Property Sector: The term “PropTech”, a combination of the word’s “property” and “technology,” is becoming in vogue with many property professionals around the world, including buyers and sellers in the market. The term refers to the burgeoning technology that is engineering and reshaping the property market. Other synonyms include RealTech and ConTech, but PropTech is the term many prefer to use.
PropTech has been defined by Professor Andrew Baum as: “PropTech is one small part of the wider digital transformation of the property industry. It describes a movement aimed at changing the mindset of the real estate industry and its customers toward technology-driven innovation in data assembly, transaction, and building and city design.”
Some are still resisting the utility of innovative technologies in the property sector, especially since it has lagged many other sectors and has clung to traditional methodologies and technologies, but most are now embracing the inevitability of change. Indeed, given that the world’s attention is increasingly being tuned to things like climate change, resource security, and environmental degradation, technological innovations are rapidly becoming a necessity rather than a luxury for the young and tech-savvy.
Already, the impact of technology is being felt to a large degree, but this is nothing compare to what is coming down the pipe. The full potential has yet to be realised. Everything, from the way buildings are designed and constructed, to the way projects are managed, to the way buildings are monitored and maintained, to the way buyers and sellers interact with the property marketplace, is changing and improving.
Upending the traditional real estate sector
Real estate markets operate pretty much the same in most countries, except for perhaps some regional variations. Also, after all, there are only so many ways that can traditionally be employed in the buying and selling of property, especially when we factor in the limitations of what old technologies and methods would provide. PropTech pioneers, however, have taken the bull by the horns and run with it, opening a multitude of exciting new opportunities and doors. The PropTech revolution, while bringing new opportunities, also brings something else: increased competition and complexity to a sector that already had its fair share of both.
Technological innovation is still in its early stages, with many people yet to dip their toes into the waters of change, but one thing is certain: PropTech is here to stay and will only grow in scope as new and improved versions hit the market. Those property professionals that stubbornly resist change will increasingly find it hard to compete as clients’ demands change, not to mention the cost savings that can be made with employing new technology to streamline processes. Do you remember the video rental stores? What happened to them as customer consumption patterns changed and online streaming technology entered the picture?
Buyers searching for property can now do so from the comfort of their living room chairs. Also, they can save time and money by not driving up and down busy roads, viewing properties, and can now engage in detailed and realistic virtual tours. While boots on the ground, site visits will be recommended for a final decision in choosing one’s final home, or indeed, buy-to-ley investment opportunity, buyers can view dozens of properties online and virtually and shortlist their choices.
What’s more, artificial intelligence (AI) and machine learning can help guide buyers in the right direction by selecting properties that are best suited to individuals and families, such as ones close to schools or transport hubs. Many of us already experience this type of thing when it comes to tailored advertising that shows up in our social media accounts and online search results ads.
What is the impact to the property sector?
PropTech came hot on the heels of FinTech (financial technology) and is increasingly being noticed by many because it is no longer a fringe phenomenon being implemented by tech savvy nerds.
There is no area left in the property sector that has been left untouched by new and disrupting technologies. And this is only the early days. Innovations have improved how people buy and sell property, as well as how landlords and tenants rent, interact, and manage property. From start to finish – design, construction, materials use, waste management, maintenance, buying, selling, due diligence, financing, and payments – nothing is left untouched by technological innovations. The World Economic Forum (WEF) leaders may well be right, we may have entered a new “Fourth Industrial Revolution”.
Surveys conducted by KPMG have turned up some interesting findings. A survey of hundreds of real estate professionals and decision-makers shows that “property organisations increasingly aware of its [PropTech’s] impact. Moreover, a total of 97% of respondents thought that digital and technological innovation would impact their businesses…73% see it as an opportunity, and a further 25% see it as both an opportunity and a threat”.
The surveys have also revealed that, despite many property sector professionals being aware of these new technologies and their benefits, many have yet to put them into action and implementation. Besides, the report states, “Real estate organisations need to be aware that the potential threats are only likely to materialise if they fail to adapt and grasp the opportunity.”