What comes to your mind when you think of "modern technology?" You probably think of speed, efficiency, productivity, and more. If you’re into property management, you’ll be happy to know that these perks are what proptech real estate will bring to your business.
Big-time investors recognize these values and have backed the sector with over $4 billion in Q1 2022 alone. In this article, we’ll reveal the meaning and types of proptech, and how it has impacted the real estate market.
Let’s dive in
What is Proptech Real Estate?
Property technology (proptech) involves using advanced software and hardware tech solutions to carry out real estate-related tasks. If you use any technology to manage properties, streamline your real estate office workflow, generate helpful data analytics insights, or improve company security, then you've enjoyed proptech.
The innovation has massive applications in real estate fintech and cybersecurity. No matter where you use proptech, the goal is to improve property management efficiency, convenience, and quality.
Realtors, property owners, leasers, and workers can benefit from the technology.
Some common examples of proptech in action are:
- IoT devices for home management
- Drones for land survey
- Artificial Intelligence (AI) for reviewing and validating mortgage applications
- Property management software (PMS) for rent collection
- Virtual Reality (VR) systems for remote visits to real estate
- Auto search engines for finding properties faster
- Smart lifts that aid workers on construction sites
All of the above and more will surely boost the productivity of any real estate business. Even a bit-sized mobile app can completely transform your ROI for the better. And with that comes significant growth in the company and industry.
Key Takeaways from Proptech Market Size and Industry Growth
The property management market and industry have seen massive growth recently. Despite the t challenges brought about by COVID-19, reports show that the proptech real estate market is worth $18.2 billion in 2022. This figure is set to hit $67.5 billion in 2032. That’s a 370% growth in only ten years.
What does this mean for the average real estate business person? Based on facts, investing in proptech now seems like the smart choice. As its market size increases over the years, so will its demand and, ultimately, its cost of adoption. Early adopters won’t have to worry about such expenses.
Next, let’s take a quick look at some proptech industry trends. Firstly, the recent global pandemic has provided more opportunities for the inevitable marriage of proptech with VR and AR systems. More people are finding it harder to travel for meetings and site tours. The year 2021 saw a 50% loss in airline travel traffic, according to Statista. This means that international real estate buyers and sellers are less likely to travel to inspect properties than they were a couple of years ago. Many of them benefit from virtual tours, thanks to proptech.
Companies like Parallel Space and Urban Base already offer virtual real estates services such as 3D VR tours and architectural renderings. With the onrushing metaverse helping AR startups raised over $2.1 billion in 2021, real estate businesses will have many solutions to patronize.
AR and VR systems help mostly with the visualization, inspection, and planning aspects of real estate. However, some realtors prefer a system that improves almost every aspect of their business for an affordable price. Hence, one of the most popular trends is using a real estate app.
This software is great for:
- Realtors and real estate agents
You can do a lot if you get professional developers to build one of such apps. It’s little wonder that experts project the real estate software market to grow from $9.73 billion to $18.66 billion between 2021 to 2028.
Types of Proptech Real Estate Innovations
There are mainly two types of property technology: residential property tech and CRETech. Let’s take a look at how each of them works.
Residential Property Tech
These software and hardware solutions improve renting, buying, selling, or owning apartments. It deals with living spaces only. For instance, Airbnb is a residential proptech tool because it helps people procure short rentals.
Some systems that fall within the residential category include:
- real estate listings
- property management software and IoT devices
- loan and mortgage management solutions
- home insurance technology (insurtech)
- Small-scale fintech tools
- transaction management tools
So long as the real estate buyer or renter is a non-business entity, the innovation used is residential property tech.
This means Commercial Real Estate Technology. As the name implies, any tech used to improve renting, buying, leasing, selling, or managing a business-related asset is CRETech. Such assets include office spaces, retail buildings, and industrial property. LoopNet is a perfect example because it provides a marketplace for companies to buy and rent properties for business purposes.
Systems that fall within the CRETech category include:
- commercial property listings and marketplaces
- custom property management software and IoT devices
- medium to large-scale fintech tools
- co-working and subletting asset management tools
Proptech Changes Real Estate
How residential and CRE professionals handled their business two decades ago is vastly different from how they do so now. The industry is always evolving, thanks to property technology. So Let's dive deeper into some of these changes and how to leverage them.
While referrals and word-of-mouth are still powerful lead sources in the real estate industry, many businesses have shifted their resources to digital solutions.
Marketing automation, CRM, and influencer marketing are just some of these proptech solutions. They help realtors and agents scale their business at minimal cost and maximum ROI.
Tours and Walkthroughs
Open houses and walkthroughs will always be integral to kick-starting and closing real estate deals. The pandemic was pretty harsh on the industry for this reason.
VR, AR, and video conferencing are to thank for keeping the industry alive during those trying times. And now, they are here to stay.
Remote 3D viewings and walkthroughs can give customers and brokers enough proof to suppress their skepticism and doubt, even without stepping on the property they wish to purchase. Also, realtors don’t have to spend as much to set up showings and open houses.
Real estate businesses no longer care about some traditional advertising platforms such as newspapers, billboards, and magazines. Website and social media ads, and online press releases have proven more effective.
Platforms like Airbnb allow people to book assets online. You don't need to submit or collect any physical document in the new age of proptech. Vetting and validation can also occur online, sometimes automatically, thanks to AI.
One of the most challenging jobs of a real estate developer is securing funding for projects. Unfortunately, some banking institutions don’t make this any more straightforward with their high-interest rates and strict policies. Blockchain in real estate aims to combat such issues.
With blockchain technology, developers can access alternative funding sources, including crowdfunding. Some argue that this option provides more transparency and security than traditional lending.
Proptech Real Estate Examples
Finally, we get to explore some real-life examples of proptech that you can try. Many of them fall under IoT devices, smart robots, software, and internet tools.
Automated and remote-controlled drones are used for real estate photography. They allow realtors to capture images and footage of landed property from above (a perspective that would be hard to get otherwise).
Property Management Software (PMS)
This software has a variety of functions in real estate. From booking/payment processing to maintenance tracking to price updates, you can use a pre-built or custom PMS to streamline your business.
Energy-saving is not only good for the environment but also for your business's finances. With smart lights that automatically switch off when a room is empty or during the day, your utility bills will be significantly smaller. You’ll be surprised at how much you can save on all your property.
Smart Heating and Cooling Units
Like smart lights, these units help companies and homes save big on power expenses. They control and optimize the temperature regulation each room gets.
Parking Management System
Big cities will always struggle with limited parking spaces. These parking area regulation systems have algorithms that help companies allocate slots based on several factors. The safe space, time, and maintenance cost.
Try Proptech Today
Proptech is taking the real estate market to greater heights in the next decade. Whether you’re a residential or commercial real estate professional, you stand to benefit a lot from property tech in terms of improvements in:
- lead generation
- project financing
- Operation processes
What technology do you think you should adopt? Real estate apps, drones, smart lights, and collaboration tools are some of the easiest. Give it a try.
Author: Olga Galik
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