The arrival of “PropTech” has already amazed the gigantic real estate market around the globe. But the irony is, not many people know about it.

What is PropTech?

Simply, the word PropTech is made up of two words; one: property, two: technology and it is described as the use of technology in the space of real estate. It goes by some other lesser known aliases also like Real EsTech, RealTech and ConTech (noting ConTech is technically a subset of PropTech and refers to Construction Technology – use of technology in the construction industry). But the king term, at least for now, is PropTech. Basically, it revolves around the change in the real estate industry and its consumers. These changes start with a shift in mentality followed by use of innovation and technology in assimilation and effective use of data, providing transparency to and efficient completion of transactions and even updating and enhancing the wider construction scene and planning of cities 1.

Revolutionising Real Estate due to PropTech

Globally, property markets operate in a very similar pattern, though with subtle differences across regions. The stream of innovations and solutions provided by technology have opened doors for real estate businesses to a whole new set of choices and possibilities. Whereas, to an existing complex landscape, another degree of competition can also be witnessed.

The PropTech scope is expected to evolve with the passage of time; it is certain that with the ever-changing digital landscape, the potential disruption of real estate sector is massively huge because of the constant birth of new companies in the PropTech space to solve real challenges and are keen on making the real estate industry better. Soon, the incumbents will be following in their footpath else they can face a similar fate as Nokia did in the mobile-phone/smartphone industry.

Process, as to how it is employed

PropTech is drawing the attention of people at large as its influence in conducting real estate businesses can be seen clearly. Selling, buying, managing and renting properties are already widely impacted by the PropTech innovations, with more to come. Additionally, development, construction, payments, services, and even due diligence processes have been positively impacted by it.

The ways in which real estate businesses, including investors and service providers, operate have already transformed. Listing platforms [Rightmove, Zoopla and OnTheMarket] 2, hardware [smart thermostats,sensors and IoT], materials [batteries for solar panels and smart concrete] and manufacturing [3D printing, offsite manufacturing and mobile construction platforms] – all these are PropTech disruptions noticeable throughout the value chain.

PropTech also takes data, automation, and Artificial Intelligence (AI) under its roof, it helps improve the processes of real estate, in particular for the areas of logistics and supply chain. 3.

Impact on the industry

It can be witnessed that the property sector has realised the opportunities that innovative technology can bring. According to the annual report of KPMG 2018 where a survey of 270 decision makers within real estate sector globally revealed that organisations in the property market are highly aware of PropTech’s potential impact – 97% respondents of the survey believe that. Having positive views about technology and innovation, a total of 73% consider it an opportunity and an additional 25% consider it both a threat as well as an opportunity 4.

Whereas, the report also shed light on the slow progress as compared to last year – mainly because of intentions not being acted upon. It shows that the potential threats are only likely to materialise if these real estate incumbents fail to grasp on the opportunities PropTech offers 5.

The value of PropTech in making money through easy investments

The amount of capital invested into PropTech is evidence of its potential and the likely transformative effect it can have on the real estate sector globally, benefiting everyone involved.

In an analysis carried by Savills, a real estate service provider – having information of the last ten years and more than 2,600 corporate investment transactions, it determined that the US has been the top-most recipient of real estate tech investment. It amounts to 57% by value, and the second is Spain with 12.4% of the investment volume. Whereas, the UK received 10.8%, making it  number three on the list 6.

An example of how PropTech has provided more, flexible and easier options to real estate investors: From the traditional model of real estate investment – that is buying a buy-to-let property, an alternative has been introduced. Now an investor doesn’t have to worry about tight regulations, time-consuming management of the property as well as a huge sum required to be able to  buy the property or to put down as a deposit for a buy-to-let mortgage (the criteria to qualify for which keeps getting tighter). Through unit trusts, property funds and property crowdfunding platforms, the threshold of minimum investment is has been reduced, in most cases with improved liquidity and requiring no management of the property assets. Also, the risk is likely reduced due to being spread over different assets as part of a more diversified portfolio 7.

Above findings validate the successful growth trajectory the PropTech sector has been on, and moving forward has the potential to add increased value to the real estate industry as a while and the global economy as well.

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