What is Prop Tech, and what makes it a sector to watch out for in the Indian landscape?
With increasing urbanisation and digitisation in every sphere of life and industry, technology today is the central driving force in improving overall well-being and driving key economic metrics in India. This rapid adoption of technology has also opened new vistas with promising potential for disrupting traditional industries. The Indian Real Estate sector is one such sector that is primed for technological disruptions and digital transformations, further catalysed by an increase in disposable incomes in recent years.
Proptech, or property technology, is this intersection of the real estate industry with technology, software, and digital solutions aimed at maximising the sale-purchase, research, marketing, and management of properties. Proptech is a new but promising sector in the Indian real estate market as ultimately, cross-industry technologies will transform how we engage with and tap into the country’s real estate market. Innovations and disruptions in the real estate sector and the construction industry are also expected to play a valuable part in India’s ambitious target of reaching a USD 5 trillion economy by [2025]. The sector can further be divided into Residential and Commercial Real Estate and constitutes technological unification with sustainability, finance, sales, and construction.
As internet penetration and digitisation become ubiquitous in emerging (Tier-II and Tier-III) cities, Proptech and these sub-sectors show immense potential in unlocking real estate potential in rural and urban areas and driving holistic localised growth. For India, Prop Tech startups account for over 6% of the total recognised startups. On the world stage (for this sector), the country ranks fourth in terms of total funding raised, approximately USD 89.1 Million across sixty-six rounds. 99acres, Magicbricks, and Nobroker are a few of the most prominent names in this industry where buyers, sellers, and agents can collaborate and exchange information about real estate with the touch of a button.
A few emerging trends responsible for the sector’s expected leap are a rapid increase in co-working and co-living spaces, prominence of social media, advancements in blockchain, machine learning, and AI (Artificial Intelligence), and disruptions in construction methods and materials. Currently, the Real Estate sector contributes 6-7% to the country’s GDP. According to the Indian Brand Equity Foundation (IBEF), the sector can exceed $1 trillion in value by 2030, and by 2025, it can potentially contribute approximately 13 percent to India's GDP (Gross Domestic Product).
Multiple MOHUA (Ministry of Housing and Urban Affairs) schemes and missions have also been directed to propel sector-focused growth and give impetus to the Make in India initiative. Pradhan Mantri Awas Yojana – Urban (PMAY-U) was launched to address the urban housing shortage among the Economically Weaker Section (EWS)/Lower Income Group (LIG) and Middle-Income Group (MIG) categories including the slum dwellers. To facilitate the adoption and promotion of modern, green, and disaster-resilient technologies, a Housing Technology Sub-Mission (TSM) was launched under this scheme in 2021. The program also organised an Indian Housing Technology Mela (IHTM) to showcase indigenous and innovative building and construction materials and facilitated the establishment of five incubators to support potential future technologies within the Indian Real Estate market.
With a capability to drive promising FDIs (Foreign Direct Investment), crowdfunding, institutional investments, and much more, the Proptech sector is the next important thing to watch out for – especially for the Indian market. Thanks to its high dependency on technology, the industry witnessed a noteworthy recovery post-COVID-19 and is growing rapidly in conjunction with Digital India, the Government of India’s flagship initiative to transform the nation into a digitally empowered economy. However, to unlock its best potential, the sector calls for a need assessment of the evolution and journey so far and requires vital stakeholders to dive deep into its far-reaching impact on the economy.
Source:
1.Report – Proptech modeling the future of Indian Real Estate, by ANAROCK (Link)
2.www.ibef.org
3.https://pib.gov.in/PressReleasePage.aspx?PRID=1809163
