At a value of a whopping $217 trillion, real estate is considered the most important and largest asset class in the world, yet it is known for being resistant to change and, today, is still in the early stages of tech adoption, especially when compared to other industries. However, the trends we are seeing now in 2022 are overwhelmingly led by changing demographic tendencies and buying behaviors which are presenting a myriad of opportunities for proptech startups and companies to step onto the stage.
What proptech has been and is doing for real estate today
Proptech, sometimes also referred to as real estate technology, sets out with the aim of helping all kinds of cross-industry parties, whether they be developers, investors, landowners or tenants, better manage their assets by simplifying and ameliorating the wide range of processes involved in real estate. It could be as simple as reducing paperwork for property management or streamlining transactions, but proptech innovations are already making significant changes in the industry, because of the many pain points they resolve for customers: from supply-strained unaffordability, to tedious manual processes, to lack of flexibility. As mentioned, proptech works alongside many other sectors, from FinTech (financial tech startups that use innovative digital softwares to provide financial services); Smart Real Estate (involving emerging technologies and systems that help run smart homes and smart cities); and even ConTech (the growing suite of construction tech softwares and products that are changing the way buildings are made).
Though little mentioned just a few years ago, the notion that proptech is now a truly global phenomenon is found in the sheer amount of new opportunities and stances new companies are bringing to the table. Take the first four unicorn companies (startup companies that are worth $1b+) in real estate: Compass, Homelink, SMS Assist and Opendoor. We see that they’re not restricted to Silicon Valley, (because Homelink is a Chinese company), and we also see that none of them really overlap in scope, (one is a portal, one is a network of real estate brokers, one is a property management tool, and one developed an algorithm for buying/selling homes online).
The broadening of the spectrum is encouraging even more companies and startups to delve deep into all the different pain-points and gaps in the market, especially in a post-COVID, post-pandemic world. Co-working has become the new buzzword disrupting the office space, co-living is doing the same when it comes to residential real estate, and crowdfunding is reshaping the construction sector and real estate investing processes.
The advent of proptech trends has also been an unforeseen catalyst for the launching of new job descriptions: from drone pilots to virtual home staging professionals, data aggregators and virtual office administrators - and the list just keeps growing every few months. Proptech is enabling professionals and startups in real estate to truly address highly specific needs, which means most proptech startups will either offer support for existing real estate professionals, (offering them tools or services to improve their productivity levels), or offer services that aim to replace real estate professionals entirely, which makes it all the more vital for industry professionals to pay attention to proptech trends.
The adoption of proptech will look different for different parties, but the outcome will always roughly be the same: saving time and money through the use of automation and remote technologies. For brokers, it can look like: easier data collection and implementing AI-powered marketing to simplify investment, leasing, buying and selling processes; automation of paperwork and streamlining back-office systems, saving time instead for more face-time with clients, market research and closing deals; or, especially in a post-COVID world, promoting direct digital engagement and reducing physical contact while keeping processes flowing smoothly. For real estate investors, proptech offers many promising features: for example, more accurate construction planning to reduce chances of critical mistakes or missing deadlines, and improved, data-backed market research that will better inform development, leasing, buying, selling and investment opportunities.
Proptech offers agents the opportunity to impact their business goals positively as well. Data-backed analytics reports can help agents inform clients of more accurate and vivid pictures of a property’s standing, based on a whole set of variables perhaps hardly discussed before, from schools in the areas to daylight hours the building receives. Proptech startups are now able to forecast property prices in x-year time based on huge data sets that, according to McKinsey, have above 90% accuracy.
It means agents are that much more armed with being able to provide precise property evaluations, marrying ‘traditional and non-traditional’ metrics like never before. Not only that, but many proptech software offer agents powerful analytics tools that can drastically improve the home prospecting process while refining audience requirements and target buyer profiles. These processes aim to cut back chances of manual error or data falling through the cracks, which explains why 80% of companies utilizing proptech say they have already seen a 70% increase in decision-making and finances, because of its positive impact on operations and overall services.
Despite these promising statistics, not everyone is on board just yet. For CRE (commercial real estate) in particular, it will be a while until the sector truly catches up to the proptech trend, seeing as how almost 78% of brokers say they still manage their back-office processes manually. That being said, it’s important to note that proptech, while a booming sector, is still a relatively new trend, and whose scope will surely evolve as new needs and new target audiences continue to rise to the surface.