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Inflow In PropTech Firms Dipped Slightly to $719 Million in 2022

The Housing.com report states that in H1 2023, Proptech investments in India surpassed the $4 billion mark

Inflow In PropTech Firms Dipped Slightly to $719 Million in 2022
POSTED ON August 01, 2023 11:42 PM

Despite global economic uncertainties, funding in PropTech firms experienced a slight dip in 2022, reaching $719 million, according to a report by Housing.com. However, the sector has demonstrated resilience, with a cumulative investment of nearly $4 billion between 2009 and 2022, boasting a remarkable compounded annual growth rate (CAGR) of 49 per cent.

Dhruv Agarwala, Group CEO of Housing.com, PropTiger.com and Makaan.com, commented on the sector's performance: "Investments in the PropTech space remained stable throughout 2022, even amidst global turmoil. Over the past decade, the real estate sector has made significant strides in adopting innovative technologies, particularly in the last three years. The COVID-19 pandemic and subsequent lockdowns served as catalysts, accelerating technology adoption across the industry."

While funding in PropTech firms marginally declined from $742 million in the previous year, specific segments within the industry drew substantial investor interest. Notably, shared economy platforms such as co-living and co-working secured the majority share, accounting for 64 per cent of the total fund inflow. 

Proptech
The coworking segment has witnessed rapid expansion in the last three years

This surge of investor confidence can be attributed to the perceived growth potential in these segments.

Additionally, PropTech players offering construction technology solutions received 15 per cent of the total funding in 2022. This trend reflects the real estate developers' growing emphasis on reducing construction times while maintaining high-quality standards. In countries like India, where extended construction cycles inflate project costs, PropTech solutions are increasingly being leveraged for effective project management.

Agarwala pointed out that the coworking segment has witnessed rapid expansion in the last three years, driven by the escalating demand for flexible workspace solutions from corporates.

The report encompassed various investment deals, including debt, private investment in public entities, PE investments in Special Purpose Vehicles (SPV), Project-level investments, Pre-IPO PV deals, and buyouts. However, deals with undisclosed amounts were excluded from the analysis to maintain transparency.

Despite facing challenges during the COVID-19 pandemic due to the temporary closure of schools and colleges, the co-living segment made a remarkable recovery with the reopening of educational institutes and offices. Co-living operators that weathered the pandemic storm experienced a V-shaped recovery, with substantial demand for superior quality rental accommodations.

Between 2009 and mid-2023, Proptech investments in India witnessed the shared economy sector as the frontrunner, comprising 40 per cent of total investments, followed by sales and marketing with a 24 per cent share. 

Proptech investments in India have grown at a CAGR of 49 per cent since 2010, with segment such as shared economy, sales and marketing seeing significant investments in value terms.

In H1 2023, the cumulative Proptech investments in India surpassed the $4 billion mark (since 2009), backed by tech adoption in real estate, especially in the last few years.

Commenting on the report, Ankita Sood, Head of Research, Housing.com, PropTiger.com and Makaan.com, said India's PropTech sector is thriving. "Despite global headwinds, investments in 2022 reached $719 million, just shy of its historic peak. Demand-side tech adoption is clear, with investments in sales, marketing, and the shared economy. Supply-side tech is also accelerating, with construction technology receiving $109 million, or 15% of total investments in this period," she added.  

According to her, the last half-decade has seen tremendous investment growth, indicating that India's PropTech sector is a bright spot in the global market. Today, tech is used across all real estate lifecycle stages, from finding a property to closing the deal. 

"This is also cutting time and pricing, making processes for all stakeholders more efficient and streamlined," Sood noted.

In summary, while the PropTech sector experienced a marginal dip in funding during 2022, its overall growth trajectory remains positive. The robust investment in shared economy platforms and construction technology solutions underscores the industry's commitment to leveraging technology for sustainable progress and development.

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