Private Equity Investments In Proptech Climb 35% In 2021: Housing.com Report

Private equity (PE) investments in proptech firms increased by 35% during the last calendar year to a record USD 741 million, driven by increased adoption of technology in the real estate sector, according to the latest report by the country's leading digital real estate firm, Housing.com.

• PE inflow in proptech touches USD 3.2 billion during 2009-2021.
• PE investments in proptech firms growing at a CAGR of 55 % since 2010.

Research by the REA India-owned leading full stack digital real estate platform Housing.com, found that the inflow of funds into proptech firms stood at USD 551 million in the 2020 calendar year. The proptech industry in India has received a total of USD 3.2 billion private funding between 2009 and 2021. 

Source: Venture Intelligence, Housing Research

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.

The annual report on the sector, titled 'PropTech India Monitor 2022' by Housing.com, that is part of REA India, which also owns PropTiger.com and Makaan.com, stated that in India, private equity investments in proptech firms have been growing at a CAGR of 55% since 2010.

The growing investor confidence has pushed the average deal size of private equity investments in proptech to an all-time high of USD 25 million in 2021. 

"The pandemic has definitely turned out to be a crucial turning point for the proptech space in India. Like many other sectors, real estate managed to leverage the digital acceleration witnessed during this period. The adoption of new age technologies, such as artificial intelligence and machine learning, virtual and augmented reality, and blockchain, have opened-up new opportunities for startups in proptech," said Dhruv Agarwala, group CEO, Housing.com, PropTiger.com and Makaan.com.

“We believe that proptech in India will continue to grow, with the future being anchored around key aspects such as efficiency, scalability, data-backed decision making and sustainability. The adoption of technology will empower all stakeholders, as firms will scale at a much faster rate, improve consumer experience, bring in much-needed transparency and aid in speedier decision making,” Agarwala added. 

As per our recent consumer survey, a significant 40% of potential home buyers are willing to buy a property completely online or after just one visit. 

Source: Venture Intelligence, Housing Research

As per our research, tech firms doing sales and marketing, and providing construction technology, garnered 69% of the total USD 741 million investments received during the last calendar year. 

The share of construction technology firms in total PE investments increased to 36% in 2021, from just 4% in the year 2020. 

Proptech firms in sales and marketing got 33% of the total PE investments last year as against 13% share in the 2020 calendar year. Investments in tech-based sales and marketing firms grew 3 times in 2021 to USD 241 million from USD 70 million in the preceding year.

The share of proptech firms in co-working and co-living, in terms of investment received, fell to 14% in 2021 from 36% in 2020. The shared economy segment, comprising co-working and co-living operators saw a 47% decline in fund inflow to USD 104 million in 2021 from USD 198 million in 2020. The fall in investments in this category is mainly due to the adverse impact of the COVID-19 pandemic. The several waves of infections and the consequent lockdowns, along with social distancing norms and work from home, resulted in plummeting demand for co-working and co-living spaces, the report pointed out. 

Similarly, the share of interior design services firms in the total PE inflow declined to 11% in 2021 from 32% in 2020. The furniture rentals segment's share in total investments dipped to 3% from 13% during the period under review. 

“The latest trends show that while proptech segments such as sales and marketing continue to garner investor interest, private equity inflow has significantly picked up in construction technology amidst the rise in input costs, as digitisation aids in achieving greater efficiency and increases cost savings. We see the next five years bringing in sizeable investments in the modernisation of the real estate sector across segments”, said Ankita Sood, head of research at Housing.com.

Link to the report: https://bit.ly/3RzxCUk