The Indian real estate industry has seen significant growth in recent years, especially in the proptech sector. Proptech startups, which utilize technology to revolutionize the real estate market, have been on the rise since the mid-2000s. In this Entrackr report, we will delve into the business models, funding trends, and future prospects of proptech startups in India.
Evolution of Proptech Startups in India
The story of proptech startups in India began with the entry of Info Edge-owned 99acres and Times Internet-owned Magicbricks in the mid-2000s. Since then, the proptech segment has witnessed rapid evolution, with startups emerging in various areas such as brokerage tech, construction tech, AI, AR, VR, IoT, and SaaS. Notable players in the market include Square Yards, Infra.Market, NoBroker, and Livspace.
Image: Entrackr Report
Funding Trends in Proptech Startups
The proptech sector has attracted significant funding in recent years, with nearly $2.4 billion raised between January 2021 and March 2023. This includes $2.25 billion raised by 39 growth stage companies and $145 million raised by 69 early stage startups. Proptech startups have managed to raise a total of $2.9 billion since January 2020. However, funding in this sector experienced fluctuations due to the impact of the COVID-19 pandemic and the overall funding environment.
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Revenue and Valuation of Top Proptech Startups
Entrackr has prepared a list of the top 20 most funded proptech startups in India, based on their revenue numbers and valuation. Oyo, Livspace, Infra.Market, and NoBroker are among the top funded companies, with varying levels of capital efficiency. Infra.Market stands out with revenue of over Rs 6,000 crore, positioning itself as a leader in the industry. Other companies with better capital efficiency include IndiQube, Square Yards, WeWork India, and HomeLane.
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Revenue Generating Real Estate-Focused Companies
To better understand the financial performance of established companies in the real estate segment, Entrackr has compiled a list of revenue generating companies, including both new age startups and legacy players. Square Yards, Anarock, 99acres, Housing, and PropTiger are among the companies that have shown growth in revenue post-COVID. The overall revenue of REA India, which owns Housing.com, PropTiger, and Makaan.com, increased by 92% to nearly Rs 300 crore in FY22.
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Growth in Major Segments
The post-COVID period has witnessed a surge in demand for various types of properties, including housing, office, retail, warehouse, co-working, and co-living spaces. Residential real estate sales in top cities of India grew by 50% in 2022, with over 3,08,940 units sold. The proptech startup landscape reflects this trend, with more than 29 startups in the real estate segment raising nearly $345 million between January 2021 and March 2023. Proptech startups specializing in construction materials, hospitality, co-working, interior design and decor, furniture and rental tech, mortgage and finance, co-living, and property management have also seen significant funding and growth.
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Challenges and Industry Initiatives
The proptech sector faces challenges due to the heavily regulated nature of the real estate market and the dominance of builders. Many proptech startups have struggled to prioritize the interests of end customers, often finding themselves in a marketing role for builders rather than independent players. However, there is hope for the sector, with the emerging boom in tier 2 cities and initiatives to clean up land ownership rules and digitize processes.
Industry initiatives such as the partnership between Credai and Venture Catalysts to set up a $100 million fund for proptech startups and scaling programs like Gruhas ASPIRE for early-stage startups showcase the potential for growth in the industry. Proptech companies are also expanding their offerings, with services like Rent Now Pay Later and collaboration with tech industry bodies to mentor startups in the real estate sector.
Image: Active Investors in Proptech
Conclusion: Prospects for Proptech Startups in India
Although the proptech sector faces challenges, such as regulatory hurdles and the dominance of builders, there are promising signs of growth and opportunities. The demand for properties, advancements in technology, and progressive moves to digitize processes drive the proptech market. With the boom in tier 2 cities and the emergence of integrated players across the real estate value chain, the proptech sector in India is poised for significant growth in the coming years.
Original Article Source: Entrackr
