Emergence of Proptech to mitigate Real Estate Frauds

Emergence of Proptech to mitigate Real Estate Frauds

The real estate sector is considered one of the most valuable sectors of the country, contributing around 5.4 per cent to the GDP (Pacra, 2021). However, several risks and challenges, including low liquidity, tedious title transfer process, and opaqueness, have made it difficult for many to invest. This business’s untapped economic and tax potential is hard to realise without the digitisation of real estate and mitigation of investment risks and frauds by bringing transparency to the projects.

The incorporation of technologies in the real estate sector will help in mitigating several challenges that reduce the sector to flourish. In several developing countries, including Pakistan, the real estate market faces the challenge of fraud, and millions of unsuspecting aspiring homeowners have lost their life savings and dreams of owning a house. Recently, a private housing society has been seen carrying out such fraud. Nearly 12,000 low-middle-income families have lost everything to the well-connected, powerful developers as they are found alleged in money laundering. Furthermore, around 43 families who owned apartments in Nasla Tower in Karachi found themselves homeless after the multi-storey building was demolished on the Supreme Court’s orders for encroaching upon the road.

Globally, the real estate industry embraces digital transformation for better efficiencies, cost reduction and enhanced decision-making to deliver better customer experiences and satisfaction. Over the years, several technologies like Blockchain, Artificial Intelligence, Asset Tokenisation and Proptech have made their way into the real estate sector to make it sustainable, profitable and transparent.

Proptech, or Property Technology, is a digital tool to optimise how people buy, sell, research, market, and manage a property. It makes the data collection process easier through Artificial Intelligence (AI) driven marketing, evaluating the development, investment, leasing, buying, and selling strategies. It enhances the automation of paperwork and secures remote transactions. Using such tech tools saves considerable time obtaining property data, land registry, technical information and surveys, and co-ownership information. These technologies are considered a real revolution for the real estate industry. However, Pakistan is also trying to adopt these innovative practices and technologies to benefit from the technological era.

It also helps eradicate existing and inherent problems stemming from opaque practices and information asymmetry in the real estate sector. Introducing proptech in this business can shift the value generated from the real estate sector. Inclusive, transparent and asset-backed growth will propel the country towards positive economic growth.

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IMARAT Institute of Policy Studies

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