A palm-sized drone buzzes 50 meters up a skyscraper in downtown Singapore. It scans the building facade for cracks and other defects. It traces the contours of the building as it makes its way up, while enabling a man who is 5 kilometers away to see a live feed on his desktop screen. He analyzes the data and combines it with information collected from hundreds of other buildings.
Welcome to PropTech, the convergence of property and technology where technologies such as drones, artificial intelligence (AI), blockchain, big data, virtual and augmented reality come together to transform the property sector.
“PropTech” is the recent buzzword that is making waves in the real estate industry. If you have no clue about its potential yet, it’s time to pay heed as you might be missing out a big piece of funding pie. The industry realized the potential of PropTech when PropTech firms snagged $459 million in global venture capital funding in 2013. However, that was only an appetizer. The real eye-opener was when the funding surged to $2.66 billion in 2016. And the growth didn’t stop there; it skyrocketed to $12.6 billion USD in 2017. If it is still not convincing, consider this— in 2008, US$20 million were ploughed into PropTech start-ups and this number crossed a whopping US$12 billion in 2018, in just 10 years. It’s impressive.
So, what this Prop-tech is all about? In simple words, PropTech is an abbreviation of the term property + technology. To expand on that, PropTech refers to businesses using technology to improve the way we buy, sell, rent, design, construct, and manage residential and commercial property.
The PropTech Revolution
Despite being one of the biggest and most valuable assets of the world, the property sector has always been slow to embrace technology. However, with the super-cycle of innovation in the last decade, PropTech emerged as one of the biggest trends in real estate. Though it did take a while for the industry to get started with technology, it’s rapidly gaining momentum now. Broadly, the industry has gone through four waves of tech innovations since 2007 and each wave mirrored a contemporaneous trend in the wider tech ecosystem.
PropTech 1.0
Following the dot-com boom, the first wave of PropTech witnessed the emergence of a new period of consumer confidence in online transactions. Initially, it was difficult to find real estate information online and buy or rent a home online. However, with the appearance of large online aggregators in social media and e-commerce acclimated consumers, online transactions began to gain hype in real estate.
PropTech 2.0
The second wave of PropTech bloomed in 2014. In this era, a new breed of tech-enabled players appeared on the radar to offer customers specialized services from the comfort of their devices using data analytics and virtual experiences. And this laid the foundation for the PropTech era.
PropTech 3.0
Aimed at ‘deepening’ user and management experiences, PropTech 3.0 brought the most exciting phase where startups grew the green shoots to challenge the very fundamental principles of the real estate sector. This era marks the great leap into emerging technologies such as IoT, Smart Lifts, Drones, and Virtual Reality and Blockchain.
PropTech 4.0
Now, a new fourth wave of PropTech is set to disrupt real estate by harnessing the power of existing inventions to optimize existing structures and lower costs. With all these successive waves of innovation and capital behind PropTech, the property industry is witnessing sweeping changes in multiple different facets from planning and construction to the sale and purchase of property.
Areas of Real Estate Undergoing Digital Transformation
Spurred on by the ever-changing digital landscape, real estate is now moving to the next level. Hundreds of dynamic PropTech companies are aiming at offering efficient solutions and improved customer experiences through technologies such as Artificial Intelligence, Augmented Reality/Virtual Reality, Internet of Things, cloud, blockchain, and Robotics. Some key areas undergoing tech futureproofing include:
Property Management
Gone are the days when you ring up your mortgage broker to inquire about a property’s valuation.These days we have a phone app for just about everything and property management is no exception. All it takes is just a single click on a property portal to ascertain the current and potential future value for a specific property. From managing the tenants to managing repairs, rates and bills all can be done from the ease of phone. The use of technologies such as cloud computing and Internet of Things automates the tasks, save time and increase efficiency for day-to-day operations in property management.
Moreover, the advent of VR and AR enable customers to take virtual tours of the property they are interested in without actually visiting it. This enhances the customer experience and helps them get answer to any questions on the go.
Construction Management
Artificial Intelligence, Drones and Information Management Systems have the potential to impact the conventional construction process. Instead of sending a human up onto a roof to conduct a survey, drones can be used in their place to capture 360-degree images from various building heights. This will not only improve safety and mitigate the risk but also provide accurate results in less time.
Mortgages
Managing Mortgage is a complex, time-consuming and paper-intensive process. However, the introduction of PropTech in mortgage can trim down the typical 30 to 45 days mortgage disbursal cycle to just a few hours. It brings the sellers, buyers, agents and lending institutions on to a common platform, thus making it easier for everyone to communicate.
Smart Buildings
In this smart world where convenience is the king, PropTech offers endless opportunities for improved convenience and capabilities to realtor and tenants alike. Thanks to Internet of Things (IoT) and cloud technology which enables us to remotely monitor and control a range of building systems from heating to air conditioning, lighting and security systems.
Buildings are now being designed to be smart to make tenants and property managers’ lives easier while reducing operation costs, improving maintenance and energy management and offering efficient utilization of space.
To Sum It Up
The real estate industry is on the path of digital transformation. The movement has already begun and you must keep pace with the change or lag behind. Today, aproperty investor can invest a home without ever leaving the couch, record data on their phone or laptop and the buyer can deal with the broker or bank through apps or websites. PropTech is improving the property businesses in terms of productivity and profitability. It has become an unstoppable and potent force that will transform the industry forever. And the only way to survive is to adopt the change. As John F Kennedy puts it – “Change is the law of life. And those who look only to the past or present are certain to miss the future”.
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Despite being one of the biggest and most valuable assets of the world, the property sector has always been slow to embrace technology.
Welcome to PropTech, the convergence of property and technology where technologies such as drones, artificial intelligence (AI), blockchain, big data, virtual and augmented reality come together to transform the property sector.