State of Proptech In India
PropTech is the new buzzword and is gradually transforming the real estate industry. It’s reported that the real estate sector counts for almost 60%
of the world’s mainstream assets, with 75% belonging to the residential sector. Yet the industry has been
slow to adopt new technologies in comparison to others. But what exactly is PropTech and what does it mean to the stake holders in Real Estate.
Raja Seetharaman, Co-Founder, Propstack
What is PropTech?
PropTech is the new buzzword and is gradually transforming the real estate industry. It’s reported that the real estate sector counts for almost 60% of the world’s mainstream assets, with 75% belonging to the residential sector. Yet the industry has been slow to adopt new technologies in comparison to others. But what exactly is PropTech and what does it mean to the stake holders in Real Estate.
PropTech is a very broad term and covers all facets of the built world. Full-stack PropTech, therefore, is a combination of technology and complex on-ground operations. PropTech includes any innovation, business model, or mechanism developed in response to emerging market needs and trends that tend to eventually displace industry incumbents, existing models, present products or services and established alliances. It brings about a fundamental change to the value proposition for a business through adoption of contemporary digital technologies; business models or methods.
It is still a new trend, and its scope will surely evolve as time goes by. Today, several verticals emerge within PropTech: the real estate market per se (PropTech), smart cities and buildings, the sharing economy, the home building industry (ConTech) and finance (FinTech). Both ConTech and FinTech have very close ties with the real estate industry.
Evolution of PropTech in India
The real estate sector in India has been relatively slow considering affinity to traditional modes of business. However, riding on the tech enabled disruptions, the Indian real estate sector is witnessing a significant rise in investments flowing to tech-based real estate start-ups in construction technologies (ConTech); property technologies (PropTech); digital business platforms, and ‘shared economies’ based real estate models.
Indian real estate sector is gradually adopting technologies that improve market access, efficiency, quality, assured delivery timelines and consumer experience. Emerging disruptions in real estate in India have created an industry inflection point where paradigm shifts are emerging in the way real estate businesses operate currently and will shape up in the future.
India is evolving in different ways and there is a significant opportunity for businesses to create technology lead models to take advantage of this change.
Millennials constitute 40% of India’s urban population. And urban migration particularly among the aspirational and ambitious millennials in on the increase.
The era of extended family or nuclear family is over. An increasing number of people are living alone as a permanent lifestyle choice for reasons that are not purely economic.
People are getting married much later in life and many are staying single indefinitely. Roommates, coworkers, online friends replace spouses as life partners.
The average number of people per household is declining.
With the rise in home prices, more people are preferring to rent than buy. In some cities, people prefer to share apartments or ‘co-live’ and this leads to significant savings.
Income growth in unpredictable, jobs are less stable and many people are now freelancing or on contract work.
This unpredictability is driving millennials towards sharing everything. They would rather have things on demand through an app rather than owning anything outright.
New business models, emerging technologies, and alternate financing mechanism are coming to the fore requiring deeper exploration and adoption to accrue major gains for the real estate industry. Adoption of new models and convergent policies can likely result in new opportunities and growth for real estate and construction sector, thereby snowballing the multiplier effect.
The opportunity for tech-enabled companies to compete in this space is driven not only by the sheer size of the market, but also by the limited amount of innovation to-date.
Most PropTech startups fall into one of two main categories:
- Startups offering support for real estate professionals, such as tools to enhance their services or their productivity;
- Startups proposing to replace real estate professionals.
To maximize convenience, environmental sustainability and cost efficiencies, the Indian real estate industry players are progressively exploring opportunities harnessing a range of new age technologies such as –
- Artificial intelligence (AI)
- Intelligence Augmentation (IA)
- Machine Learning (ML)
- Deep Learning (DL)
- Big Data Analytics
- Computer Vision
- Internet of Things (IoT),
- Augmented and virtual reality (AR/VR)
Future for PropTech in India
Over 60 per cent of these Global PropTech companies are in the Asia Pacific region. And India contributes many companies to this list. An increase in demand for property tech innovative solutions and investments into PropTech is expected to drive the future growth in the real estate industry.
I believe that tech-enabled real estate companies will capture majority market share over the next 10 years. The next crop of companies will introduce solutions to digitize workflows and elevate transparency for every stakeholder in the ecosystem so that better decisions can be made at a fraction of the cost. Propstack was developed in response to a need for greater market transparency and deeper analytics.
Propstack is India’s leading Real Estate technology, data and workflow solutions platform. They conduct expansive, ongoing research to produce and maintain the largest and most comprehensive database of Real Estate information. They are also the largest private repository of registered sale, lease and mortgage information in India. Based on their progress, there is every indication that technological progress will continue to shape the future of this industry.
PropTech will force the real the industry to imbibe an agile and flexible approach to business by continuously adopting emerging technologies. Companies who adapt and adopt PropTech will be ready for the future and emerge as market leaders.
Adoption Challenges in PropTech
Adoption of tech within real estate, however, still faces adversity for several reasons: (1) a desire for access to more cohesive tech solutions with capacity to address various gaps in services, (2) concerns that there is a lack of internal expertise within real estate firms to effectively evaluate the numerous single-offering tech solutions available in the market and (3) the view among many real estate operators that tech developers lack sufficient knowledge of real estate to develop applications that will be effective in integration across a real estate business model and that tech startups have simply crowded the space due to the uptick in funding.
As the real estate industry moves to embrace technological innovation, one of the main challenges to technology integration is the fragmentation of PropTech assets into small scale early stage offerings of specialized technology. The consolidation of these assets has both reduced
the competition that they face for funding and the resulting increase in scale optimizes the likelihood of attention from real estate incumbents attracted to the possibility of a single platform provider for all technology needs. Taken together, these factors are driving the rise of deals and pace of PropTech M&A, which we expect will continue in 2020.
About the author
Raja is a Co-Founder of Propstack and is responsible for the strategy & overall operations of the firm. He is passionate about technology for commercial real estate and brings over fifteen years of experience of advising Fortune 500 firms on their real estate strategy in India. Raja has built Propstack into a leading provider of CRE data information and analytics in India and hopes to transform the commercial real estate industry. His primary focus is to create a platform which increases transparency and adoption of technology in the industry. With his extensive knowledge of commercial real estate, Raja develops and implements technology solutions that maximise the value of his client’s real estate strategies.
Raja has previously worked with Jones Lang LaSalle as a National Director – Corporate Solutions and had successful stints with Ascendas, Colliers International and Insignia.
Education & Affiliations
Raja has completed his Masters in Business Administration (MBA) from Institute of Technology & Management and Bachelor of Commerce from Mumbai University.
Raja is a Member of the Royal Institute of Chartered Surveyors (MRICS)