Proptech, short for property technology, is an up-and-coming trend in commercial and residential real estate that encompases the new innovations within the market. It involves technology to help people buy, sell, and manage properties. Think of proptech as the digitalization of real estate. Typically, the term “proptech” is used to refer to startups in the market. These companies provide innovative business models and technologies to be used in real estate.
Proptech has been particularly attractive to building owners and venture capitalists. In 2017, venture capitalists invested a record $12 billion in proptech start-ups globally according to a tech research marketing agency, RE:Tech. Proptech has continued to grow in the following years.
More and more companies are adopting new technologies and introducing innovations so their company doesn’t become obsolete in the technology revolution. Businesses are moving quickly in order to capitalize on the merge between the physical and digital worlds. Real estate companies have already seen new developments such as access control systems like Kisi’s. Companies like Uber and Airbnb revolutionized their respective industries-- now real estate is seeing the same thing.
How Does Proptech Work?
The goal of proptech is to incorporate innovation by improving efficiency, customer experiences, and general processes. Historically, the real estate industry suffers from unaffordability, complicated or bothersome leasing and payment options, and lack of flexibility. Proptech is pushing companies to address these issues.
Proptech companies aim to use the rise of technology to their advantage by reinventing what people know as real estate. Each company is different, ranging in level of radical changes to the real estate industry. For example, some firms use new real estate technology to completely replace real estate professionals. Other firms focus more specifically on enhancing a certain aspect of the real estate business. These startups have an advantage in the market because they can incorporate innovation every step of the way and truly rethink existing systems and processes.
Some Examples of Proptech
The span of technology emerging in the real estate space is vast. 3D printing and offsite manufacturing fall under manufacturing, while advancements in other areas, such as bricks being designed to act as batteries for solar panels, fall under the materials category of proptech. For visits to properties, access control is increasingly popular, whether it be fingerprint technology, keyless entry systems, or mobile control. Rightmove and Zoopla are two different property portals that demonstrate advancements of software within the industry.
Other proptech examples include companies that assist with valuing properties, selling homes within a set period of time, and applying for mortgages. Another result of the emergence of proptech is a cost structure shakeup. Companies are offering more affordable prices and more attractive services than what has traditionally existed.
Proptech includes online platforms unrelated to buying and selling too. For example, Nextdoor is an application that allows residents to receive up-to-date information and notices from other people in the neighborhood. Another application, Clutter, packs, stores, and moves people’s belongings and includes an online tracking system.
Proptech and Data
Proptech is related to the Internet of Things (IOT). Included in the IOT is the popular Amazon Alexa. Alexa, along with other digital home assistants, is an example of the increasing interconnectedness of people and things. According to the World Economic Forum “Technological Tipping Points,” it’s estimated that by 2022, there will be over 1 trillion sensors connected to the internet. These sensors are things like Alexa among other innovations, all of which push a more connected society. This will lead to more data, which can then be used for planning and selling, particularly in the real estate space.
IOT sensors gather data which is processed using big data analytics. The data can then be used in systems like artificial intelligence to add value to end consumers. Some people bring up issues with privacy among this technology innovation we are experiencing, but within the real estate space, there are several checks and balances put into place to ensure customer and resident data is being used properly and not kept for financial gain.
What Impact Does Proptech Have?
In general, the lifetime of technology innovations depend on the technology’s usefulness to consumers. It’s likely that in the real estate market, many systems will be enhanced by the entrance of proptech and perhaps completely replaced. For example, companies have the ability to acquire properties by leveraging data. Blockchain technology, an infrastructure for transactions and data exchange, can help with the timeliness of a purchase. With 3D technology, rendering, and virtual reality, it’s possible for individuals to even take virtual interactive tours of a property when deciding if they will buy. Professions, such as real estate consultants, still have a place and are adapting to the changing industry to serve customers the best they can.
Environmental and Social Impact
Proptech has been proven to be a force for environmental and social good. Active smart buildings which integrate renewable technologies are growing in popularity. Systems monitor energy conversion, storage, and usage. This gives homeowners and property managers more control. The creation of energy self-sufficient structures has led to further improvements in air quality and living standards.