PropTech stands for property technology, is a relatively recent movement in the real estate industry. The movement is an innovative approach that uses technology to optimize how consumers and real estate professionals interact with property. PropTech, therefore, leverages digitalization to help property managers, owners, builders, and landlords to manage their assets.
Real estate is one of the largest and most lucrative asset classes in the United States and indeed in many other countries. In fact, it accounts for over 13% of the global GDP.
However, real estate processes are riddled with inefficiencies resulting from a lack of flexibility and automation. Payment and leasing arrangements are tedious and housing markets are often constrained by supply which increases unaffordability.
PropTech seeks to address these issues by allowing property managers, owners, builders, and landlords to manage their assets digitally. This is achieved by various means, including big data, blockchain, construction technology, and drone technology to name a few.
Regardless of the method, digital transformation is enabling real estate businesses to rapidly embrace innovation and increase efficiency in the process.
Real-world applications of PropTech
- Artificial intelligence – developers are now beginning to use AI to identify areas deemed the most profitable to invest in. AI is also being used in building design, where it plays an important role in optimizing spatial layouts.
- Robotics – several robots have been manufactured specifically for use in the construction industry. Australian company FBR recently released a robot that laid the bricks for a 3-bedroom, 2-bathroom home in under 3 days. The robot could lay 1000 bricks an hour, compared to 400 bricks an hour by a human bricklayer.
- Virtual and augmented reality – builders are now able to quickly and immersively provide walkthrough experiences for potential clients. This saves time and money in constructing demonstration homes and makes open inspections more efficient.
- Streamlined office employee solutions – technology now enables office building workers to manage a broad array of functions within a single app. This includes access in the form of a mobile key card, food ordering, and visitor registration.
- Streamlined property manager/tenant interactions. Through central data portals, property managers can increase the efficiency of building maintenance and alert tenants to service outages. Tenants can use the same portal to make rental payments and submit work orders in a collaborative and transparent manner.
Examples of successful PropTech companies
Opendoor enables homeowners to sell their homes from the comfort of their sofa. The company purchases the property from the homeowner online at a price set by a data-driven algorithm.
Then, it sends a team of renovators to upgrade the property and puts it back on the market. Interestingly, the company also uses connected locks and cameras to enable self-guided visits by prospective buyers.
Brickblock is a smart contract platform that allows buyers to purchase real-world assets with cryptocurrencies. The organization has tokenized real estate assets through blockchain technology to subvert barriers to entry often imposed by banks and other lending institutions.
Ultimately, this process saves time, reduces costs, and takes much of the hassle and stress out of buying real estate.
- PropTech describes technology that streamlines processes in the real estate industry, which has historically been slow to innovate and is inefficient.
- PropTech helps property managers, landlords, office employees, and tenants interact with commercial and residential property in a cohesive and transparent manner.
- PropTech encompasses a suite of different technologies, including AI, robotics, virtual reality, blockchain, and big data.