Private equity inflow in PropTech firms up by 5 per cent to USD 270 million in H1 2022: Housing.com

With acceleration in the adoption of technologies in real estate during the COVID-19 pandemic, private equity players’ interest in investing in PropTech firms in India has gained momentum. 

According to Housing.com, the private equity (PE) investment in PropTech firms increased 5 per cent to USD 270 million during January-June 2022 as compared to the year-ago period.

Between 2009 and H1 of 2022, the PropTech industry in India received a total of USD 3.42 billion in private funding.

Source: Housing Research

According to Housing.com, which is part of REA India, that also owns PropTiger.com and 

Makaan.com, the number of PE deals in the first half of this calendar year (Jan2022 to June 2022) has grown by 1.5 times as against the year-ago period (Jan 2021 to June 2021).

The company had earlier reported that the PE inflow in PropTech rose 35 per cent in full year of 2021 to USD 741 million from USD 551 million in the previous year 2020.

The average deal size in H1 2022 stands at USD 14 million, as compared to USD 32 million during the same period in 2021.

Commenting on the report, Dhruv Agarwala, Group CEO Housing.com, PropTiger.com and Makaan.com, said: "While PropTech firms have been around in India for more than a decade and a half, of late, this space has attracted a lot of interest from investors, both domestic and overseas."

"The use of technology has been steadily permeating across the real estate value chain over the last decade but it has accelerated significantly since the outbreak of the COVID-19 pandemic. This has led to a significant reduction in the time taken for the closure of property transactions. Managing construction activity as well as management of housing societies and commercial complexes have become more efficient," Agarwala added.

Ankita Sood, Head of Research, Housing.com, PropTiger.com and Makaan.com, said: “India is the second largest internet user in the world. This coupled with the pandemic-induced digital acceleration in itself presents a colossal opportunity for PropTech space in the country. The growth is corroborated by the fact that the PropTech investments in India have continued on an upward trajectory despite the global uncertainties, with USD 270 million invested in H1 2022 – a 5 per cent sequential growth on an already higher base of 2021.

The firms in the PropTech space in India are constantly using innovative technologies such as artificial intelligence (AI), the internet of things (IoT), and virtual reality to augment the customer and consumer experience across the real estate life cycle, Sood added.

Sood further added, “Along with these, upcoming technologies such as metaverse and blockchain which are slowly gaining ground in India, are poised to open up a myriad of opportunities in the real estate sector.”

All stakeholders -- including real estate developers, property brokers, and prospective customers -- are increasingly using digital tools and technologies not only for search and discovery but also for advisory and transactional support.

Sales and marketing have become more effective and targeted with the use of technologies like Artificial Intelligence, machine learning, virtual and augmented reality, and drones.

As per the data, PropTech firms that are involved in construction technology, sales and marketing, and coworking and coliving garnered 77 per cent of the total PE investment during January-June 2022.

The investments tracked include private equity, venture capital, debt, PIPE (Private investment in public entities), project level investments, and pre-IPO private equity deals, at the early, growth, and late stage.