PropTech (Property Technology) is much more than savvy real estate lingo; it’s the new frontier of the sector. As with any innovation before it, PropTech has garnered the attention of everyone from the general public to venture capitalists alike in hopes of being among the first in line to usher in (and benefit from) the next revolution.
What Is PropTech, Exactly?
Though the word itself is tossed around more frequently than a beach ball at a Jimmy Buffet concert, it’s exceedingly hard to give PropTech a singular meaning or definition. PropTech can be described as any technology that can be used to help individuals and companies research, buy, sell and manage real estate. A huge range of existing and potential applications within these constraints are currently being explored.
It’s also part of a wider movement that aims to change the way we interact with buildings themselves, prioritizing new digital experiences and changing the way residents, building staff, and vendors engage with the places in which they live and work.
In a similar way to FinTech (Finance Technology), PropTech streamlines a huge range of existing processes while simultaneously cutting costs, disrupting the industry status quo, and creating and/or supporting emerging markets. The extent of its reach is broad and includes the following:
- Resident and Building Experience – Among the most important developments in PropTech, technology targeting resident and building experience aims to consolidate a broad range of functions through the use of centralized tech hubs. Examples include rent payments, maintenance services, and hospitality/consumer services that can be accessed by both landlords and tenants. Real estate sales may also be boosted by offering potential homeowners access to an operating system for buildings that ensures more meaningful interactions with the resident’s physical space.
- Smart Homes– The monitoring, managing, and operating of specific assets in smart homes form a large part of the PropTech segment. This can mean anything from physical assets (thermostats and lightbulbs) to less concrete assets (energy monitoring and conservation).
- Real Estate FinTech– Real estate FinTech involves streamlining the entire process of buying and selling real estate, including the paperwork.
- Real Estate Sharing– A relatively new market segment for real estate, PropTech is essentially redefining the way land, offices, storage, and apartments are occupied. This follows in the footstep of other industries that have embraced the sharing economy.
How Will PropTech Change the Real Estate Market?
Simple to imagine yet difficult to predict. The real estate industry, in particular, has often been resistant to change, and technology has been slow to catch on. However, a huge range of innovative and practical products are already beginning to emerge.
These tools and services will not only ensure that existing processes are refined but also guide developers towards prioritizing tech in new builds. Construction, architecture, and building management will begin to align in their desires to incorporate technology as it becomes increasingly fundamental to the real estate industry as a whole. PropTech will become a core consideration at any stage of the real estate journey, from planning and design to purpose-built completion.
Related: 10 Real Estate Technology Trends You Can Expect in 2020
Resident and Building Experiences
The development of tech designed to improve resident and building experience is among the most highly anticipated. Traditional analogue workflows are being replaced by centralized, digital hubs that are quickly becoming thought of as operating systems for buildings.
PropTech would open up a number of avenues that would increase efficiency; including seamless onboarding/offboarding of tenants or homeowners, instant access to digital contracts/paperwork, and digitally connected services unique to the building.
Resident experience is fast becoming part of a blossoming PropTech vocabulary. Rental markets are growing the world over; resident experience is increasingly being seen as a viable way to attract and retain the best, most reliable tenants. Whether providing quick building repairs for long-standing tenants or bringing the ultimate holiday experience to your Airbnb guests, residents of the PropTech world are discovering that good experiences matter—and they benefit everyone.
These technologies are also changing the markets for landlords and tenants. Relationships that have often been fraught with difficulties and conflict are now being entirely reimagined from the ground up. Once such app revolutionizing the rental experience is Livly. Designed as a combined management hub for landlords and a comprehensive concierge service for residents, it is redefining the way both parties interact in a mutually beneficial way.
Smart Home Technologies
Tied closely to the tenant and building experience, smart home devices are among the most visible elements of PropTech. Many consumer-ready products are already changing the face of real estate. The luxury market in particular now demands smart-capable homes or at least buildings that enable easy integration of the technology. From IoT connected security systems through cutting-edge home theatre systems to everyday utility automation, these once-futuristic home luxuries are very quickly becoming the standard—meaning that ROI for investors can be optimized through the marketing of such products in any given building.
However, smart tech in the home is about much more than providing a 21st-century approach to utilities; it’s also pushing real estate developers towards more energy-efficient buildings that appeal to a new generation of home buyers. The fact that Millennials and younger generations now care more about the environment doesn’t have to translate into sacrificing convenience. Today, smart homes are both eco-friendly and full of modern convenience, making them a real draw for all buyers.
Real Estate FinTech Technologies
Real estate FinTech is also a game-changer, with the introduction of big data and blockchain readdressing the way properties are bought and sold on a fundamental level. Blockchain technologies, in particular, will literally rip up old paper-based contracts, deeds, and legal documents and replace them with entirely digital processes that will streamline buying and selling while reducing costs. This is seen as a longstanding obstacle to the efficient exchange of all types of assets. Blockchain represents a welcome new approach that, if developed properly, can solve problems at almost every link of the chain.
FinTech is also bringing a breath of fresh air to the way in which developers are approaching large projects. New forecasting tools that allow easier calculations for acquisition costs, investment income, funding structures, and taxes are all enabling developers to refine budgets and cut costs. Additionally, the digitalization of fundraising is already well underway, with a huge range of new avenues to explore including crowdfunding and online liquidity platforms that enable individuals to quickly access a network of investors.
Conclusion
Technological innovation may already be ushering in a brave new world for the real estate market, and many predict that a huge range of new innovations will begin to change the face of the industry as we know it. Everything from the way large real estate deals are processed to the way tenants search for properties is on the table, and it seems unlikely that the PropTech revolution will stop there.
Sharing economies, in particular, are changing the way individuals think about real estate and the definition of “home.” The meteoric rise of the digital nomad and the predicted growth of remote workers alongside the fact that homeownership for Millennials is increasingly out of reach means that a “home to call one’s own” is becoming less of a priority. As populations across the world grow exponentially, developers are beginning to design communal buildings and community-based neighborhoods in an attempt to address our increasingly crowded cities.
In the future, the real estate market may no longer be based on buying, selling, and renting to individuals and families at all. In fact, as the PropTech industry gathers steam, we may live to witness a more malleable industry that prioritizes sharing on a much broader scale. With PropTech, the possibilities are about as endless as the potential avenues of impact.
This article has been contributed by Adam McCombs.
