Currently, quite a good number of people are working hard to improve the real estate business. Backed by a large pocket of financial resources and well-educated experts in the field, they are aiming to change the business in the manner it is being traded, used, and operated for the better.
With the technology of Proptech, more and more firms are embracing this because of its industry disrupting demeanor. But how much it could impact, still remains to be seen. As the numbers of Proptech companies are increasing, it will only be a matter of time to truly feel its impact on the Industry
The impact of Proptech in the Real Estate Business
Proptech is basically a collection of technological innovations that aims to disrupt the real estate markets. It is an innovative approach that uses technology to optimize the way people conduct their real estate business. Proptech is a cross-industry technology, which benefits all parties involved, including investors, and even property development companies. Therefore, it has earned a lot of interest from all the business sectors in the industry.
The real estate industry is considered the largest asset class, which attracts new trends, such as Proptech, to aid in the general dealings of the business. Since 2014, Proptech has seen a steady and strong growth within the real estate business. Records have shown that some of the Proptech startups experienced exponential growth from a hundred-million-dollar industry to a ten-billion-dollar industry in a span of around 3 years.
Three waves of PropTech
Modernizing the real estate industry is an initiative that is not new. In the case of Proptech, there are actually several waves already (three in fact) that started way back in the 1980s. Each wave has significantly impacted the industry throughout.
First Wave (1980-2000): Real Estate in the Microsoft Era
The introduction of spreadsheet software tools such as Lotus and Excel paved the way for the modernization of real estate investment and portfolio management. In this manner, other Proptech startups emerged to aid in other aspects of the business industry such as in underwriting, accounting, and even analytics. Due to limitations on the innovation and technology back then, end-users would have needed massive customization from these Proptech companies, which proved to be expensive.
Second Wave (2001-2007): The Emergence of Online Aggregators
Business websites have sprung up, which also includes customized websites for business transactions. This is also the start of an influx of consumer confidence in online transactions. While real estate information couldn’t have been easily obtained back then, it was noted as a difficulty, thus the emergence of online aggregators was established eventually. Through these online portals, consumers have been acclimatized to performing online transactions and eventually created new venues such as online portals for any kind of real estate transactions.
Third Wave (2008-present)
The third wave of Proptech paved the way for remarkable advancements during this period. In the recent decade, Proptech ushered in technological breakthroughs such as data processing and storage. Consumer appetites have been proven to change in this time, where they value access rather than ownership of real estate property. The technological advancement also opened the way for online transactions in other sectors such as in offices, retail shops, and even storage space, or warehouses.
Hot facts about Proptech
Why is Proptech so popular in the real estate industry right now? Below are some of the interesting facts and might be the reason why it is an important innovation in the industry currently:
- The value of investments in Proptech companies was 13.85 billion USD in 2019, bringing the average annual funding over the last three years to almost 14 billion USD.
- Worldwide real estate acquisitions and merges were above a 100 deals back in 2018.
- 35% of surveyed investors believe that smart buildings are the ones to go for Proptech projects.
- Proptech startups are rapidly increasing and 65% of respondents believe that it is one item that is critical for the development of commercial real estate in the world.
- 97% of building managers believe that tenant satisfaction is their utmost importance and that Proptech is the one that will satisfy that need.
With all these promising facts about Proptech and all the significant evolutions of technology, how will this affect the real estate business in the future? Here are some notable projections:
- Increased appetite of property investors in trying new technology products
- Tech companies will encourage change thus consumers and inventors will follow suit
- Tenant apps will grow more, and its popularity will increase paving the way for more Proptech startups to emerge
With all these on hand and some more to come, there is no way for Proptech but to go up and up.