Technological advancements in real estate were traditionally happening at a slow pace. The real estate companies were quite slow in adapting to technology. However, the onset of the pandemic has steered an accelerated digital transformation in the sector giving rise to proptech startups and emerging as real game-changers in the industry.
Technology has permeated into every business sector and real estate is one of the toppers of the list. According to statistics – Proptech fundraising records an all-time high in 2021 with $9.5 billion from investors and venture capitalists in the mid of November. This figure breaks the record of $9 billion fundraising in 2019.
Technology has been increasingly becoming an attractive asset for landlords, potential real estate investors and tenants looking for an efficient and secure opportunity in the Commercial Real Estate segment (CRE). This presents a lucrative opportunity for proptech investors to witness high returns on their investment.
Proptech startups boom
There are a huge number of Proptech startups in India that are playing a crucial role in infusing technology in the sector’s everyday operations. As a result, these startups are changing the way people look at property investments, especially in the CRE segment. For instance, there are technology-backed proptech platforms that are hosting multiple activities such as property listing, management and portfolio diversification to benefit the real estate investors or buyers without having to step into the hassles of managing their assets. These platforms add value and spur growth in the industry.
While the industry is identifying the potential of technology, the government is also coming up with various initiatives to drive proptech’s adoption in the sector. The government’s flagship campaigns such as Digital India, Smart Cities concept, etc. are accelerating the holistic use of technology in real estate.
Furthermore, the proptech startups are embedding technology in a way that makes the real estate sector more resilient. When the COVID-19 pandemic hit the real estate sector harder in 2020, propTech platforms helped it move on the trajectory of rapid recovery. For instance, proptech platforms helped buyers with the search and discovery of properties from the comfort of their homes and enabled virtual walkthroughs. In addition, the newly evolved propTech platforms leveraged the potential of drones, new technologies – Artificial Intelligence, Big Data and Cloud to revolutionize the sector.
Major proptech trends to emerge in 2022
Fractional ownership has evolved dramatically over the years and become an emerging trend in CRE. The concept is gaining popularity in India as it reduces the financial burden on a single investor or new age investors in CRE. In simple terms, the concept of Fractional Ownership works by dividing the cost of a premium commercial property into multiple fractions and provides accessibility and affordability to people to participate in a real estate investment opportunity at a fraction of cost.
Traditionally, only a bunch of wealthy investors used to invest in A grade commercial property. However, fractional ownership has made it easier for young Indians to come together and purchase an asset, enjoy the yield and capital gains at the time of exit and sell their fractions, whenever required. This trend is projected to revolutionize the way people make investments in CRE in 2022.
AI and Cloud-based technologies are optimizing the process of asset identification and selection. Integration of these technologies is gradually outpacing the conventional ways of purchasing and managing an asset. The best example of this is the use of predictive analysis in determining the true value of a property and evaluating the occurrence of relevant events such as income distribution in the vicinity, changes in market trends, etc.
Apart from this, the increased adoption of cloud technologies has created a boon for real estate investors as they can access information about a property from anywhere. According to the facts – 80 percent of top proptech companies are adopting some form of cloud technology in three different models – Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). Besides taking the real estate sector online, the adoption of cloud technology in the real estate sector lowers the dependency on manual work, saving a significant amount of energy.
Virtual property tours were already creating ripples in the real estate sector. With movement restrictions imposed to contain the spread of COVID-19, the technology witnessed an uptick in its adoption by proptech and prominent real estate companies. Potential buyers can visit the property virtually and decide without stepping out of their homes. Virtual property tours provide a more realistic reflection of the property interiors that can help in understanding whether the property matches the buyer’s imagination or not.
What next?
Traditionally, the real estate sector in India was unorganized. However, the emergence of proptech startups disrupted the industry making it more approachable, affordable and transparent for potential buyers or investors. The technological advancements adopted by Proptech players are predicted to create a digitally driven sector and sustain its place in the longer run.
(Varun Mohan is CEO & Founder of Definite)
