What is Proptech?
Proptech is a mix of property and technology which means utilisation of technology as a solution to challenges in the real estate sector. Precisely, technology is used to create services offered in real estate to buy, sell, rent, develop, market and manage property in a more efficient and practical way. Proptech is segregated into four categories based on different types of activities within the real estate market, namely, Brokerage and Leasing, Investment and Financing, Project Development and Property Management.
Proptech can be broken down into three phases.
Proptech 1.0, 2007: Start-ups began surfacing on the real estate scenario to address buyers’ need for a single online portal that assembled property listings. These portals took the shape of marketplaces, and presented a somewhat low degree of technical challenge to facilitate efficiency of business models.
Proptech 2.0, 2013: Addressed the needs of small businesses and brokers that were more complicated than those of buyers. The growing availability of tech talent enabled start-ups to employ more advanced technology such as Data and Analytics or Virtual Reality (VR), while using a pay-to-use or Software as a Service (SaaS) business model.
Proptech 3.0, 2018: Led by start-ups employing rising technologies like drones and solar power to contemplate enterprise obligations. These technologies need massive upfront investment and knowledge in the real estate. These innovations are built from the grassroots so as to tackle dynamic business needs rather than being adapted.
The Indian Context
In 2017, India saw multiple reforms in real estate and economic activities. Authorities imposed Real Estate (Regulation and Development) Act (RERA) and Goods & Services Tax (GST) and Demonetisation, for improved governance and transparency. These short-term setbacks were necessary to ensure real estate reaps the benefits in the long term.
Policy reforms will guarantee more sustainable growth in property demand. Moreover, enhancement in the market transparency will prompt changes in consumers’ sentiments towards online trading in real estate. In 2018, the residential market is expected to face greater challenges as compared to the commercial market backed by sustaining demand.
With accelerated urbanisation and rise of the middle class and millennials, improved technological sophistication is the need of the hour. Thus, Proptech can reach its full potential once certain conditions are in place. Greater flexibility, acceptance in regulation and evolved consumer habits will streamline the transformation process.
Proptech is fast catching up with the traditional market, especially in countries like China and India. It possesses significant potential to disrupt and transform the traditional market with possibility to scale across the large spectrum of real estate industry.
Corporates have realized the opportunity to overcome incompetency and inefficiency in their business and maximise their reach backed by these Proptech start-ups. One thing will lead to another and soon Proptech will reap the benefits of growing market for its products. This will result in new partnerships and perhaps some emerging new real estate players.