As more and more homebuyers in India strategy and execute their home purchases by means of virtual platforms in the aftermath of the coronavirus pandemic, the PropTech sector in India attracted more than $551 million in 2020, surpassing the aggregate of earlier year – $549 million, shows a report by Housing.com.
The report titled ‘PropTech: The Future of Real Estate in India’ shows that investments in the PropTech segment grew marginally up to $551 million in 2020 from $549 million in 2019. However, even the marginal upwards movement could be termed as important, thinking of the unprecedented challenges the globe faced in the course of 2020. More importantly, investments in the segment in the course of the year had been at their peak in 2020 because tech-based begin-up corporations in India started getting into the genuine estate segment in India, beginning 2000s.
So far, $2.4 billion have been invested in India’s PropTech sector across 225 offers as on date, the report says.
The report attributes the development in the segment to a quick-increasing middle class, speedy urbanisation, the adoption of technologies, an rising world wide web user base of more than 500 million customers, a young demographic base and a steadily consolidating genuine estate canvas.
“During the lockdown and the subsequent phased opening of the economy, most buyers concluded their property purchases using virtual mediums. That was made possible because since 2010, enterprises have already been investing heavily in the Proptech segment to enable buyers to conclude property purchases with fewer efforts as applied traditionally. If these platforms were only popular to find and finalize properties in the pre-pandemic era, the pandemic has changed much of that. It is also pertinent to mention here that housing markets in India would have taken an even more severe hit because of the virus outbreak and its effects, had the PropTech industry not been gradually growing in the country,” stated Dhruv Agarwala, Group CEO, Housing.com, Makaan.com & PropTiger.com.
“While pointing out that growth of the industry in the Asian region has yet to reach a level seen in their western counterparts, the report also points out that online business platforms that have been on the radar of investors since 2009, have evolved since, from being mere mediums for digital classifieds to offering full-stack solutions towards discovery, advisory and transactional support, with this and ever evolving technology, the new decade belongs to PropTech,” added Agarwala.
The segment is most likely to see a tremendous enhance in the close to future amid increasing use of technologies such as virtual reality, drones, huge information, artificial intelligence in dwelling purchases. This is expressed by means of the reality that genuine estate in the nation is slated to grow to be a $1-trillion marketplace by 2030.
The report, having said that, also points out a majority of corporations are nonetheless performed by means of the offline mode in the home brokerage business enterprise in India, estimated to be a $1,400-million ($1.4 billion) sector. However, the development of PropTech in India is also indicated by means of the reality that even with the actual transaction culminating offline, more than 50% of the genuine estate getting choices take location by means of on line searches, the report says. With the increasing world wide web user base that is anticipated to boost up to one billion by 2025, the chance for players in this segment is colossal, it adds.
Despite international headwinds, private markets continue investment momentum in PropTech firms in India
After crossing the $500-million mark in 2018— $530 million worth of offers had been signed in that year—deal volume in the PropTech segment additional enhanced to $551 million in 2020, says the report. Despite the serious challenges in the year 2020, deal worth in this tremendously increasing sector crossed the $550-million mark, surpassing the aggregate of $549 million invested in 2019.
The investment inflow in genuine estate is increasing at a CAGR of 10%, of which PropTech has been a blue-chip segment because 2010, increasing at a robust CAGR of 57%.
Segments attracting Investors focus
Because of its earning possible, the industrial residential space continued to claim a lion’s share in the general investment in 2020. The share of investments in the segment has substantially enhanced to 62% in 2020, as compared to 25% in 2015. This is mainly mainly because of the rent-yielding assets such as offices, warehouses, malls, and so forth. The availability of an exit solution in the type of genuine estate investment trusts also aids industrial realty stay the most preferred amongst international investors.
In contrast, the share of the residential segment has been decreased to a mere 2% in 2020, as compared to 61% in 2015. Several components have played their element in the waning of investor interest in the residential segment. Sluggish demand, steep capital values, building delays, coupled with the NBFC debacle, have kept investors away from the residential segment.