CXOToday has engaged in an exclusive interview with Chirag Mehta, Founder, Arbour Investments
Q How do you envision real estate fintech evolving in the next 5-10 years, and what key technological advancements do you anticipate will drive this evolution?
In the next 5-10 years, real estate fintech is expected to undergo significant evolution, driven by technological advancements that will improve efficiency, streamline processes, and enhance user experiences. Some key technological advancements and trends that will shape the real estate fintech landscape include:
Automation: AI will play a crucial role in automating processes such as property search, asset evaluation, risk analysis, and general management tasks, leading to better offers, faster deals, and safer investments.
Blockchain: Blockchain technology will continue to gain traction in real estate fintech, providing a secure and transparent platform for recording and managing property transactions.
Data Analysis: Advanced data analysis tools will help real estate professionals better understand market trends, property valuations, and investment opportunities.
Digital Payment Systems: The adoption of digital payment systems will become more widespread, enabling faster and more secure transactions in real estate.
Tech-Enabled Underwriting and Servicing: Fintech solutions will leverage technology to improve the underwriting and servicing processes, making it easier for businesses to access financing and manage their properties.
Platforms Leveraging FinTech: As the real estate ecosystem evolves, platforms that combine fintech and real estate will expand their offerings through acquisitions, product development, or partnerships, owning more of the real estate transaction cycle.
Faster Payment Cycles: Fintech solutions will accelerate payment periods, making it easier for businesses to manage cash flow and invest in property improvements.
These technological advancements will not only streamline processes but also create new opportunities for innovation and growth in the real estate fintech sector. As a result, we can expect to see a more efficient, user-friendly, and transparent real estate market in the coming years.
Q How have recent government policies and incentives affected the real estate landscape?
Recent government policies and incentives in India have significantly affected the real estate landscape. Some of the key effects include:
Implementation of RERA (Real Estate Regulatory Authority): In 2016, the Indian government implemented RERA to increase transparency and confidence in the real estate sector, which in turn increased demand for property and pushed up prices.
Taxation policies: Changes to taxation policies, such as stamp duty, registration fees, and capital gains taxes, have increased the cost of buying and selling property, directly impacting real estate prices.
Investment incentives: Government initiatives like the Real Estate Investment Trust (REIT) and the Affordable Housing Scheme have encouraged foreign investment in the real estate sector, increasing investment and pushing up prices in certain areas.
Environmental sustainability: The Indian government’s incentives, such as tax breaks, low-interest loans, and subsidies for energy-efficient materials, have promoted green and sustainable development in the real estate sector.
Affordable housing: The government has launched initiatives like Pradhan Mantri Awas Yojana — Gramin, which aims to build 10.2 million dwellings for the rural poor by 2019, and Pradhan Mantri Awas Yojana — Urban, which aims to create 12 million new houses for the urban poor by 2022. These initiatives have boosted the affordable housing segment, attracting more investors and buyers.
Ease of doing business: The government has been working on simplifying processes and reducing costs for real estate developers, such as easing compliance and relaxing norms for foreign investment.
Infrastructure push: The government is expected to announce incentives that will boost the growth of the sector, such as reducing transaction costs and expanding the SWAMIH Fund, which ensures the completion of projects and boosts homebuyer confidence.
These policies and incentives have shaped the real estate landscape in India, driving growth, investment, and innovation in the sector.
Q In the context of real estate transactions, how can real estate solutions contribute to improving efficiency, transparency, and accessibility for both buyers and sellers? Are there specific challenges in the real estate industry that fintech is particularly well-suited to address?
Real estate solutions can contribute to improving efficiency, transparency, and accessibility for both buyers and sellers. Fintech, a combination of financial technology, has been particularly well-suited to address specific challenges in the real estate industry, such as:
Lack of transparency: Fintech solutions can provide a transparent platform for recording and managing property transactions, ensuring that all parties involved have access to accurate and up-to-date information.
Poor data management: Fintech can improve data management by streamlining processes and reducing errors, making it easier for all stakeholders to access and understand the information they need.
Slow decision-making: Fintech solutions can expedite operations by automating processes such as property search, asset evaluation, risk analysis, and general management tasks, leading to faster and more informed decisions.
