ProptechBuzz, a prominent global platform for proptech, recently featured Dheeraj S, Fund Manager at Earth Fund, India’s premier proptech investment fund, on their podcast. During the episode, Dheeraj offered valuable insights into the current landscape of the Indian proptech ecosystem and its future trajectory.
About Dheeraj S:
Dheeraj brings expertise in Early-stage, Private Equity, and Corporate Strategy. Previously, he managed Manipal Group’s start-up portfolio and played a pivotal role in a Nasdaq SPAC listing and cross-border PE transaction. He also co-managed Sundaram Group’s $150 million Real Estate Alternate Funds. With a decade of experience, he began his career at Deloitte in Financial Advisory and is a Chartered Accountant from Bangalore.
The real estate sector, valued at over $300 trillion worldwide, needs to catch up in terms of technology adoption. This exclusion of technology has led to many inefficiencies and environmental problems within the industry. Nonetheless, a game changer is appearing – proptech – a blend of ‘property’ and ‘technology’ that could alter how we design, construct, operate and finance real estate.
In 2030, the Indian market for proptech is anticipated to soar to an astonishing $1 trillion propelled by growing investor interest and innovation-friendly conditions. Key players are being attracted by this burgeoning ecosystem including Earth Fund which specializes in early-stage proptech investments with a strong emphasis on sustainability.
The proptech journey began with discovery platforms and listing websites, which digitized the home buying and renting process. This initial wave was followed by the rise of the shared economy with co-working space, co-living arrangements, and platforms like Airbnb gaining traction.
Concurrently, solutions to ease builders’ supply chain problems like procurement platforms arose to expedite the building process. The Notable Success Story of Infra.Market – one the largest proptech companies in India with a valuation of over $2.5 billion, is a noteworthy example.
However, the real power of Proptech lies in its ability to address the entire real estate ecosystem. Many cutting-edge ideas have made a meaningful impact since 2017, including augmented reality/virtual reality (AR/VR) for property marketing and interior design visualization, material handling robotics & robots for construction tasks, and investment platforms democratizing access to real estate investments.
The COVID-19 pandemic hastened the adoption of proptech solutions even more, especially in the consumer market, where smart home systems and virtual property tours are becoming more and more common.
The proptech ecosystem encompasses a diverse range of sub-segments, each tackling specific pain points along the real estate value chain:
1. Construction Tech: The implementation of many technologies, such as supply chain management, robotics, modular construction, and 3D printing, has been crucial in optimizing the construction process.
2. Renovations and Interiors: Effective strategies for improving the design, refurbishment, and furnishing of houses include the utilization of interior design platforms and collaborative tools for architects.
3. Transaction Solutions: Platforms that enable the purchase, sale, and rental of properties, such as portals for listing homes and solutions for fractional ownership REITs and online marketplace.
4. Investment and Finance: The implementation of strategies aimed at enhancing the accessibility of real estate investments and offering diverse financing alternatives for both developers and buyers.
Beyond the established sub-segments, a host of emerging technologies are poised to reshape the real estate landscape:
1. Smart Contracts: Blockchain-based solutions enhance process efficiency and workflow management, streamline documentation and milestone payments, improve transparency, and enhance security.
2. AR/VR: Immersive technologies such as AR/VR offer transformative for prospective buyers and renters and allow users to virtually tour properties and visualize interior design, which helps them to make informed decisions remotely.
3. Robotics: Automated solutions for material handling, plastering, and painting, addressing labor challenges in the construction industry.
4. Modular Construction and 3D Printing: This innovative construction method holds the potential to address traditional construction challenges, such as labor shortages and supply chain disruptions. Implementing Modular construction tech enables improved quality control, reduced costs, and faster project completion.
5. Data, AI, and ML for Commercial Real Estate: data analytics, machine learning, and artificial intelligence offer optimizing operations and enhance efficiency in commercial real estate. These technologies can efficiently and accurately analyze energy usage, predict demand, and improve space utilization, leading to cost savings and improved decision-making.
6. IoT for Greener Buildings: IoT sensors and devices enable real-time monitoring and usage of energy consumption. By leveraging companies can easily reduce operating costs, and promote sustainability.
Even though there is great potential in the Indian proptech market, there are some challenges that need to be addressed to hasten adoption:
1. Developer’s Aversion: There has been a reluctance among developers to participate in proptech due to apprehensions regarding the potential return on investment.
2. Slow Construction Tech Development: Robotics and 3D printing are other construction techs that have yet to make a significant impact in India due to factors such as labor cost arbitrage.
To get over these challenges, developers, entrepreneurs, and investors will need to work together. Solutions that boost operational efficiencies, decrease expenses, or increase top-line income are more likely to be adopted by developers. Brigade Group’s Proptech Accelerator Programme is one such initiative that is helping to speed up adoption; thus far, 70 startups have benefited from this program.
There exist several investment opportunities for investors interested in proptech:
1. Sustainability-Oriented Solutions: Investments in real estate sustainability solutions can provide environmental benefits while also yielding financial returns.
2. Emerging Technologies: Early-stage investments made on emerging proptech technologies could potentially drive high growth rates and cause market disruptions.
3. Cross-Sub-segment Innovations: Solutions cutting across multiple proptech sub-segments, addressing complex challenges, offer attractive investment opportunities.
Earth Fund, led by seasoned professionals with expertise in real estate, technology, and private equity aims to invest in solutions that deal with the nexus between these three fields, having been. These criteria include different proptech sub-segments of innovation which are preferable especially when they address technological and sustainability challenges.
As Dheeraj said, “Anything which cuts across real estate, technology, and sustainability would be a focus area.”
This refers to things like energy-efficient buildings, using IoT devices to monitor and control energy use efficiently as well as reducing carbon emissions.
Real estate is undergoing a technological revolution, fostering increased efficiency and innovation opportunities. It is expected that the Indian market will witness substantial development in the utilization of proptech as a result of its considerable potential and favorable environment. To effectively leverage the potential of proptech in India, it is critical to confront obstacles including the sluggish adoption of construction technologies and the restricted involvement of developers.
Prosperous opportunities may get discovered by investors in proptech solutions, which integrate sustainability, technology, and real estate. Proptech possesses the potential to revolutionize real estate design, construction, operations, and investment strategies, thereby fostering a more sustainable and efficient future as the real estate industry progresses.
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By Proptechbuzz
By Ravi Kumar
