Real Estate is one of the main sectors that play a leading and influential role in the global economy. In recent years, both the domestic and the global real estate market have shown great scope for growth and significant investment potential.
The introduction of new technologies, albeit at a slower pace compared to other industries, has led to the creation of innovative and disruptive solutions in the real estate market. The term used is Proptech which is short for Property Technology and is the intersection of the property 'industry' with technology and software. Essentially, it is the application of information technology and specially designed platforms and applications to the real estate market and has the potential to radically transform the residential and commercial market and management—the goal: smarter, smoother, and faster transactions.
In this article, you'll see what PropTech is all about, the benefits, and finally, current and future PropTech trends you'll need to know about.
What Is PropTech?
PropTech derives from two different sources. Of course, you have the property as a starting point, and then there is technology. Real estate technology, or PropTech, emerged from FinTech, a game-changing technology that gave us online banking, crowdfunding, and peer-to-peer lending, among other things.
Real Estate is a cumbersome industry. It moves slowly and unevenly, and many people who manage real Estate tend to be conservative. All of that is changing thanks to PropTech, and one of the most exciting developments is the increased diversity of entrants into this industry.
These are only some of the real estate industry's problems and have ignited the PropTech revolution.
- Will you be able to buy and sell houses over the internet?
- Why does buying a house take so long?
- Why isn't it possible to find out how much each house is worth online?
- Why is it necessary to fill out a paper form to obtain a mortgage?
- Why does the bank need to send a surveyor to measure a property?
- Why can't contracts and money transfers be made automatically without requiring several lawyers and other third-party professionals?
The first signs of a PropTech movement were websites like Zoopla, Zillow, Trulia, and others. Nowadays, it is very natural to go online and find out pretty much everything that is for sale in a specific area, rather than going around different estate agents and picking up papers describing houses for sale.
With PropTech 2.0, hundreds, if not thousands, of startups are eagerly attempting to disrupt the slow-moving conservative real estate industry to reach a point where buying and selling houses online will become the new norm.
There are several ways in which developments in PropTech can benefit the real estate industry. Not only are they a lucrative alternative for investors, but new tools can help a large number of buyers, sellers, renters, and owners by improving the process of searching for and transferring or renting real Estate, while software tools and services are available to finance these transactions. Thus, both companies and users benefit as the eyes of all involved are focused on modernizing the real estate sector (residential or commercial), making it simpler to navigate and ultimately more cost-effective.
The advantages of Proptech are summarized as follows:
Increased Innovation in the Real Estate Market
Proptech delivers speed. In addition, big data, sensors, and data analysis allow the real estate market to innovate more. They provide information and knowledge necessary to make informed decisions, making buying and selling more properties more practical.
In particular, big data and blockchain technologies improve transaction transparency and security. These tools enable users to track their property transactions with a single button click. Because every party involved will have visibility into every transaction, it is possible to achieve greater transparency, leading the industry to higher standards.
Technology facilitates property managers in many problems, such as finding tenants or promoting a property. From floor plans and photos to online property tours, the expansion of three-dimensional (3D) virtual tools enables interested parties to promote either an existing or new property. In no time, now, a hand-drawn sketch of a floor plan can be turned into a 3D model.
Furthermore, the procedures for renting or selling a property are digitized. There are real estate platforms or apps where renters, buyers, and owners find each other easier according to their requirements. Also, digital management solutions make it faster and more flexible to dispose of individual rooms or business spaces, resulting in more efficient use of a property as a whole.
PropTech applications also focus on creating messaging services to enhance communication between landlords and tenants. In this way, digital access is provided to documents or files relating to the history, legality, characteristics, and claims that exist for a property. Thus, property managers can store relevant information about it on a single table, while landlords can respond directly to tenant requests. The result is fewer misunderstandings and faster responses.
All of the above ultimately contribute to the added value of a property, leading to higher rental or sale yields. This possibility may be possible because buildings managed by PropTech applications are considered more valuable and of higher quality and, therefore, more "precious" than buildings disposed of in traditional rather than innovative ways.
Proptech's impact on real estate can be huge as it has the power to combine its applications adding even more value, and giving property managers the ability to attract new leads directly from a larger pool.
PropTech Current and Future Trends
The property management industry is being transformed by virtual reality. 3D virtual property tours are one of the most intriguing PropTech trends to watch in 2022 and beyond. It is expected to advance to a point where buyers will be able to virtually visit apartments, houses, and properties when making purchasing decisions. By eliminating the need to visit multiple properties, they will save both time and money. Although many property management companies already use 3D visualization tools to show their properties, adopting this technology in the following years will increase. Enhancement can be accomplished through more realistic visualizations or by adding features that are still being developed.
Artificial intelligence plays and will continue to play an important role in the real estate industry's future. AI can process large volumes of data generated in real-time and provides valuable insights. With AI, you can analyze historical data, identify trends in the property market, and get realistic valuations. It also assists in understanding customer needs and recommending appropriate properties, ultimately improving their overall purchasing experience. Real estate agents also use AI-powered chatbots to stay in touch with their clients around the clock and accurately answer their questions.
Big Data & Analytics
Using big data analytics, real estate professionals can identify investment properties that meet the specific needs of their clients. Real estate agents will be able to maintain long-term customer relationships as well as improve their overall performance through personalized services. Using big data analytics in information modeling (BIM) is also possible. Data gathered from various sources enables companies to create 3D models of buildings for use in property maintenance, construction, as well as other areas.
Internet of Things
The Internet of Things (IoT) is a network of connected devices that can exchange data, track the state of a building, and predict failures, making it a valuable tool for property professionals and owners. An IoT-enabled building can offer high-quality property management, including optimal heating and ventilation controls, as well as complete building security. This is a trend that will have a big impact on young, tech-savvy customers, who are familiar with new technologies and expect to be able to control lights, temperature, and appliances from the comfort of their smartphones.
Most property transactions still involve a variety of third parties, such as banks and agents, as well as a large amount of paper documentation, which drives up prices. Blockchain, as a property technology trend, could resolve these issues. Smart contracts based on blockchain technology store property transaction data and are signed digitally when buyer-seller conditions are met. It eliminates the need for third-party involvement and decreases the required paper documentation while also improving transparency and security.
Summing Things Up
It is obvious that firms will need to invest in new technology to remain competitive. PropTech is advancing, and the opportunities appear to be limitless. We are excited to contribute to the industry's evolution in the coming years.
Do you plan to launch a PropTech project? Schedule a call with us today.