Real Estate Tech in India is witnessing a surge, with many players jumping on to the bandwagon to support innovative startups that are solving knotty problems of the real estate sector.
The tech-enabled real estate companies are growing rapidly, making India one of the fastest emerging realty tech destinations in the world. According to a report by Tracxn, startup research firm, 2010 witnessed the launch of 24 tech startups but the number shot up to 231 in 2015. The number of launches dropped to 68 in 2016 probably because a lot of new startup firms focused on consolidating rather than expanding.
The market dynamism of Real Estate Tech in India is all set to transform the sector with their innovative approach. Be it real estate consultancy, sale-purchase, investment, after sale services or any other property related assistance; tech startups have disrupted the traditional real estate market and changed the way real estate business carried on.
While the real estate tech startups make property search and purchase accessible, transparent and reliable affairs for buyers, developers too want to leverage the help of technology to increase their business. Take the case of realty tech companies which not only assist in the sale and purchase orf property but also take buyers on a virtual property viewing sitting at home.
It’s difficult to spare time to visit ten projects before making a final call to invest into one. But a realty tech startup, that deals in sale-purchase of property, can provide a virtual viewing of many projects it has tied up with. You have to spend the whole day to visit one project. However, the virtual display will show you dozens of projects within a few hours sitting at home. You can shortlist them by viewing as many times as possible and then plan your visit to the properties you have shortlisted.
Like virtual viewing, artificial intelligence (AI) and Internet of Things (IoT) have revolutionized the home automation services.
The reason for the rapid growth real estate tech in India, is that they simplify buyer’s property search, legal hassles, safe possessions and finally offer a variety of post-possession services for a good and decent living.
But before we look at the real estate tech in India, the startups in it, and the type of segment they deal in, let’s take a look at the real estate market in India which also tell the reason for the emergence of real estate tech in India
Indian Real Estate Sector and its Impact on Real Estate Tech in India
Indian real estate sector has been gradually reviving from the slowdown of 2011-12. The investment in the sector shows signs of recovery and the commercial sector looks promising once again. However, the residential market is still challenging due to sluggish demand.
The realty sector in India was on the rise from 2000 onwards when developers sensed a tremendous residential opportunity for emerging middle class. From 2004 to 2011, the market was in top gear with the launch of thousands of new projects in all sectors, be it residential, commercial or retail. Industrial real estate too boomed on the back of government’s special economic zone policies.
During this period, the property prices shot up unrealistically from 100% to 700%, prominently because wealthy and influential people parked their black money into the various project. Lack of regulatory mechanism encouraged fly-by-night operators to enter the sector, and it earned a very bad name in the following years.
The economic slowdown of 2008-09 had an adverse impact on the purchasing power of the middle class. Rising property prices and decreasing buying capacity have resulted in the massive supply of housing stocks in some metro cities. Property prices have fallen up to 40% in many areas, and despite that, the housing demand is quite subdued.
At one hand while India faces a massive shortage of affordable housing, large housing stock is lying vacant due to high pricing.
As per a report released by Cushman & Wakefield and GRI entitled “Revitalising Indian Real Estate: A new era of growth & investment, the total urban housing demand is estimated at 4.2 million from the period 2016-2020 in top eight cities.
The emergence of the real estate tech in India, lies in the various challenges that the property market faced in the process of development. Lack of transparency in property deals encouraged some entrepreneurs to take help of the technology and come up with ventures that can help people get rid of scrupulous and dishonest property brokers.
Delay in the delivery of possession of property prompted real estate companies to launch online real-time update of construction so that they can win the trust and confidence of people.
A lot of such factors contributed and gave impetus to real estate tech in India, nudging it to emerge as a reliable channel between developers and buyers. Another significant reason is the fact that the realty market is expected to become a $180 billion sector by 2020 in India. To handle such a huge market, the use of technology is inevitable. The rising demand and supply scene need tech support.
Real Estate Tech in India
According to an estimation, India has more than 700 real estate tech companies which have come up over a period of ten years in different segments. The number of deals has also increased from 11 in 2014 to 30 in 2015, according to Tracxn.
The website further says that though 2016 witnessed fewer deals than the previous year, i.e., 20, however, the total funding volume was $60 million. The majority of deals were seed or early stage investment which shows that the realty tech market is evolving and has a tremendous potential.
Despite sluggish market, startups are eyeing up acquisitions and funding that have kept the technological innovation sector vibrant. A few of prominent recent deals include PropTiger.com acquiring Banglore based Out of Box Interaction (OoBI), Classifieds portal Quikr’s $200-million buy of Commonfloor, Indiannetwork.in acquired MagicSpace and Fellahomes bought Lifepad.
Startups in the real estate tech in India, offer service in areas such as listing and search services, marketplaces, virtual viewing, tech-enabled brokerage services, leasing-management software, data valuation and analytics just to name a few. Some of the startups that offer these services are SmartVizx, SimplyMovein, PlaBro, BroEx, Agentdesks Awfis just to name a few.
The active investors in the real estate tech sector in India, include Accel Partners, Helion Venture Partners, Tiger Global Management, SAIF Partners, Foundation Capital, Indian Angel Network, etc.
Top companies in real estate tech in India
The top realty-tech companies offer residential real estate related services more than commercial because residential buyers are more tech savvy than the commercial once. The majority of tech startups provides list and search services followed by marketplace and property information services. Some of the prominent services that realty techs provide are –
List and Search Services: Housing.com, PropertyGuru, Proptiger, IndiaProperty.com, 99 acres are a few instances of companies that provide list and search services. Huge demand for online property search has made this segment quite attractive for startups.
Marketplaces: SimplyMoveIn, NoBroker, Awfis help buyers and sellers come together to strike a deal. Some of the Indian companies also cater to the property need of NRIs and foreigners.
Tech-enabled Brokerage: Such companies like AgentDesks, PlaBro, BroEx, etc. have their listing services and they use their brokers for property sale-purchase.
Property Information/Management Services: Companies like NestAway help property owners to market their property through their website.
Virtual Viewing: Some of the tech companies such as develops virtual reality solutions for real estate developers. With this technology, 360-degree view of such properties that are yet to be built can be provided.
Opportunity for real estate startups in India
The realty tech market is an emerging one in India and considering its disruptive nature, now, the majority of top developers want to collaborate with technology companies. Some of them have formed an investment wing in their organizations whose work is to identify the startups that can bring innovative changes in the sector. The purpose is to fund such companies and leverage the benefit of its technological innovation.
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Recently realty player Lodha Group has formed its investment fund for startups with initial investment corpus of Rs 50 Cr. Another instance of realty tech’s growing popularity is the international property consultant Jones Lang LaSalle (JLL)’s new technology investment division in last year October, which invested in Foyr.com. It is a Hyderabad-based firm which offers a technological solution to real estate sector.
With Indian real estate sector all set to be back on the path of recovery, the realty tech is going to play a great role in several ways. Today, young homebuyers are keen on buying flats online as it saves his time and money. They are ready to take a virtual trip to the project and decide. In December 2014, Google had organized its second edition of four-day Great Online Shopping Festival (GOSF), and it had become a huge hit. India’s well-known corporate giant’s realty arm’s Tata Housing had claimed to sell 50 flats costing Rs 25 crore.
It shows that changing trend in real estate buying and selling in India. Keeping in mind the trend, there is no denying the fact that realty tech will be the future of all sort of activities in India.
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Do you want to know what makes a winning PropTech startup, check out these Top 50 Real Estate Tech startups to watch out for in 2018.
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