Is “brick and mortar” the way forward for PropTech?
4 min read 29 Oct 2021, 05:08 PM ISTPropTech companies have, hitherto, been more “tech” than “prop”, and have been typically founded by technology entrepreneurs and funded by venture capital firms who specialize in tech investing. These technology firms aim to transform the real estate industry into digital players.
PremiumGlobal real estate is worth more than USD 217 trillion and accounts for 60% of worldwide assets owned by individuals. Despite being the single largest asset class, real estate has long remained a sector yet to be revolutionized by technology, and it has only been recently that it has been infused with innovation. During the past decade, buoyed by the sheer size of the opportunity in real estate, a number of technology firms have made inroads into this traditional industry, creating the PropTech industry and making it easier for both consumers and service providers to transact, own, and share real estate assets.
PropTech companies have, hitherto, been more “tech" than “prop", and have been typically founded by technology entrepreneurs and funded by venture capital firms who specialize in tech investing. These technology firms aim to transform the real estate industry into digital players. However, recent trends show that the transformation has been a two-way street, with the tech players digitizing opportunities in real estate while also vertically integrating into the manufacturing of the real estate products that they specialize in.
In the same way that streaming services such as Netflix started out as pure digital platforms and then expanded into producing the underlying shows that they carried, PropTech firms are increasingly building the assets that their platforms list. Whether it is Airbnb building its own properties and partnering with developers, or Zillow buying and selling homes on its own account, PropTech is spreading itself through the real estate stack. This trend is not just global - our very own PropTech players in India have been going down a similar path. An example of this is SmartOwner, one of the prominent PropTech firms in India, which is already leading the trend of vertical integration by getting into real estate development management.
When we examine the journey of SmartOwner, we can understand the business imperatives that have caused PropTech to vertically integrate within the real estate industry. Founded in 2012, SmartOwner not only grabbed the attention of investors but also grew rapidly, becoming Asia’s fastest-growing PropTech company within five years. SmartOwner revolutionized investing in Indian real estate by creating a user-friendly marketplace for properties that were highly curated from the perspective of their suitability as an investment. In an industry where investors found it quite challenging to make safe and reliable investments, SmartOwner’s carefully curated opportunities came as a breath of fresh air. One of the key reasons for SmartOwner’s success was its focus on delivering an experience that enabled users to transact in a simple and safe manner.
Fast forward nine years to the present day, and SmartOwner has come full circle with the launch of a luxury apartment project, Centreo, developed by its in-house development management arm - Prime One Corp. What made SmartOwner - India’s leading property marketplace, to get into the world of development? Having achieved scale and with clients present across the world, taking over development management was necessary to reduce third party risks and give SmartOwner greater control over its own destiny. We see this exact same phenomenon being played out abroad as well - both in PropTech and in other tech platforms - the latest example being Amazon’s bid to purchase MGM. All these companies are vertically integrating within their industries and going from being merely platforms to becoming major manufacturers of their products. The goal is simple - to reduce counterparty risk and have greater control over their futures.
For SmartOwner, having offered clients investment options that were curated in-house, developing projects was a natural progression, albeit a tough one to achieve in a short period of time. The decision was also catalyzed by the changing needs of consumers in fast-growing emerging markets such as India. As people become wealthier, the demand for luxury products designed and built to international standards is increasing rapidly. Well-traveled homebuyers in markets such as Bangalore, having seen how people live in the rich world, have started demanding homes built to international standards - a demand that the traditional real estate industry has struggled to meet. For the NRI founders of SmartOwner, designing to international standards came more naturally, given their professional experience in the U.S.
SmartOwner’s first project was the luxury apartment development, Centreo. Designed by U.S. architect Jeff Kiser, Centreo has quickly built a reputation for Prime One Corp, SmartOwner’s development wing, and won awards and become one of the most coveted luxury residential projects in South Bangalore. Customers who have purchased their homes in Centreo attribute their buying decision to the attention to detail and international aesthetic of the project. Riding on the success of Centreo, Prime One Corp now has a series of developments planned for launch over the next few months, thus completing SmartOwner’s journey from a pure tech platform into a major real estate developer in its own right. SmartOwner’s journey is a harbinger of things to come for the PropTech world more generally. While the tech world uses the phrase brick and mortar figuratively, for Proptech firms, that may literally be their future.
Disclaimer: This is a company press release. No HT journalist is involved in the creation of this content.
