering a 35 per cent YoY growth. Investments in segments such as sales and marketing, and construction technology grew multi-fold as compared to 2020 and these segments together accounted for 69 per cent share of the total private equity inflow in proptech in 2021. Such platforms are using innovative technologies such as artificial intelligence (AI), the internet of things (IoT), and virtual reality to augment the customer and consumer experience.
Apart from these segments setting the trend for coming years, we also see that upcoming technologies such as metaverse and Web 3.0 built using blockchain are set to disrupt the Proptech space in the coming period. While such innovative technologies are relatively new and yet to gain ground in India, they are poised to open up a myriad of opportunities in the real estate sector.
Aditya Jhaveri, CEO and founder, Blox
The foundation over which relationships are built is trust, especially when it comes to buying real estate. Data analytics has become a very significant element in managing developers and brokers to better supervise the entire sale-purchase experience, thereby creating a transparent and trustworthy ecosystem to bring trust and delight to homebuyers.
Convenience is one of the key drivers for any business today. Constant endeavors are being made to make the Indian real estate market fully automated in terms of purchasing a property. Implementation of artificial intelligence, and proprietary algorithms, to systemize, and streamline the entire process including search, comparison, scheduling and managing visits, digital interactions with relationship managers and builders, paperwork and legal processes and finally bookings and payments, digitally will be pivotal in transforming the real estate industry.
From self-scheduling of site visits to instant virtual tours and digital payments are the next big growth drivers in the propetch sector.
Ashish Deora, founder and chief executive officer, Aurum Ventures
PropTech has become a pivotal part of the real estate sector owing to changing the behaviour of consumers and the Real Estate development becoming more and more organized, particularly post-pandemic. On the supply side, data-driven decision-making to bring efficiency to real estate financing, construction and monetization is a clear trend getting established.
As a result, financial institutions and real estate developers are now using demand-supply data before investing in projects. Developers are using CRMs to ensure that the sale cycle of RE projects is efficiently managed at all touch points with technology platforms facilitating the launch, activation and distribution of real estate projects. Consumers are using technology for discovering real estate projects before making purchase decisions. Internet of Things laced smart homes are sought by home buyers for ease and convenience.
Sudharshan Lodha, CEO and founder, Strata
Real estate is one of the world's oldest and largest sectors, however, it has lagged other industries in embracing Technology. Now with the adoption of cutting-edge technologies, the proptech revolution is reshaping the real-estate sector and changing the way it operates. Triggered by the pandemic and the consecutive lockdowns, the industry's inclination towards a digital-first approach is aiding to enhance competencies thereby leading to efficient asset management, improved RoI, and greater transparency among others.