Technology’s potential to transform how we live and work is more apparent than ever. We have seen this in finance, health services and transportation. The growth of click and collect and companies such as Deliveroo and Amazon have radically altered our spending and eating habits, forcing changes in such areas as the retail, leisure and industrial sectors. Real estate is no different with the industry rapidly becoming a hotbed for entrepreneurs and investors alike.
PropTech is one small part of the wider digital transformation of the property industry. It is making a difference in construction, the occupier market, investment and estate agencies. It includes such things as online listings, virtual reality, machine learning, drones, big data and crowdsourcing. Over £3 billion has been spent in 2018 to date.
The first generation of PropTech emerged in the early 2000s with property search engines, such as Rightmove, changing the traditional real estate agency models. Since that time, technological advancements in deep learning, artificial intelligence (AI) and other big data technologies are driving significant innovation in all areas of the property sector. Turning big data, which is large data sets that may be analysed to reveal patterns and trends, into smart data, as seen with Nest, creating smart homes with adaptive and efficient thermostats and smoke alarms.
Other advancements include crowdfunding technologies, powering companies like Property Partner, to purchase small shares in rental property for as little as £50. Virtual reality is utilising 3D imaging for property mapping and consumer property search. In addition, we are seeing the emergence of co-working and co-living spaces, which are potentially lucrative models of the future, for example the global franchise WeWork.
How can PropTech be harnessed?
Used by Chatbot, a computer programme which conducts conversations as a human would – removed need for an agent to book viewings. AI can carry out advanced property searches and valuations. Proportunity, Beagle and OneDome are all advancing AI.
Sector set to grow with 250,000 units by 2030. Canopy, a UK start up, initiated a tenant scoring system allowing for a deposit free system.
Residential and commercial tenants have a growing demand and need for high speed reliable connectivity and if a certain building does not meet their expectations there will be others that do.
Modular construction can solve the housing shortage. A recent partnership with Uber and Moda Living aim to reduce car ownership in cities by developing an app for residents who can book transport saving the need for parking spaces.
Data is captured in a more refined way allowing investors to make and change their investment decision.
Reducing head count in the office and having hot desks will save money on office space and equipment. Future working may include virtual presence.
PropTech is the future and has wide reaching advantages for all stakeholders in the real estate industry, for example:
- Investors and occupiers - delivering new and innovative tools to improve buildings and services adding value for clients, customers and end-users.
- Landlords - to attract and retain tenants who want flexibility (era of agile working and a changing headcount in the workplace) and connectivity.
- Property developers - faster and better quality construction.
PropTech is about businesses embracing innovation and the use of technology to create opportunity and add value. Whether that be in enhancing traditional services or replacing them with new and more innovative ones. As these new opportunities develop, companies need to be alert to the potential risks they may bring. For now, perhaps the greatest risk is the use of data needed in so many of these emerging innovations and the potential implications of a breach or attack.