Proptech 3.0: How Does Proptech Fit in the Future of Real Estate?
What does proptech mean, and where is it headed?
According to the 2018 KPMG PropTech Survey, 90% of real-estate businesses already have or are in the process of creating a digital-oriented strategy and vision. Developers and project marketers alike are going digital and not looking back. It’s clear that there’s hardly a soul in the biz who can afford to ignore the benefits that technology brings to the table.
But how did the real estate industry get here? What is ‘proptech’ and where is it heading?
Let’s try to find some answers.
What is PropTech and Why Does it Matter
For the sake of clarity, it’s important to note that the term ‘PropTech’ encapsulates several concepts rather than a singular trend. Short for ‘property technology’, it stands for the complete phenomenon and application of technology in real estate.
In other words, PropTech refers to the people (start-ups, established companies), tools (software and hardware), and processes (industry practices, manufacturing technologies) that leverage technology to move the industry forward.
As investments in technology start to yield results, we’re seeing significant improvements across the entire new development real estate sector:
- Smart contracts and electronic payments bring transparency and security to real estate transactions
- Digital-native brokerages and online listing sites improve communication between buyers and sellers
- The buyer’s journey gets much shorter thanks to data accessibility and smaller amounts of paperwork required to close deals
- Property management gets more efficient as owners can effectively track and analyze occupation data
Similar to what FinTech has been doing for the financial sector, the development of property technology was one of the chief drivers that prompted an overhaul of the stagnant real estate business around the world.
PropTech didn’t just happen overnight. Let’s take a look at how it came to be and how it’s been progressing over the years.
1980s — 2000s: The Start of Proptech 1.0
Like in any other industry, real estate entered technology in search of incremental improvements.
With operating systems like Microsoft Windows hitting the market, the industry saw a glimpse of tools that could improve workflow by leveraging available tech. It didn’t take long for Excel sheets to replace, at least to some degree, the old-school pen & paper methods.
This first stage of Proptech was also the time when businesses like Property Market Analysis (PMA) and CoStar entered the market. These companies came forward to assist real estate businesses with computer-generated data and analytics.
By the early 2000s, property listing platforms like Zoopla, Trulia and Zillow had opened shop and was nudging the focus towards residential real estate.
Present Day: Rise of PropTech 2.0
PropTech 2.0 launched with a singular goal: to disrupt every part of the real estate industry. A new wave of start-ups began to infringe on the domination of established technology giants, and have been doing so since then.
In 2008, Brian Chesky, Joe Gebbia and Nathan Blecharczyk created the first hospitality service brokerage, Airbnb. Originally known as Airbedandbreakfast.com, the site crossed the 10,000-users mark in March 2009. They created a niche of their own within the hospitality industry and kickstarted the ‘sharing economy’.
Airbnb is creating a new marketplace for space and is facing many of the challenges that eBay faced back in 1998 when they created a new marketplace for goods.
Another hit for PropTech 2.0 came in 2010 with the launch of WeWork. The company snatched the other end of the market and soon became the biggest platform for leasing office space. In 2015, Fast Company listed WeWork as one of the world’s most innovative companies, a noteworthy feat considering the real estate industry’s attachment to ‘tradition’.
Thanks to increasing computing power and arrival of flexible software solutions, tech businesses started offering robust listing and research platforms, analytics tools, marketing data and property-management utilities, quickly making the industry more accessible and forward-thinking.
The Future: What is PropTech 3.0?
While PropTech 3.0 is still in its infancy, changes to the market are already happening as many industry leaders are investing in and adopting new technologies.
Much like the first stage of the PropTech (r)evolution, the current wave aims at improving the existing structures, rather than focusing on disruption.
For instance, the US-based Compass pairs the traditional brokerage model with a tech-driven platform. By removing much of the paperwork out of the equation, it speeds up the buying & selling process dramatically.
There are many other examples of organizations that are trying to introduce further improvements. Platforms like Spark are bringing innovation to the field of new home sales, making new development sales more efficient and profitable than ever. Companies like MindSpace (shared office spaces), Bungalow (home rental services) or CityBldr (smart land & property management) are actively pushing the industry forward in search of innovation.
PropTech 3.0 even changes the way legal tasks are carried out. Decentralized blockchain technology allows the execution of smart contracts that bring transactions to conclusion in a more efficient way.
Buyers are more tech-savvy than ever. That’s why it’s increasingly important to opt for a customer-centric approach, offer transparency and make sure services are accessible everywhere.
Conclusion
There is much we can learn from the past of PropTech, but we can also predict what’s about to come by observing its current state.
As technology advances and becomes more widely-used within the real estate industry, we can expect buy-in from developers and real estate marketers on all levels. The day-to-day processes of new home sales have already begun to transform as the use of technology accelerates the process of writing and closing a sale, managing inventory, and overall improving the buyer experience.
If you’re looking to future-proof your business and invest in a robust CRM solution, reach out at hello@spark.re.
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This blog was written with Dawid Bednarski, freelance copywriter and blogger at OctoScribe. When he’s not writing about tech, he’s enjoying the simplicity of analog photography and daring bike trips with his wife.
