What happens when one of the oldest industries meets the newest tech?

Mitesh Patel
Mitesh Patel

 

Proptech, or property technology, is one of the fastest-growing areas for technological investment. In fact, according to an article published by Forbes, investment in this area increased by three times between 2016 and 2017. As a result, many are predicting that it will have a transformational effect on real estate, in much the same way that technology has changed film, music, fast food, finance, transport and hospitality in recent years.

However, many people are still resistant to the change and continue to see real estate as one of the few areas that are immune to technological disruption. In this article, we take a closer look at proptech, the reasons for its rise, and how new technology is going to fundamentally alter one of the oldest industries in the coming years.

What is PropTech?

Proptech refers to forms of technology that have been developed for the property or real estate industry. The word ‘proptech’ itself is a shortened way of saying property technology, and it is highly varied. For example, a security system, a smart energy meter and a property management service platform can all be classed as proptech.

With that being said, proptech is most commonly used to refer to software solutions or platforms, which can help to change the way business is done within the industry. This encompasses the various digital products developed by Engage, such as resident, lettings, office, landlord and investor portals.

“Historically, the real estate industry has been the hardest to disrupt,” says Matt Dixon, in an article written for Medium.com. “End user demand will always dictate adoption, so as the tech-savvy demographic becomes more attune to real estate inefficiencies, demand for PropTech will continue to grow.”

How Will PropTech Change Real Estate?

As was the case with Uber in the transport industry and Airbnb within tourism, most proptech is primarily concerned with improving efficiency and enhancing the customer experience. Therefore, the technology is likely to change real estate by changing the dynamics, with the concept of ‘tenants’ being replaced by ‘customers’.

Within commercial real estate, meanwhile, proptech has helped to develop the concepts of ‘space as a service’ and ‘access instead of ownership’. Essentially, commercial real estate customers are increasingly interested in access to office buildings or co-working spaces, and they want to treat this as a service. In some ways, this mirrors the success of Uber, which is based on access to a vehicle, rather than ownership of one.

Another way that proptech is likely to change the real estate industry is by moving more business online, away from bricks and mortar operations. At present, it is estimated that online estate agents account for around five percent of the market, but it is anticipated that this will increase to within the 15-20 percent range by the year 2020.

Key Benefits of PropTech

For proptech to truly revolutionise the real estate industry, it needs to be seen as worthwhile. Fortunately, there are a number of significant advantages associated with using a property management service or a software solution – both for those operating in the industry and for tenants or customers.

For landlords, proptech can provide 24/7 access to documents, payment gateways, maintenance information and news. Lettings processes can also be sped up significantly, allowing landlords to bring in rent earlier, resulting in more money. For customers or tenants, proptech can provide real-time information and a host of self-service options. This is significant, because 40 percent of customers now prefer self-service to human interactions.

Improved efficiency can produce a superior overall customer experience, resulting in higher satisfaction rates. Meanwhile, the ability to access information on demand can mean a reduction in the need for storage space, and proptech can enhance the possibilities for communication, leading to greater transparency too.

The Final Word

In the modern world, customer experience is arguably the single most important battleground, while we are also seeing some significant cultural shifts, such as the move towards space as a service, and the emergence of commercial real estate customers prioritising access over physical ownership. These trends have helped to set the stage for the proptech revolution, which is set to bring one of the oldest industries into the digital age.

The increased availability of property technology is likely to transform real estate in the coming years, moving more business online; improving process speed and overall efficiency; providing customers, landlords and real estate agents with easier access to information; and leading to tenants being treated more like proper customers.

 

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