A new buzzword has arrived in the real estate industry. Proptech — or property technology — encompasses the tools real estate pros use to optimize buying, managing, marketing, researching, and selling properties. Depending on the real estate subsection, you’ve probably heard this tech referred to as real estate tech, retech, realtech, or CRE tech. But they all fall under the umbrella of proptech.
But how has this tech disrupted the real estate industry? Here’s a simple example: Have you ever stayed at a boutique hotel or AirBnb property you found by looking on various websites? You likely researched amenities and prices, doing a little comparison shopping. If so, you’ve experienced firsthand proptech’s influence.
Proptech has innovated operations and processes for everyone involved in the real estate market, including brokers and investors, landlords and tenants, letting agents, and more.
How We’re Benefitting from Proptech Solutions
If you’re a broker using property tech solutions, you’ve seen myriad benefits. For example, perhaps you’re using a platform that facilitates data collection and uses AI-driven marketing to screen, track, and analyze all your buying, development, investment, leasing, and selling processes. When paired with big data analytics (more on that later) to structure and document data sets that grow larger with each passing day, you’re better equipped to win more deals.
Proptech enables automation of paperwork and cost reduction, streamlining back-office processes and freeing time for more critical tasks like customer communications, deal development and closing, and market research. This tech really found its stride during the COVID pandemic when transactions had to pivot to online platforms. It eliminates the reams of paper once needed, with secure remote transactions and digital contracting. Now, the contactless solutions including touch and facial recognition have become the norm — not the exception.
Landlords and tenants benefit from proptech solutions as well. By gathering data 24/7, landlords gain insight into how tenants use their property. A network of smart devices and IoT-enabled sensors gives input about building security and maintenance needs. All a landlord must do is login to access the data. This tech also facilitates better communication between landlords and tenants, workers, maintenance teams, and anyone else involved with building operations. It’s even possible, now, for prospective tenants to take virtual tours, buyers to conduct home or business inspections, and landlords to verify issues, on a completely digital platform.
Real estate investors benefit from proptech, too. They can use it to plan construction more accurately, thus reducing (or better yet, eliminating) the possibility of critical mistakes — or a missed deadline — resulting in millions of dollars of cost overruns. Proptech improves market research by tracking buying, development, investment, leasing, and selling opportunities. And finally, real estate investors can use proptech to help manage the property purchase and sale process.
Let’s Get Granular About the Proptech Landscape
Since 2010, there’s been an explosion of proptech companies arriving on the global landscape — over 9,000 companies, in fact! The following are two ways to categorize proptech’s ecosystem.
- The intersection of construction technology (contech), finance technology (fintech), smart real estate (or smart home) and shared economy. This traditional approach to classifying the proptech ecosystem shows its elements and relationships.
Contech uses modern materials and sustainable building approaches. Fintech incorporates technology into the finance space facilitating easier access for customers and businesses to all the financial services. Smart real estate falls entirely under the proptech umbrella as it uses IoT-enabled devices for remote management and monitoring of homes and businesses. Shared economy real estate includes all the proptech platforms offering shared or joint property use (think WeWork, Vrbo, and AirBnB)
- Two domains — residential and commercial — based on the end user. The main difference between the two? Residential proptech focuses on smart property solutions for individuals and families. CREtech focuses on driving efficient commercial property management.
Residential proptech includes listing and marketplaces, agent tools, and other property search platforms, sale tools, financing tools, mortgage lender software, closing tools, IoT-powered tools, and loan management systems.
CREtech uses other tools to run, search, rent, and sell industrial, office and retail properties. CRE professionals use property search platforms, construction planning/management tools, evaluation and financing tools like transaction underwriting and management or debt financing platforms, IoT-powered property management tools, and asset utilization tech for co-living/co-working space management, retail/industrial building management, and more.
Big Data: A Critical Success Factor for Real Estate
While America may run on Dunkin’, big data propels proptech. How real estate professionals use big data can influence their success. Big data is transforming real estate by:
- Generating better analytics because it enables more granularity of research and data
- Providing more precise property evaluations thanks to its ability to access and analyze huge data sets, combining traditional and non-traditional data
- Improving building prospecting, marketing, and sales with tools designed to help RE professionals refine their target audiences, identify better-aligned buyers, and create stronger offers
- Supporting data-driven property development with more robust data analysis helping real estate developers predict where (and what) to build and identify amenities potential tenants would most appreciate
- Supporting data-driven risk prediction to guide real estate investors on the pros, cons, and risks of investing in specific projects or buildings
- Digitalizing back-office processes, with clear datasets, checks-and-balances to prevent data from falling through the cracks, and automation to free up human capital to address more critical-thinking requirements
Looking Ahead to 2023
Proptech solutions trends in 2023 will continue innovating, with blockchain and AI technologies playing a greater role.
Software-as-a-Service (SaaS) technology will facilitate property searching, researching, renting, buying and selling. People can use their smartphones to search for properties and schedule alerts for a specific property becoming available. Agents and brokers can track online activity, connect with potential clients, and generate more detailed reports.
Smart buildings and IoT will continue to drive connectivity both in residential and commercial buildings. Convenient, 24/7 access to building management systems will make it easier to align with stricter environmental requirements as well.
Augmented reality (AR) and virtual reality (VR) will be game changers for the construction industry, supporting site visits by enabling CR professionals to give clients tours without ever leaving the office (or their homes). Because AR uses live footage from onsite cameras, it can generate computer renderings like 3D models and measurements of the actual environment and show spatial relationships as well. VR simplifies the ability to share designs quickly and accurately.
AI and predictive intelligence platforms will facilitate decision-makers’ abilities to glean insights from unstructured and structured data via quick, accurate reporting and predictive analytics for anticipating future trends. Real estate investors will also rely on these advanced analytical systems to inform their strategies, and developers can use this tech for operations management across all business areas.
Are you a commercial real estate investor or looking for a specific property to meet your company’s needs? We invite you to talk to the professionals at CREA United: an organization of CRE professionals from 92 firms representing all disciplines within the CRE industry, from brokers to subcontractors, financial services to security systems, interior designers to architects, movers to IT, and more.