In recent years, technology has disrupted countless parts of the economy, from design to payment processing to HR.
Now proptech coming for real estate.
Proptech – property technology – is one of the hottest new investment trends.
Proptech refers to any real estate-focused technology but also encompasses the companies offering this technology.
It is a sector that’s seen astonishing growth. In 2011, it was worth $186 million around the world.
Five years later, it had passed $2.67 billion and was still rising. 2016 saw the founding of the first four proptech startups worth a billion dollars or more.
Proptech-focused investment funds have emerged, such as Fifth Wall Ventures.
Proptech offers great potential for companies that embrace it.
But it also offers a threat to the established order, as proptech startups use their technology to take business from older companies.
One way or another, the real estate sector is in for some massive disruption.
The Forms of Proptech
By its nature, proptech doesn’t have neat boundaries.
Financial and construction companies, as well as environmental engineering and online providers, have all jumped on the proptech train.
Real estate technology generally falls into one of four groups.
First, there’s the hardware.
This covers equipment such as sensors and measuring devices, which make it easier for estate agents and surveyors to assess the state of a property.
Then there are materials.
Creations such as light-emitting cement, brick cooling systems, and self-healing concrete have the potential to change both the construction and the management needs of buildings.
Related to this is manufacturing technology.
3D printing and offsite manufacturing could have important implications for the repair and maintenance of existing buildings, as well as the way new ones are created.
But the most immediately important area is software.
From data analysis programs to management apps to web-based services, software is transforming real estate.
New technology helps real estate businesses in two ways.
Firstly, it provides savings by lowering marketing costs, letting landlords more easily find tenants, and allowing better use of existing space.
Secondly, it increases earnings by helping landlords to find a reasonable rental price for their property and to retain the tenants they have.
Proptech’s changes aren’t all dramatic, but they’re already being felt.
The Internet of Real Estate
The Internet facilitates proptech.
New technology can be set up and find a market quickly.
Online real estate brokers have made hay by creating services that modern renters and homeowners can find easily.
By being internet based, they cut down on overheads, letting them reduce their fees and so draw in more clients. They currently represent around 5% of the market, and this is growing.
Conventional estate agents also make heavy use of the internet. Sites like Rightmove make it easier for buyers and tenants to find properties that suit them and so have become vital to estate agents.
Variations on this have been created for some markets. Movebubble takes the housing search into users’ phones, providing an app for finding rentals.
Specialist sites and software help owners, agents, and tenants in a variety of ways.
GetRentr provides up-to-date information on licensing regulations, relating these to a property’s location.
Proportunity uses machine learning to forecast the future value of properties, using this estimate as a basis for lending.
A vast range of sites has sprung up over the past few years, and this is just the beginning.
The Future of Proptech
Technology has enormous potential to keep on changing the property market.
Blockchain may allow smart contracts, instant transfer of payments, and the secure exchange of critical data.
The internet of things, connecting hardware to the internet, will give landlords new ways to manage their properties.
Opendoor is already making use of this technology, with connected locks and cameras allowing self-guided home viewings.
Of course, disruption won’t just come from technology.
Social trends such as more co-working and co-living create challenges for the industry. But technology will help in business’s responses.
The key to coping with disruption is to be willing to innovate in how you work.
For companies willing to learn, invest, and experiment, disruptive technology will lower costs and increase profits.
Disruption is coming and that needn’t be a bad thing.