To sincerely appreciate the potential impact of Proptech, it is necessary to understand what it is and what it involves. This can be a challenging task as Proptech, like all tech-related innovation, is constantly evolving and advancing at a rapid pace. Furthermore, there are various disciplines involved with various ideas on how technology could or should disrupt real estate.
Proptech is redefining how the real estate industry operates and interacts, evolving traditional practices and services using key technological advancements, many of which have been successfully adopted in other industries. Many variations of these advancements tend to change and multiply at a rapid pace, however, we have identified three key areas of tech-driven innovation that are having a significant impact on numerous industries, including real estate. These are the sharing economy, the internet of things (IoT) and cutting out the middle mani. We consider these trends in more detail later.
On a global range, increasing levels of investment in the proptech sector show the increasing momentum within this dynamic area of the real estate industry. Global venture capital investment in the sector reached over US$11bn in 2018, from $12.6bn in 2017, $4.2bn in 2016, and $1.8bn in 2015, according to research from US-based real estate tech research and marketing agency Re: Tech (recently acquired by CREtech). In line with increasing investment, the number of proptech-focussed accelerators and investment funds is also increasing. Key examples include PiLabs in London and Metaprop in New York, along with larger global funds like JLL’s Spark.
The sector itself has also witnessed significant developments in formalization and representation, with country-specific proptech associations and conferences forming at a considerable pace. Europe, the USA, South America, the Middle East, and Asia have all witnessed a flurry of proptech activity in various forms. On the global front, Unissu is an organization that launched recently which aims to be the ‘number one source for proptech data, content, and research’, while Future Proptech promotes itself as the ‘the world’s number one proptech event.’
The proptech solutions coming to the market are diverse but some of the key impacts we have identified center around transaction platforms, management platforms, data-driven services and wide-ranging digital innovation (like blockchain and virtual reality innovations). Together, these solutions are drastically transforming the business of real estate in a significant way. For example, transactions are becoming more efficient and transparent, particularly in the residential sector, through online estate agents and letting services.
Additionally, property management is becoming more efficient through innovative software solutions, and new avenues for investment and financing are available through crowdfunding platforms. Data and blockchain innovations additionally offer a broad range of potential impacts that are continuously evolving. For example, blockchain offers the opportunity to digitize deeds registries and drastically improve the transparency and efficiency of these crucial databases.
One of the most exciting areas of proptech which produces high levels of innovation and influence is property related services. These can come in a variety of forms and often utilize software solutions, smart building technology, and data. In general, these services offer new and efficient ways of using, managing and evaluating space.
However, with the proptech wave, we have seen the available offerings increase in innovation – sometimes on the back of other technology or proptech advancements. Within the property management sphere, apps and dashboard platforms have become popular and offer a convenient platform for tenants, property managers and landlords to interact and manage properties effectively.