How Proptech is changing the Realty Sector
Real estate sector has always been considered a late adopter of technology. Year 2007 saw the emergence of proptech trend that leveraged technology to improve the property centric services.SapnaSrivastavatakes look at how the Proptech developments are altering the real estate business.
India reported themost number of deals since 2013 in property technology space, recording 77 deals amounting to USD 928 million, the maximum by any country in Asia Pacific region. Such dynamic growth can be attributed to various factors such as the fast growing middle-income population and rapid urbanization across cites as well as the growing number of young upwardly mobile professionals and inclination towards technology adoption in various sectors.
The increasing penetration of internet, use of mobile data & apps and e-commerce is gradually creating a mind-set for online transaction among masses and thereby creating a strong preference for online platform in terms of property related services as well. In fact, brokerage and leasing dominates all other verticals such as property management, project management and financingin India.
Lack of transparency is considered the primary reason for technology intervention in the real estate segment.
Technology enabled faster design development, construction coordination and project & delivery schedule management as also online real-time update of construction and sales and marketing to gain trust of customers. Moreover, given the scale of operations and future expansion of Indian real estate, the rising demand and supply would inevitably need tech support.
This has given impetus to many technology start-ups to foray in realty tech segment to emerge as a reliable channel between developers and buyers. According to estimation, India has more than 700 realty tech companies which have come up over a period of ten years in different segments ranging from listing and search services, marketplaces, virtual viewing, brokerage services, leasing-management, data valuation and residential home improvement, design, and maintenance just to name a few.
The “PropTech 3.0: the future of real estate” report by Oxford University divides PropTech into three sub-segments:
– Real Estate FinTech – Those innovations overlap with FinTech to facilitate trading of real estate such as lending technology, trading apps, connection of buyers and sellers and online estate agents.
– Shared Economy – These platforms and concepts facilitate the use of property assets with the focus on the end user of the asset.
– Smart Real estate – This segment is concerned with the operation and management of property using technology.
After years of slump, the Indian real-estate is on its path to recovery. The age profile of property buyers too is now getting younger who are tech-savvy and more informed. The real estate organizations too to attract investments are getting more process driven. Given all these factors, the realty tech companies are set to play a major role in several ways. As a matter of fat some developers are incubating new start-ups that can bring innovative changes in the sector.
The most widespread sector of Proptech is the listings portals that provide a way to list property for sale and for rent effectively connecting buyer and sellerand online real estate agentsthat provide the similar services as the traditional estate agency.
On the other hand, Data, Research and Information providersdigitize data on property types, prices, performance and other relevant points to be utilised by real estate profession for better analysis of opportunities and performance improvement.A parallel sector is ConTech i.e. technological solutions for the construction industry that is enhancing efficiency and productivity in the way developers put together projects.
Also, while Online lenders, debt & mortgage platforms are developing online models to simplify applying for mortgage finance and saving customers time and effort, Equity raising platforms are helping investors to invest in property without the huge capital outlay involved in traditional home ownership. They invest small amounts and receive a share of the property and any returns received from rental or the future sale of the property.
Furthermore, in the age of shared economy, sharing of real estate assets has become a norm. The most well-knownexamples are AirBnB in hospitality and WeWork for Co-working office spaces.Moreover, listings websites such as Zillow now make provisions for house shares on a long-term basis.
The Smart Real Estate is another segment where Proptech companies are making an impact with the development of integrated smart featuresto better manage the use of properties and allowing remote control of key home functions.Block Chain
The Future of PropTech
The PropTech industry is in its relative infancy in India but is already pushing the boundaries and its products and innovations are getting accepted by the real estate industry. The progressive real estate professionals in the tough business scenario too are seeking newer avenues to enhance their company’s bottom line. They need to stay up to date with the advances of PropTech to be able to leverage the benefits it provides to support their business aims. PropTech provides infinite possibilities for the creation of a new type of property industry.Thus, the time is ripe for Proptech companies to make inroads in the reluctant realty industry. But the Proptech companies too would need to constantly upgrade their offerings to keep pace with the fast changing world of technology.
However, there are questions if technology will be able to entirely replace certain analysis based functions or the sales process, given the possible unwillingness of customers to part with their personal data due to lack of personal human interaction. Similarly, while there are many advantages of blockchain, the adoption of Blockchain in real estate would require legislative changes, standardisation and education around Blockchain concepts.
The possibilities of PropTech are substantial and there are a number of directions in which the sector could grow.Though some traditional practices of real estate remain a hurdle to cross, the sector as a whole seems more willing to integrate technology into their business operations. No doubt, the prevalence of PropTech firms is growing and there are sector players that are investing in identifying potential start-ups and enabling them to grow.
The Next Big Thing
Virtual Reality:Virtual reality / augmented reality is already being embraced with virtual tours of properties. The growing commercialisation of the industry will make VR available to the masses, drastically expand its market and function in the future of real estate. As the VR industry changes it will radically influence the way property is presented and information is exchanged.
Block chain: This technology is most likely to completely restructure the real estate selling and purchase process, automating the functions from surveyors to lawyers. It’s a pretty complex system where data is shared rather than being hosted on a single server and centrally ‘owned’. The entire system accepts any change with interactions occurring between one user and another therefore making it less likely to be hacked.
Artificial Intelligence: Artificial intelligence or AI is most likely to have a great bearing in the real estate as it develops further.AI determined automations to facilitate a more efficient design and environment; construction and automation etc. may get rolled out for the mass usage. Large businesses and warehouses are already adoptingAI in its current developed stage.