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 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 software is used by landlords and real estate professionals to track and handle operations surrounding residential building management. This involves managing activities like:
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:
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:
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:
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:
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.
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:
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.
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!