Let’s start with the most obvious question – What is PropTech?
The name PropTech is an amalgamation of the words “property” and “technology”, and is also commonly referred to as real estate technology. The term encompasses mobile apps, websites, proptech software, and other digital products whose aim is to facilitate and modernize how people manage, buy, sell, or rent real estate. What started out as a niche corner of the tech world, has transformed into a multi-billion dollar industry – and it’s just getting started! So let’s talk a bit about proptech development – how it started, what’s the current situation, and where it’s going?
The rise of the PropTech Industry
The first PropTech companies popped up during the late 90’s and early 2000’s “dot-com boom” – although those companies were few in number and not many continued to exist for long. The real estate business was slower in adopting process digitalization, which is evidenced by the lack of funding in the industry. Instead, we saw FinTech (Financial technology) companies explode in this era. In the 2010’s however, all of that changed.
The development and advancements of new technologies such as big data, artificial intelligence, and machine learning have driven the growth of all digital industries, including PropTech. Indeed, PropTech developments have echoed those of the bigger FinTech and ConTech (Construction Technology – home building) industries. In fact, PropTech in large parts also overlaps with these industries, so its rapid expansion really should come as no surprise!
Today, PropTech funding is at an all-time high, despite the hit real estate took during the COVID crisis. The pandemic spurred the growth of other PropTech startup ideas such as: smart space planning solutions, touchless asset control, occupancy level monitoring solutions, etc. There is no dearth of ideas waiting to propel PropTech development further than ever before! The increasing customer demand for innovative tech solutions and services in the real estate industry will be the driving force in the PropTech market in the coming years.
It may seem to you at this point that the PropTech concept is very vague and maybe you’re not sure exactly what type of companies would fall under the category. Let’s take a look at some of the most popular PropTech types and specific businesses that fall within those categories.
Property Management PropTech
Property management software is used by landlords and real estate professionals to track and handle operations surrounding residential building management. This involves managing activities like:
- Tenant and lease tracking: helps manage the leasing process which includes tenant screening, move-in and move-out management, as well as rent and utility payment collections.
- Managing finances and accounting: for collecting rent, cost management, operation streamlining, generating financial reports, etc.
- Building maintenance: to issue and track work orders and assign tasks to maintenance workers.
- Tenant portal: to allow tenants to communicate amongst each other or with staff, to submit maintenance requests, to pay rents and fees, etc.
Elevated Living is one such property management company in the Chicago area. Elevated Living offers digital property management solutions for luxury residential buildings and building complexes. They create branded digital platforms where each building/apartment complex is able to have its own application and own logo. The software includes functionalities such as:
- Property manager role for managing building service and events, resident notifications, payment management, etc.
- Listing of restaurants and services in the surrounding area, as well as options to order service in-app.
- “Front desk” feature – the property manager and lobby employees can check guest permissions based on pre-approval from residents.
- Package management – lobby employees collect, scan parcels for residents, and send arrival notifications to them via the app.
Rentals and Sale PropTech
This category encompasses digital tools that enable the search and discovery of properties for rent or for sale. This is one of the oldest and most common types of PropTech technology. Some of the services that rental and sale Proptech offers are:
- Facilitate communication between tenants and property owners or rental managers
- Pull together available listings of residential or commercial real estates and filter according to search requirements
- Provide a market overview
Zillow is one of the most famous PropTech platforms ever, as well as one of the first in the industry. Founded in 2004 in the United States, Zillow has a market cap of 14.63 billion dollars and millions of users on a monthly basis. It is an ever-expanding Proptech platform used for searching or offering properties for rent and/or for sale. Some of the functionalities Zillow offers are:
- safe and efficient communication between renters/buyers and listing agents
- advanced visualization tools such as 3D map view, online video and VR touring, and neighborhood mapping functionalities
- full feature property details
- estimated market value for individual properties – termed a “Zestimate”
Property Valuation & Predictive Analytics
Real estate valuation is a multi-step process aimed at determining the fair market value of a property. The standard way until now has involved in-person contact, manual data entries and checks, which in the end is a very long and inefficient way of going about it. This is where real estate appraising software comes in – allowing brokers to work remotely and increase the efficiency and productivity of the valuation process! By using AI and cloud technology this software can analyze various databases and help homeowners appraise their own properties without the need to hire an appraiser.
