India’s property technology (PropTech) scene is starting to gain traction as the country’s growing real estate market and increasingly tech-savvy citizens create new opportunities.
By 2030, India is expected to be the third largest real estate market in the world with the sector contributing to over 15 percent of the country’s GDP, according to a joint report by KPMG and real estate body NAREDCO. Combined with a growing middle-class who are turning to the internet to buy goods and services ever more frequently, the online property market has high growth potential.
“The India start-up scene has immense potential as real estate is one of the largest industries here, and one dealing with high transaction and brokerage values,” says Anuj Nangpal, Head of JLL India Technology Ventures. “These markets run across billions of dollars and is an attractive space for any investor. And with e-commerce rising in India, the expectation is that the bulk of the transactions will go online eventually.”
As such it’s been increasingly attracts the attention of global investors. Back in 2015, Qualcomm Ventures, an American telecommunications service provider, announced a total investment of US$150 million for online startups with a special focus on online housing. In January, India’s Proptiger.com and Housing.com merged to become the country’s largest online real estate company, attracting fresh funding from REA Group and Japan’s Softbank while in March global real estate consultant Coldwell Banker India acquired Favista.com, an online realty search firm.
A growing sector
In the last 10 years the fledgling PropTech industry has gone from strength to strength. When the scene first emerged in India in the mid-2000s, most of its players such as 99acres.com and indiaproperties.com were largely online classifieds for interested home owners.
Portals like Housing.com entered a few years later to allow users to compare properties against one another using indicators from apartment size to facilities like club houses and even nearby amenities such as schools, malls and railway stations.
Now a third wave of start-ups is starting to make their mark in India. These aim to simplify the entire property purchase transaction process by enabling customers to sign agreements online to get assets and title deeds transferred. “That’s the Holy Grail that everyone’s after,” says Nangpal.
And the development of proptech in India could also solve other inefficiencies in the market. “The PropTech market offers more choice to the consumers and the convenience of exercising it. It’s usually quite painful to contact multiple brokers and go to different places,” says Nangpal. “Online platforms allow people to access choices in a discreet fashion without being hassled.”
While the PropTech sector continues to evolve quickly, it’s not without its challenges. Cultural norms take time to adapt and most Indians are still resistant towards completing a transaction entirely online. They prefer to interact personally to finalize property transactions.
Other issues to get around include the traditionally fragmented market run by hundreds of middlemen operating in local districts and the extensive paperwork required by the government to transact a property.
Yet there are some areas of progress. The implementation of the Real Estate (Regulation and Development) Act or RERA in May 2017 is expected to improve transparency in the sector, attract more investors and provide more impetus for India’s proptech scene.
“As promising as India’s proptech scene is, there’s no denying that traditional habits and systems are hard to shake off,” says Nangpal. “But with greater adoption of technology and greater investment from big, foreign players, India’s online realty game looks poised for success.”