Real Estate Technologies in India: Changing the Market Landscape

“The Indian real estate sector is rapidly adopting new and innovative technologies. This is helping to improve the efficiency and transparency in the sector and making it easier for buyers, sellers, and investors to participate in the market.”

The real estate sector in India is one of the largest and most important sectors of the economy. It accounts for about 7-8% of India’s GDP and employs over 100 million people.

However, it is also one of the most fragmented and inefficient sectors. This is mostly due to the lack of transparency, the complex regulatory environment, and reliance on traditional methods of buying and selling property.

Thanks to the real estate technology (PropTech) sector, the Indian real estate market is slowly transforming.

• According to a report from Nasscom, the Indian real estate technology sector is expected to generate over 200,000 jobs in the next five years. The sector is also expected to contribute over $1 trillion to the Indian economy by 2030.

• Indian PropTech startups raised over $2 billion in funding in 2021, up from $400 million in 2019. This growth indicates the growing interest in PropTech from investors and the potential of the Indian real estate market.

• PropTech startups use technology to make the real estate process more transparent, efficient, and accessible for all, including buyers, sellers, and investors.

The real estate technology sector is snowballing and is now significantly impacting other parts of the real estate market in India. It is slowly but gradually transforming how properties are bought, sold, and managed.

Did you know you can now take a virtual tour of a property before you even visit it in person? Or that you can use AI to find the best deals on financing? Keep reading to know more.

New and Innovative Real Estate Technologies in India

The origins of real estate technology in India can be traced back to the early 2000s when a few startups began to offer online property listings and search services.

For example, Magicbricks (2000) and 99acres (2005) are the oldest and most popular real estate websites in India, offering a wide range of services, including property listings, search tools, and market research.

PropTiger (2006) is another popular real estate tech company in India that offers property market reports, valuation tools, and investment advice.

The adoption of these technologies was fairly slow in the early days. This was typically because of the lack of internet penetration, low awareness among consumers, and resistance to change from traditional real estate players.

However, today, the PropTech sector in the country is thriving. There are over 1000 startups in India offering a wide range of products and services, in addition to online property listings, search tools, and analytics and market advice.

It is also noteworthy that over the years, the focus of PropTech has now shifted from just offering listings, search tools, and investment advice to elevating the user experience for all involved.

There are a number of new and innovative technologies being deployed in India in the real estate sector.

Virtual Reality (VR) and Augmented Reality (AR)

Some of the leading real estate developers and brokerages have partnered with PropTech startups to create an immersive experience for buyers and tenants. For example, Godrej Properties uses VR to give buyers virtual tours of its properties. DLF uses AR to overlay information about its properties on real-world images.

Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML are being deployed to help buyers and sellers make more informed decisions by analyzing large amounts of data to form patterns and make personalized recommendations. For example, NoBroker - a PropTech startup, uses AI to match buyers and sellers with each other. Another tech startup - Housing.com, uses ML to develop personalized recommendations for buyers and tenants.

Blockchain Technology

Blockchain technology is being used to create smart contracts that can automate the real estate transaction process. In some cases, it is also being used to create fractional ownership models that allow investors to own a piece of a property without having to buy the entire thing. Although the technology is still in its early stages of adoption in the Indian real estate sector, a few startups, like Propy, are working on developing blockchain-based applications.

At this point, it is worth mentioning that the adoption of these new and innovative technologies is currently limited to tier-1 cities and high-value developers and real estate conglomerates.

Challenges and Limitations of Real Estate Technology in India

The adoption of new and innovative technologies is still in its early stages in India’s real estate sector. And of course, there are a few plausible reasons which explain why this adoption is limited in the country.

• High cost of implementation

The technologies used in real estate are very costly, especially for smaller developers and brokerages. Consider this- any technology to be deployed requires a framework, bandwidth, and supporting technological backing. On top of this, the digitization of real estate transactions requires a huge infrastructure and skilled workforce.

• Lack of awareness among traditional real estate players

Many developers and brokerages are unaware of the technologies, let alone the benefits these technologies have to offer. It is also noteworthy that there is resistance from the traditional real estate players in their willingness to learn about these technologies.

• Lack of expertise

There is also a lack of expertise in the Indian real estate sector in implementing and using these technologies. For a large population of traditional real estate players in the country, the lack of knowledge to use these technologies is one of the biggest roadblocks to the adoption of these technologies.

Note that the situation looks drastically different in different parts of the country. For example, the situation is not as bad for high-value real estate in hot markets as it is in the affordable segment.

However, the situation is now changing rapidly. The cost of these technologies is decreasing, and more developers and brokerages are becoming aware of their benefits.

We can expect to see wider adoption of these technologies in the Indian real estate sector, including tier-2 and tier-3 cities.

Role of the Government of India in PropTech

The government of India is also promoting the adoption of new technologies in the real estate sector.

One of the key initiatives is the Smart Cities Mission, which aims to develop 100 smart cities across the country. Smart cities are expected to be at the forefront of adopting new technologies in the real estate sector.

