Private Equity investments in proptech companies rose to $741 million in 2021: Report
- ByStartupStory | July 15, 2022
According to Housing.com, private equity investments in proptech companies increased by 35% to $741 million last year as investors looked to capitalise on enormous opportunities created by the growing use of technology in the real estate industry. 69 per cent of the total funds went to proptech companies that offer solutions for sales, marketing, and construction management. $551 million was invested into proptech companies in 2020.
The Indian players in proptech got $3.2 billion in private equity (PE) investments between 2009 and 2021. Private equity, venture capital, debt, PIPE (Private Investment in Public Entities), project level investments, and pre-IPO private equity deals in the early, growth, and late stages are all included in the overall investment amount for Australia’s REA group-owned Housing.com.
According to the “PropTech India Monitor 2022” study by Housing.com, a division of REA India, which also owns PropTiger.com and Makaan.com, PE investments in proptech companies have increased at a CAGR (Compound Annual Growth Rate) of 55 per cent since 2010. According to the analysis, in 2021, the average deal size for PE investments in proptech would reach a record high of $25 million.
“Undoubtedly, the pandemic has proven to be a significant turning point for the proptech industry in India. Real estate, like many other industries, was able to take advantage of the digital acceleration that was happening at the time,” Housing.com’s Group CEO, Dhruv Agarwala, remarked. He also pointed out that the use of cutting-edge technologies like blockchain, virtual and augmented reality, AI, and machine learning has created new prospects for proptech businesses.
According to a recent consumer survey conducted by Housing.com, a sizable 40% of prospective homebuyers are willing to make their purchase entirely online or after just one visit. According to Housing.com research, tech companies that offer construction technology, as well as sales and marketing services, got 69 per cent of the $741 million in investments made during the previous fiscal year. Compared to just 4% in 2020, construction technology companies now account for 36% of all PE investments.
The survey stated that the several waves of infections and the ensuing lockdowns, together with social distance standards and work-from-home policies, caused a decline in demand for co-working and co-living locations. In a similar vein, the share of interior design services firms in total PE inflow dropped from 32% in 2020 to 11% in 2021, while the participation of the furniture rentals category in total investments fell from 13% to 3% over the period under consideration. Ankita Sood, Head of Research at Housing.com, expects a large increase in PE inflows into the proptech sector over the next five years.
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