Proptech has become an essential part of the real estate industry, impacting professionals, investors, and end-users. It improves property acquisition, management, and customer experience through digital processes and advanced technologies like VR, AR, and data analytics.
Sharing her motivation and interest in Proptech as well as her current endeavours within the industry, Binitha Dalal, Founder and Managing Partner, Mt K Kapital, and Head-Fund Raising, Rustomjee Group said “As an experienced real estate developer in the city of country’s financial hub, Mumbai, we very much appreciate the advantages of Proptech and intend to incorporate it in all the future activities. Our company, Mt K Kapital, manages funds for various real estate projects. We are also collaborating with Venture Capitalists to establish a PropTech fund, recognizing the immense potential for technological innovations in construction, sales, management, and asset ownership in real estate. Adapting to these changes is crucial for industry success. The pandemic's shift to virtual meetings highlights the impact of unexpected events on traditional methods and demonstrates Proptech transformative potential within our industry.”
Regarding the significance of Proptech in today's world, Sudarshan Lodha, Co-Founder & CEO, Strata expressed, “Proptech encompasses more than just property listing websites, but it extends to asset management, construction materials, procurement and many other areas. In India, real estate dominates people's portfolios, emphasizing the need for efficient tenant engagement and asset management expertise. On an average, Indians have almost 70-80% of their portfolio exposed to real estate. But, with an illiquid asset class, people don't have expertise in asset management at all. The tenant engagement structure has changed where landlord is no longer the supreme master. One has to find the right tenants and please them. From that standpoint, Proptech has a huge scope in asset management and that is what we see as a large opportunity, discovery in terms of pricing, affordability, and how could quality assets be offered to people over a period of time.”
Yash Gupta Managing Partner, YGR added, “In the realm of Proptech, the long-term benefits of technology and its adoption can be better understood through the concept of half-life. In exponential technology, reaching from 0% to 1% market penetration signifies the halfway point, with equal time taken to reach from 1% to 100% adoption. Linear thinkers may find grasping this algorithmic curve challenging. We have seen in the case of Swiggy & Zomato, where people are ready to pay for convenience, but it's taken them 7-10 years to reach where they are today. PropTech is a little far away because it is just too large an asset class for people to adopt as such.”
PROMINENT AREAS OF PROPTECH
While sharing her perspective on the key areas for technology in real estate, Binitha Dalal said, “I believe, Proptech is the next big thing and if you invest in it, it will not only offer an opportunity to make a significant difference in the industry, but you will reap some profits and benefits as well along the way. Our Proptech fund is supported by an industry body as we are promoting awareness on the role of technology specifically in construction practices. The progress in urban areas is now spreading to tier 2 and tier 3 cities, and utilizing modern methods like prefab, precast, and preform will improve the building’s quality and delivery time. Apart from other important advantages, Proptech stands out for its cost-saving potential.”
Sharing his perspective on prioritizing financial support for technology firms focused on revenue expansion rather than cost-cutting endeavors, Sudarshan Lodha said, “The organization’s focus should be on the long-term vision. Proptech is a gradual process that won't yield immediate results. Regrettably, major developers adopting Proptech tend to prioritize short-term gains over long-term benefits. In short, developers primarily consider costs and potential long-term revenue when evaluating a project. While sustainable materials and better air quality management have become increasingly appreciated by occupiers, cost remains the most significant factor in decision-making. Widespread Proptech adoption may be slow, with revenue generation taking precedence over cost-saving measures at least for the next decade."
Yash Gupta agreed, “Indeed, in the real estate industry, technology focusing on increasing revenue growth than cost reduction have been preferred, Whether it's a WeWork, which allows you to grow revenue by fractionalizing spaces, or whether it's listing services that increase the reach and aid in increasing revenue, have been funded better than those that help in reducing cost. But, in spite of challenges in convincing clients and slow adoption rates, industry leaders are now increasingly open to adopting disruptive strategies. I believe, as property technologies will continue to develop and get sophisticated, industry professional and companies will become more willing to pay for cost reduction strategies.”
NECESSITY AND NOT A CHOICE
Proptech is no longer considered a passing trend and has become a necessity for real estate players. As Binitha Dalal puts it, “Real estate technology is here to stay. In the past decade, the focus had been on revenue, but recent lockdowns have highlighted the importance of cost efficiency and profit generation. For instance, technological advancements like Apna Complex and MyGate have simplified post-handover processes in residential and commercial spaces. These innovations are increasingly integrated by developers, signifying a shift towards prioritizing post-handover customer experience in the industry. Recently, I found out that a mere $2.4 billion has been invested in Proptech start-ups since 2021, a relatively low amount considering the industry's contribution to India's GDP. Low awareness and inadequate innovation are the primary causes. The Proptech start-up landscape, though smaller than Fintech, is set for growth with effective solutions and tech-savvy professionals. Despite current challenges in innovation and communication, the future looks bright with incubator programs boosting consumer and developer confidence.”
Sudarshan Lodha added, “With a focus on real-time updates and landlord-occupant interaction, there is a significant untapped market for third-party solution providers in India. Our ‘Strata Reach’ is a platform designed to enhance communication between real estate professionals, acting as unbiased mediators. Since its launch, it has facilitated four transactions related to asset creation and supply funding. The platform disrupts the conventional process by offering a unified solution for stakeholders like tenants, developers, and investors. While currently focused on the financial investments, Strata Reach aims to become a significant platform for all real estate ecosystem members”.
Yash Gupta summarizing the discussion concluded, “The frequent challenges encountered in technology adoption and company’s scaling may present difficulties in persuading individuals to invest in Proptech firms or funds. However, it’s not only consumers that benefit from Proptech; but its advantages for the real estate industry are manifold as well. Mistakes are an integral aspect of the learning process. Contrary to the belief that mistakes signify failure, they represent progress and contribute to self-improvement. We’ve seen how the industry has slowly evolved towards better symmetry of information and buying experience. Proptech began with primarily focusing on community management, evolving into a solution to streamline residential community processes. Consequently, PropTech has now become an essential aspect of real estate construction, sales and management.”
Real estate has been through multiple cycles of tech innovation from early days of classifieds to current Proptech, heading towards blockchain & Web3 assimilation.
Proptech is helping addresses ever growing consumer demands and complex processes by automating tasks, managing clients, analysing markets, offering personalized services, and providing data-driven insights to investors for decision-making and portfolio monitoring.
While, real estate is witnessing growing investments across asset classes, the number of start-ups in PropTech space constitute mere 1-2% of overall start-ups in India.
The property industry is evolving due to technological innovations, but caution in investment approaches is necessary.
The PropTech sector will undergo development stages before stabilizing, attracting various investors focusing on different phases.
The shift to virtual meetings highlights the impact of unexpected events on traditional methods and demonstrates Proptech’s transformative potential within our industry. Binitha Dalal
Proptech is a gradual process that won't yield immediate results. Regrettably, major developers adopting Proptech tend to prioritize short-term gains over long-term benefits. Sudarshan Lodha
For an exponential technology, reaching from 0% to 1% market penetration signifies the halfway point, with equal time taken to reach from 1% to 100% adoption. Yash Gupta
