Property Technology, commonly known as PropTech, refers to the use of Information Technology (IT) to assist both individuals and companies buy, sell, research, and manage real estate. While still a relatively new field, the convergence of technologies, cloud, and digital transformation are key forces driving PropTech forward. The goals of PropTech include: minimizing the cost and resources associated with real estate transactions, maximizing efficiency, saving time, and personalizing property management. This concept is similar to FinTech, where the focus is on the use of technology in finance. PropTech utilizes digital innovation and other technologies to address real estate market participants’ needs in the property industry.
Efficient PropTech is specifically devised to streamline processes and connect market participants in all aspects of real estate. Therefore, PropTech directly impacts buyers, sellers, brokers, lenders, landlords, as well as others. One of the most popular current PropTech technology is virtual reality software, which allows prospective buyers to virtually walk through properties, construction sites, and more. Additional well-known PropTech technologies include software for reporting repairs, splitting rent payments, and crowdfunding new real estate projects.
At this time, PropTech consists of three major market segments: (1) smart home, (2) sharing real estate, and (3) real estate FinTech.
A smart home is equipped with digital platforms that monitor, manage, or operate specific property assets. Amazon Echo’s Alexa is an example of something in a smart home. Generally, they are comprised of digital platforms that monitor, manage or operate specific property assets. Other examples could be something a security surveillance system that warns property owners of a threat, a smart thermostat that regulates the temperature of uninhabited units, or smart light bulbs that can be turned on by a smartphone app or digital assistant.
Sharing Real Estate
This refers to technology that facilitates the processes involved with sharing or renting real estate assets, such as land, offices, storage, apartments, parking lots, and more. For example, there could be a software that facilitates automatic online payments for retail spaces occupied in a building owned by a property management company.
Real Estate FinTech
This segment of PropTech includes applications that involve buying and selling real estate assets. A platform that reduces the amount of physical paperwork and documentation involved in a home purchase can be thought of as an example. Stay tuned for a deeper conversation regarding the relationship between PropTech and FinTech.
With PropTech still being a relatively new field, the investors are largely comprised of wealthy, seasoned real estate investing experts (or at least those with a real estate investing background). In addition to being backed by some of the world’s largest real estate giants, it would be fair to say most of the individuals behind the world’s biggest tech companies, agree that future technology is pushing towards digital transformation (Donati, Forbes). Therefore, you’ll find investors that are interested in a sort of ‘futuristic’ technology category when it comes to financial investments. For example, PropTech investors would be very likely to also be interested in FinTech and Cryptocurrency. While the latter two seem to be more popular at the moment, PropTech is definitely something well worth looking into, especially if you have a specific interest in real estate investing.