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Navigating regulatory challenges and market barriers in scaling proptech startups


Navigating the challenges and market obstacles in growing property technology (proptech) ventures in India will require deep local understanding—not just of the real estate scene and its use of tech but also of changing regulations. 

The understanding of the digital shift within the real estate industry in the country has largely contributed to the growth of proptech in India. Innovations range from real estate fintech within the segment to the purchase or rental platform of properties and even property management software. Giant players like MagicBricks, and 99acres, and emerging ones like NoBroker and NestAway are changing the way transactions in the real estate market are being done in India.

Complex regulations also pose a huge challenge for growing proptech ventures in India. Through the Real Estate (Regulation and Development) Act, 2016 (RERA), the government regulated the real estate sector in favour of consumer protection but it also allowed every state to frame its rules. Due to this, it becomes very difficult for businesses to function smoothly pan-India.

For example, NoBroker, whose business model involves eliminating the middleman in property deals, have to adhere to different state rules, including adapting to local real estate laws.

High cost to attract customers, traditional mindset, and mixing tech with old real practices of real estate are the big market barriers today. Companies like NestAway address these by focusing on tech-based property management solutions that appeal to youth, most of whom are comfortable with online transactions. For example, house renting and the management of properties generally involves a lot of human work, but NestAway has used tech to make it way easier.

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Integrating technology like artificial intelligence (AI), virtual reality (VR), and blockchain is the major role player in overcoming the challenges, be it regulatory or market. For example, Brigade Group uses VR for virtual property tours to enhance customers’ experience and reach out to more people without geographical limits.

Blockchain also promises to make property transactions and records much easier and safer. Even new entrants like Zvesta, based in Bengaluru, are using blockchain to ensure clear and safe records of property deals, nearly eliminating fraud while also cutting transaction time.

With growth often comes strategy and partnerships. For example, MagicBricks intermediates between the developer and banks to enable an end-to-end service that makes financing easier for the buyer. Such partnerships in proptech, therefore, bring together the credibility and customer base of traditional real estate and financial institutions, helping overcome market barriers to proptech companies.

The Indian government, through its Digital India initiative, has in a big way supported the proptech sector with better internet access and bringing digitisation to its fold. This cuts down on the rife confusion within the property market and sets in place an enabling environment for proptech ventures.

Further, smart city projects by governments present a great opportunity for proptech companies. These projects bring together the constituent elements of urban life—all crying out for the technological solution proptech companies can offer. That’s the tech upstart.

Firms in the proptech space would require much innovation, strategic plan, and sound understanding of tech and local markets to sail through the regulatory challenges, and often there are high market entry barriers. Growth of the sector is being catalysed through tech adoption, regulatory improvements, and strategic partnerships. With an ecosystem that is maturing, proptech in India is at an inflection point in the way that it is not just solving some of these challenges but rather redefining the complete real estate ecosystem.

(Murali Krishna V is Principal at Spyre VC, a proptech-focused fund.)


Edited by Kanishk Singh

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)



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