For years, the real estate industry kept avoiding embracing digital technologies. The market wasn’t exactly hot — project completions were slow and demand was low — and there was no special hurry to be very cutting edge in terms of technology. Then the Covid-19 pandemic hit and everything changed. Proptech’ is the real estate industry’s new buzzword and the focus is on how to pitch and sell the property to consumers without them ever having to leave their living rooms.
Simply put, Proptech is a term that refers to the application of digital technologies in the real estate industry. It isn’t just about applying digital technology to sales and marketing of real estate – its scope includes everything from project design and construction management to new construction materials and technology, from innovative financing mechanisms to property management and from property registration to escrow services. The real estate sector is around 6-7% of GDP and there is a huge opportunity to apply new technologies such as blockchain, IoT, AR/VR and machine learning among others, to make the sector more efficient and transparent across the value chain.
Proptech companies are not new to India. They have been around for more than a decade but a majority of the companies have focused on online classifieds for the sale, rent and purchase of properties. In more recent times we have seen the emergence of proptech startups in the area of construction, materials procurement, home automation, interior design & home improvement, data analytics, escrow services, society management, coliving and coworking. Funding in the proptech space has lagged funding in other tech areas but one can expect this to change in the coming years, especially given the speed of digital adoption in real estate in the wake of the Covid-19 pandemic.
The adoption of digital technologies in the area of sales and marketing of real estate has seen the maximum acceleration over the last twelve months. Although, real estate developers and brokers have been using online real estate portals, along with social media platforms like Facebook, for advertising and enquiry generation for quite sometime now, the pace of growth has been very slow. However, when the Covid-19 pandemic hit India and the government imposed a strict lockdown for over two months, it became impossible for real estate developers and brokers to access potential customers other than through digital media.
Real estate developers and brokers, who were using technology either sporadically or not at all, had no option but to adopt digital marketing technologies in order to survive as they were already struggling even before the pandemic hit because of poor market conditions. They could just not afford to sit idle and book zero sales. Suddenly, digital tools like virtual tours/3D walkthroughs, live sales webinars along with live drone views of projects and video conferencing with customers on platforms like Zoom became the new normal for sales and marketing of real estate. Developers and brokers did achieve a fair amount of success, as prospective customers who were initially reluctant to engage digitally, started engaging with them to buy their dream homes. Traffic on online portals surged significantly during this period.
As people moved away from physical newspapers to online news platforms, builders also started launching new projects online. Webinars and online events to market their real estate projects were well attended both by channel partners as well as customers. Not only are the sale and purchase of properties taking place using these digital tools but also increase the renting of commercial and residential assets are happening through the online medium. The coliving segment, which provides flexible rental housing solutions to students and working professionals, has transformed and adopted digital tools in a big way.
In a strange way, one can say that adversity in the form of the Covid-19 pandemic has been a positive for proptech and for the real estate industry. Real estate developers and brokers were forced to reinvent themselves and quickly embrace digital technologies. After some initial resistance from customers, sales started trickling in. There were many success stories of entire projects getting sold online, without any physical involvement. Not only has Proptech bailed out the real estate sector from probably the worst crisis it has ever faced it has fundamentally altered the way property will be transacted in the future, bringing in significant cost-savings and efficiencies for the real estate industry.
On the face of it, housing sales seem to have bottomed out. Demand has been improving month-on-month after the economy started unlocking from June 2020 onwards and the momentum is continuing. Housing prices have been stable over the last few years while interest rates on home loans are at multi-year lows. Developers are also more than willing to offer discounts and attractive payment plans. Homeownership has gained importance in the wake of the Covid-19 pandemic and the need for larger homes is being felt. As discussed above, technology is becoming more and more pervasive in the industry. All these factors bode well for the housing sector.