2016, a year of consolidation for real estate tech sector in India: Report

For the Indian realestate tech sector, 2016 seems to be a year of consolidation with more buyout deals likely to be announced in the coming weeks, according to a report by startup research firm Tracxn. (Hindu Business Line)

Tracxn, quoting media reports, says that Bangalore-based Cryptopy Technologies Pvt Ltd, which runs home-rental startup, Grabhouse, is also looking for a possible suitor. The report says that the sector has already witnessed six acquisitions this year including the $100-million buyout of Commonfloor by classifieds portal Quikr. The other significant deals were PropTiger’s acquisition of Proprates and 3DPhy, MagicSpace by the Indiannetwork.in and Lifepad by Fellahomes.

The Indian real estate market, which is expected to touch $180 billion by 2020, is currently witnessing a slump even as around 4 lakh crore of inventory remains unsold in the top seven cities. Consequently, several real estate tech startups are trying to solve this problem with the help of technology. 2014 was a breakout year for India’s real estate tech startups in terms of funding, with $222 million secured in just 11 rounds. Despite a slump in the real estate market, close to 300 companies have emerged in this sector since 2015, with the pace of investment too picking up with $60 million invested in 20 deals ($61 million from 30 deal rounds in 2015), the report added. A bulk of the investments accounted for seed or early-stage level funding, an indicator that new business models continue to evolve in this sector. Some of them include managed property rentals, P2P listings, broker networks, co-working spaces, short-term residential and commercial rentals, data analytics, and AR/VR solutions.

Some of the most notable investment rounds by ticket size for the year were bagged by Nestaway ($30 million), Housing ($15 million), NoBroker ($10 million), DoorKeys ($2 million) and BHIVE Workspace ($1 million). Business models based on property rentals and buying accounted for 11 of the 20 deal rounds in this sector this year. Some of the most funded Indian players in this space include Housing.com ($136.5 million), Proptiger ($44 million), Nestaway ($43.3 million) and NoBroker ($13 million).

The large upcoming sectors in this sector include commercial co-working places (managed,listings and marketplaces), managed residential rentals, residential property buying and renting and selling enablers. Some of the upcoming niche business models in this space include platforms for networking and networking collaboration among brokers, listing and marketplaces for service apartments, P2P (peer to peer) rental listings and marketplaces and virtual reality-based visualisation platforms.

Co-working spaces have seen a spurt in formation activity since 2015, with close to 60 companies emerging till date in this sub-sector alone. In the year-to-date, around four companies in this sub-sector, including the likes of BHIVE Workspace, SpaceMunk, WiredHub and Qdesq, have secured funding. Delhi-based awfis is currently the most funded ($10 milion) player in this sub-sector. Accel Partners (PropTiger, Commonfloor), Helion Venture Partners (Housing, Indiahomes.com), Tiger Global Management (NestAway), SAIF Partners (NoBroker) and Foundation Capital (IndiaHomes.com) were the most active investors in this sector, Tracxn said in its report.