The push for the digitisation and growing stakeholder confidence during the pandemic has manifested into the bull run of private equity investments in the PropTech firms, which reached an all-time high of USD 0.7 billion in 2021 according to Housing.com’s PropTech India Monitor 2022 report. This high-water mark comes after a record-high year of private investments in the PropTech, which had reached USD 0.5 billion in 2020. With this, the PropTech industry in India has received a total of USD 3.2 billion in private funding between 2009 to 2021. Investments in PropTech grew at an impressive 55 per cent (CAGR) between 2010-2021, compared to a 20 per cent growth in total private equity investments received across industries during the same period. Our analysis indicates that the tech firms under construction technology and, sales and marketing, led the PropTech rally in 2021, accounting for 69 per cent of the USD 0.7 billion investments received during the year.
Construction Technology took the highest share of 36 per cent in the private equity inflows of USD 742 million received in 2021. It also has the largest average deal size of USD 53 million compared to the other segments in 2021. The soaring need for planning, management and optimisation of construction processes has fuelled the demand for such services amongst the stakeholders. Such construction technology platforms offer comprehensive B2B services and tools for material procurement, optimisation of material use, tracking the project progress, and effective allocation of resources, thus improving the construction quality and efficiency.
Also, the major developers dominating the markets post the consolidation due to the structural changes, such as Real Estate (Regulation and Development) Act (RERA) and Goods and Services Tax (GST), have high budget portfolios and can invest in construction technology platforms to optimise processes as opposed to retail developers. Moreover, amidst the upward inflationary pressures and rising input costs, such platforms have even more gained prominence to reduce wastage of materials and augment the processes. The rising demand and popularity of such platforms indicate that the segment is poised to maintain a positive rally in the coming period.