Inefficient transactions: Fintech can help accelerate payment periods, making it easier for businesses to access financing and manage their properties.
Limited accessibility: Fintech has democratized real estate investment, allowing people of all income levels to participate in the market through platforms like crowdfunding.
Cybersecurity threats: Fintech solutions can help protect against potential data breaches and ensure that payment or other aspects of the deal process are as secure as possible.
Loss of face-to-face encounters: Fintech can help maintain relationships and trust in the real estate industry despite the increasing reliance on digital solutions.
By leveraging fintech solutions, the real estate industry can overcome these challenges and continue to evolve, offering better experiences for buyers, sellers, and other stakeholders.
Q With the increasing use of blockchain technology, how do you see it impacting the real estate fintech landscape, particularly in terms of security, trust, and streamlining processes like property transactions and title management?
Blockchain technology is poised to have a transformative impact on the real estate fintech landscape, particularly in terms of security, trust, and streamlining processes like property transactions and title management. Some of the key impacts and benefits of blockchain in real estate include:
Increased Transparency and Trust: Blockchain technology creates more transparency, minimizes fraud, and reduces the need for intermediaries, thereby instilling confidence in buyers, sellers, and investors.
Streamlined Processes: Blockchain enables the use of smart contracts and tokenization to streamline real estate processes, making them more efficient and accurate.
Reduced Costs and Increased Accessibility: By eliminating intermediaries, blockchain technology reduces costs, making real estate investing more cost-effective and inclusive, and lowering the barrier to entry for investors.
Facilitating International Investments and Fractional Ownership: Blockchain can facilitate international real estate investments and codify the practice of fractional ownership, opening up new opportunities for investors.
Challenges and Considerations: While blockchain offers significant benefits, challenges such as the complexity of integration with existing real estate systems and the need for widespread adoption across the industry should be considered.
Blockchain technology is set to revolutionize the real estate fintech landscape by enhancing security, trust, and efficiency, and by making property transactions and title management more accessible and cost-effective for all stakeholders.
Q As the world becomes more interconnected, cross-border real estate transactions are becoming more common. How can real estate institute facilitate and streamline international real estate investments, and what challenges need to be addressed in this globalized context?
Real estate institutes can play a pivotal role in facilitating and streamlining international real estate investments through various means. These institutes can provide education and training on global real estate markets, including the associated risks and returns, macroeconomic and geopolitical considerations, and the identification of opportunities.
They can also offer insights into international real estate development, global real estate investment trusts (REITs), global mortgage products, and mortgage-backed securities (MBS), as well as the international taxation of real estate. By equipping real estate professionals and investors with this knowledge, institutes can help them make informed decisions when engaging in cross-border transactions.
Furthermore, real estate institutes can provide access to global networks of real estate professionals, investors, and developers. These networks can offer valuable connections and partnerships, which are essential for navigating the complexities of international real estate investments. Additionally, these institutes can offer resources and tools for due diligence, market analysis, and risk management, which are crucial for assessing and mitigating the unique risks associated with international real estate transactions.
Despite the potential benefits, there are several challenges that need to be addressed in the context of globalized real estate transactions. One significant challenge is the differences in legal and regulatory frameworks across countries. Navigating these variations requires a deep understanding of local laws and regulations, which can be facilitated through the resources and networks provided by real estate institutes. Currency exchange rates, language barriers, and cultural differences also present challenges in international real estate transactions. Real estate institutes can help address these challenges by providing access to language and culture-specific resources, as well as by offering guidance on navigating currency exchange and international business practices.
Moreover, varying levels of transparency and data availability in different countries can pose challenges for international real estate investments. Fintech solutions, such as blockchain technology, can help address this issue by providing a transparent platform for recording and managing property transactions. Blockchain technology can also facilitate international real estate investments and codify the practice of fractional ownership, opening up new opportunities for investors.
In conclusion, real estate institutes are instrumental in facilitating and streamlining international real estate investments by providing education, resources, and access to global networks. Fintech solutions particularly block chain technology, can help address challenges related to transparency, trust, and efficiency in cross-border real estate transactions. By leveraging the expertise of real estate institutes and the innovative capabilities of fintech, investors and professionals can navigate the complexities of international real estate transactions more effectively.