Technology and real estate often go hand-in-hand, which is the case with PropTech. PropTech is a broad term that, if you’re in real estate in any capacity, is worth knowing. PropTech is relevant to both commercial and residential real estate.
It’s a buzz word, but also one with real industry implications.
So what is it?
PropTech is part of the larger digital transformation that’s taking place in the real estate and property industries. It focuses on tech shifts in the industry but also changes in movement, transactions and attitudes.
PropTech is a tech and innovation-based approach to real estate. It provides optimization in the way people do everything real estate-related including research, buying, renting, selling, and managing properties. There are developers, property management companies and investors involved.
Many hope PropTech applications will be able to solve challenges following the pandemic, commercially and residentially.
PropTech may sound like a broad and even vague term, and the reality is that it is. However, it points to the undeniable reality that technology is here to stay in real estate. The pouring in of venture capital to real estate-based tech startups is just one of the many indicators.
We see PropTech especially taking off in big cities right now, where it delivers efficiency and an improved experience for everyone. New York is a leader in PropTech, largely because of the crunch created by a lack of units and affordability. PropTech may better serve consumers in challenging situations.
Real Estate Industry Unicorns
A unicorn is a company that is worth more than $1 billion. Compass was one of the first companies in real estate to meet that, and following were Homelink and SMS Assist. Then, there was Opendoor.
Each of these four unicorn startups is unique from one another.
For example, Compass is a network of brokers. Homelink is a portal, and SMS Assist is a tool for property management. Then, Opendoor is an algorithm created to help with buying and selling property online.
There are also more than 800 registered real estate startups right now, and over the past four years, more than $6.4 billion has been raised.
What’s Next?
Some analysts and real estate experts believe we’ve already gone through the first two waves of PropTech, and we’re headed for the 3.0 wave.
What might that third wave bring?
It could be that PropTech companies will focus on targeting problems that are currently inherent in the value chain. Built is an example of this. Built is a software provider that helps banks take their loan management process digital. It adds not just efficiency but also transparency to loan workflows.
There’s also something called Qualia, intended to make the closing process smoother. It brings together realtors, lenders, title agents, and buyers and sellers. There’s one centralized record, and there are tools for better communication and workflows.
It’s likely that the most successful organizations in real estate in the coming years will be the most tech-enabled. They will be able to deliver the highest levels of transparency for everyone involved, which will improve decision-making and reduce costs. They will also streamline workflows from end-to-end.
There will also be more development in areas already being utilized. For example, blockchain technology might be integrated for faster purchases, and virtual reality is poised to continue to become more relevant as a selling tool.
Rather than real estate professionals being intimidated by the rise of PropTech, they should instead think about harnessing it to their advantage as early adopters tend to have access to tremendous opportunities.
