PropTech is going to revolutionize the real estate market - such Internet headings are just jumping out at you... But what is Prop Tech? What changes can Prop Tech bring to the traditional real estate agencies and what problems can it cause? What real estate actors can be affected by Prop Tech? This is what we need to know about the new trend.
MULTI-FACETED NATURE OF PROP-TECH
The term Prop Tech (an abbreviation from English “property technologies” - technologies, related to real property) was first introduced by the French investor Vincent Lecamus at the end of the last century. Under this term he meant innovative products and models, which were appearing on the market of residential and commercial real property. Nowadays it would be true to admit that the term “Prop tech” is quite many-sided and represents many issues, which form a radically new approach to purchase, maintenance and management of real property. It is also possible to define Prop Tech as a set of digital projects at the real estate market. Such projects include smart-houses and smart-cities, digital platforms for searching of real property, etc. Prop Tech is also a set of startups, which suggest innovative products and application solutions in the field of creation and management of real property (deals, related to real estate, investment analysis, construction and design, real property maintenance, development, etc.)
PropTech is relatively a new trend and its scope will definitely grow over time. But today we can already talk about few directions in Prop tec:
- real estate market as it is (Prop Tech)
- smart cities and buildings, collaborative economics, construction industry (ConTech)
- finances (FinTech)
ConTech and FinTech are closely connected with the real estate industry. The interaction between these directions can be seen in the diagram below:
PRIME PROP TECH STARTUPS
Prop Tech innovations, which can change our reality tomorrow include automation, Marketplace, Big Data - a large, diverse set of structured and unstructured data, which is processed by certain program tools, Internet of Things (IoT) - a system of interrelated computing devices, digital objects, etc. which have ability to accumulate and exchange data, artificial intelligence, Blockchain, virtual reality (VR), 3D printing, etc.
Today among the most well-known Prop Tech startups one can name American startups, such as Redfin, Zillow, OpenDoor, Trulia. We can also include here a popular British service - Tepilo and Chinese - Homelink.
To demonstrate how Prop Tech innovations are actually implemented in practice, let’s consider the example of Opendoor, a startup which provides completely new ways of selling property. The work of the company is based on several technological solutions. Using big data , IoT (internet of things), digitalization, the company makes the process of purchase significantly simpler. The startup obtains property items online directly from owners. The price of these property items is calculated with the help of Big data algorithms. After the upgrade process, the items are places back on the market. Electronic locks and connected cameras, which are set up in buildings and premises allow to arrange previews of apartments at any time, convenient for a potential customer and without any previous registration. The presence of an agent is not necessary. The lock code can be obtained via the special application.
Opendoor of course is not a single example. Some other successful projects include the use of artificial intelligence by Skyline Al, virtual reality by EyeSpy360 and Matterport, smart home viewing and booking tools by Front Door, technology of Blockchain by Ubitquity.
INFLUENCE ON REAL ESTATE MARKET AND PROP TECH WINNING ADVANTAGES
The key to success of these startups lies in their ability to breathe a new life into habitual activities and processes, to rearrange existing systems with radically new ideas. PropTech startups suggest a new vision of things and opportunities for reinvention of current real estate market. And even small steps will one day lead to global changes of the whole real estate system.
The above mentioned examples show that the startups in Prop Tech sector are developing in two main directions: they either suggest specific tools, which aim to assist professionals to improve the quality of their services and to raise their efficiency; or they seek to substitute professionals. And to the regret of the latter, the development of Prop Tech innovations, can play a wicked trick with them. Modern technologies and online platforms will provide users with an opportunity to make deals on their own. Purchase and sale of property items will be significantly simplified. The development of such projects will imminently affect the work of real estate agents, who most likely will act as advisers, consultants or providers of technological platforms.
The influence of PropTech is not limited to the interference with the process of making purchase-and-sale deals or lease of real property. Modern technologies allow to automate the management of real estate items. Such programs for instance, help to monitor the terms of rental agreements, to control invoicing, to keep property accounts, to pay taxes, to place rental items on websites as well as to monitor revenues and expenses.
PropTech-services, which suggest solutions based on the internet of things, allow to minimize expenses, connected with real estate services, they also help to control energy consumption, timely detect faults and troubles of equipment.
The effect of PropTech on the real estate market will inevitably grow under the influence of the demand for innovations. To obtain a residential or commercial item in any part of the world will become as easy as to buy bond papers, and virtual assistants will manage the items. The analysts predict that Prop Tech will make the market more “transparent” and clear as well as will release the market from unnecessary agents. But of course the success rate of traditional actors on real estate market will more likely depend on how quickly they will manage to adjust themselves to current changes.
Thus it becomes evident that Prop Tech is winning power on the real estate market, gradually becoming a very powerful tool, that is actually able to change reality and suggest new ways of thinking and vision for the agents, involved in real estate processes.
If you feel that the time to start implementing Prop Tech in your ideas to create a cutting-edge business has come, feel free to contact us.