Reanomy is a very interesting company in this category whose goal is to provide PropTech Big Data and Machine Learning-based insights for Commercial Real Estate agencies, brokers, and other professionals. The software uses Big Data Network and Artificial Intelligence algorithms to analyze millions of real estate deals to provide the most accurate and up-to-date information to real estate professionals. Some of the solutions provided by Reanomy are:
- Ownership and tenant data
- Property details with full transaction histories
- AI and predictive analysis
IOT and Smart Home PropTech
First smartphones, then smart watches, smart medical devices, and now – smart houses. Like other smart devices, smart home appliances and smart homes collect data through various sensors which is then uploaded to the cloud and is analyzed using AI and machine learning. You are probably already using your smartphone to control things like music, lighting, air conditioning, etc. in your home. Technological developments have taken this to the next step.
New IoT systems are capable of handling routine maintenance tasks, detecting malfunctions and defects, optimizing environmental performance by adjusting operating systems based on actual or predicted use, automated property controls, and much much more. The result is lower energy consumption, a decrease in maintenance costs, a healthier indoor climate, etc.
SmartHab is a French IoT startup that offers energy management solutions for residential properties. Their PropTech software analyzes data gathered from various sensors to automate different processes like building surveillance and energy utilization management. For example, when a resident leaves their home, the smart system can automatically turn off lights and reduce the temperature in order to save energy. Residents can use the app to monitor their energy consumption and act to reduce their energy costs as well as their carbon footprint. The app can also suggest actions for more efficient energy uses.
Benefits of PropTech development
Traditional real estate is a headache for everyone involved – it’s expensive, takes a long time to finalize a deal, the payment processes are tedious, and it can be very high risk. Technological innovations have transformed many other industries, so it was just a matter of time when it would be real estate’s turn. PropTech technologies aim to address the seen and unseen problems of traditional real estate and streamline every step of the process, as well as create an overall better consumer experience. Let’s take a look at some of the advantages of PropTech software:
- Digital platforms make it easier to create a single space for interaction of all parties thus allowing for better communication.
- Data is available in real time, allowing for faster processing and hence boosting performance and profitability.
- Potential buyers/tenants can choose from hundreds of different options in a single place providing them higher flexibility and value.
- Higher transparency through the incorporation of new technologies such as big data or blockchains.
- Technologies like AR and VR make remote viewing of real estate properties possible, so landlords or prospective buyers/tenants do not need to be on location.
Are there any challenges?
The benefits of PropTech development are many and we could write a whole article just on that topic. However, the industry is not without its challenges!
The COVID crisis affected many industries and sadly, real estate was no exception. The pandemic created a huge hurdle for PropTech startups – large numbers of commercial real estate stood completely empty, there was a significant decrease in available homes for sale, many people lost their income and were forced to leave their homes, while the entire time prices continued to rise. There is light at the end of the tunnel however, and we can already see the real estate industry starting to rebound, and along with it PropTech development!
Another even bigger challenge for this industry is and will continue to be legislation. Regulatory and legal challenges will have to be addressed in order to be able to grow PropTech on a global scale. For one, given the amount of data collected and shared by PropTech technology as well as its nature (private/confidential), the industry faces issues around Data Protection and Intellectual property laws. Furthermore, new technologies like IoT and AI will probably prompt the writing of new forms of contracts requiring legal aid to ensure legislative compliance.
PropTech is the future of real estate
While PropTech is still relatively a new trend, you can be sure that its scope will continue to grow. The very basic reason for this is that the problems that PropTech development solves are very real – the demand is simply there!. The continuous developments in digitalization and cloud technology will further fuel the progress of the PropTech industry. Even though the industry will face various challenges like corporate liability, high implementation costs, technology service and performance issues, etc. that could restrain its growth in the short term – PropTech is definitely playing the long game! One thing is sure, the real estate industry will never be the same again.
We are definitely excited to see where PropTech development will go – are you?
If the answer is YES, and you have an idea for a PropTech platform you would like to develop – contact Redvike now! We have the experience and enthusiasm that you need to create a truly unique and performance-improving product!