The government is also providing assistance to startups and companies that are developing new technologies for the real estate sector.

For example, the government has launched the Startup India initiative, which provides several benefits to startups, including financial assistance, tax breaks, and mentorship.

In addition, the government is also working to create a more conducive environment for the adoption of new technologies in the real estate sector. For example, the government is working to streamline the regulatory process and to improve the availability of data.

Digital Land Records Modernization Programme (DILRMP)

The Digital Land Records Modernization Programme (DILRMP) is a Central Sector scheme launched by the Government of India in 2016. The aim of the program is to modernize land records management in the country by digitizing land records and integrating them with other government systems.

There are three major components of the program:

• Computerization of land records and making them available online.

• Conducting surveys and re-surveys to update land records and to ensure that they are accurate and up-to-date.

• Computerization of the property registration process and making it more efficient and transparent.

Upon proper execution, the program is expected to have a number of benefits, including increased transparency in land records management, redacted corruption, improved efficiency in land transactions, increased access to land records, and reduced land disputes.

The Digital India Land Records Modernization Programme has been a successful initiative so far. As of March 2023, 92% of land records in India have been digitised.

In addition, the program has been successful in reducing the time taken to register a property by 50%.

Smart Property Registration System (SPRS)

The Smart Property Registration System (SPRS) is an online platform that has been launched by the Government of India to make the property registration process more efficient and transparent.

The SPRS allows users to register their properties online and track the status of their registration applications. The system also provides a number of other features, such as:

• Online payment of registration fees.

• Electronic signing of documents.

• Integration with other government systems.

As a result, the SPRS is expected to have a number of benefits, including reduced time and cost of property registration, increased transparency in the property registration process, reduced corruption, and improved efficiency in land transactions.

The Smart Property Registration System (SPRS) has also been a successful initiative. As of March 2023, over 20 states in India have implemented the SPRS. The system has been successful in reducing the time taken to register a property by 25%.

India Blockchain Alliance (IBA)

The India Blockchain Alliance (IBA) is a public-private partnership that has been launched by the government of India to promote the adoption of blockchain technology in India.

The IBA has a number of objectives, including:

• To promote the development and adoption of blockchain technology in India.

• To create a forum for stakeholders to discuss and collaborate on blockchain initiatives.

• To develop standards and guidelines for the use of blockchain technology.

• To educate the public about blockchain technology.

The IBA is expected to play a key role in promoting and adoption of blockchain technology in the Indian real estate sector. Blockchain technology has the potential to revolutionize the real estate sector by making it more efficient, transparent, and secure.

The India Blockchain Alliance (IBA) is still a new initiative, but it has the potential to play a key role in promoting the adoption of blockchain technology in the Indian real estate sector. The IBA has already over 100 members, including startups, companies, and government agencies.

The government of India has projected that the Indian real estate sector will grow at a CAGR of 9% in the next 5 years. And the adoption of new technologies is expected to play a key role in driving this growth.

The Future of Real Estate Technology in India

The future of the real estate sector in India is bright. The sector is expected to grow at a rapid pace in the next 5-10 years.

Some of the key trends that are expected to shape the future of real estate technologies in India include:

The Rise of Artificial Intelligence (AI)

AI is being used to develop a variety of PropTech applications, such as chatbots that can answer customer questions, AI-powered property valuation tools, and AI-driven investment advice. AI is expected to play an increasingly important role in the PropTech sector in the coming years.

For example, AI-powered property valuation tools can help buyers and sellers get a more accurate estimate of the value of a property. This can help reduce disputes and make the real estate transactions process more efficient.

The Growth of Blockchain Technology

Blockchain technology is being used to develop new ways to conduct real estate transactions. For example, blockchain can be used to track the ownership of property and to facilitate payments. Blockchain is expected to have a significant impact on the PropTech sector in the coming years.

Blockchain can also help to reduce fraud and corruption in the real estate market by making the real estate transaction process more secure and efficient.

The Emergence of New Business Models

New business models are emerging in the PropTech sector, such as fractional ownership platforms, real estate crowdfunding platforms, and PropTech-enabled real estate agents. These new business models are making it easier for buyers, sellers, and investors to participate in the real estate market.

Fractional ownership platforms can make it easier for buyers to invest in real estate, especially in high-priced markets. They can also help to make real estate more affordable for first-time homebuyers.

Likewise, PropTech-enabled real estate agents can provide buyers and sellers with a better experience by using virtual reality and augmented reality tools.

The Increasing Focus on Sustainability

The PropTech sector is increasingly focusing on sustainability. This is due to the growing awareness of the environmental impact of the real estate industry. PropTech startups are developing new technologies to help buildings become more energy-efficient and to reduce their environmental impact.

Using sustainable technologies in the real estate sector can also make it more attractive to buyers and tenants and help reduce the cost of operating and maintaining buildings.

As the PropTech market continues to grow and evolve, we can expect to see even more innovative technologies emerge in the coming years.