It might be early days for PropTech – the marriage of property and technology – but signs of a sector on the rise are already there.
Property technology, ‘PropTech’ for short, is something of a catch-all term for a disruptive new breed of data-based startups and intelligence innovators now applying their skills with analytics and algorithms to the real estate sector.
The reference point for the PropTech name is ‘FinTech’, the booming technology segment for the finance community. Dramatic growth curves in FinTech saw total global investment rocket 75 percent in 2015 alone to reach $22.3 billion, with Europe up 120 percent. For PropTech, progress is slower and gains smaller – so far.
“It’s an exciting time in real estate right now,” he says. “PropTech is starting to make its presence felt both in residential and commercial. And, while it has a long way to go before it reaches the level of disruption FinTech has achieved, it will usher in big changes over the next few years.”
The range of potential applications is broad: in Europe, companies such as Berlin-based Machine and Deep Learning specialist LEVERTON is helping transform the tedium of document management; Datscha from Sweden is speeding up commercial property search and identifying ownership; and Pi Labs has launched in London as the region’s first Venture Capital firm for PropTech.
In the global market, though, it is primarily Chinese and American firms that dominate the list of leading PropTech companies ranked by funding success, with the sector raising in the region of $1.7 billion in 2015.
A rapidly evolving sector
PropTech take-up in real estate has initially found favor among consumer-facing property portals operating more of an online ‘searching-and-shopping’ model.
It’s also responsible for driving innovation in the residential property industry. Zoopla launched an iPhone app with Augmented Reality (AR) as long ago as 2010 and Rightmove began trials of Virtual Reality (VR) technologies last year. Now, even traditional high street estate agents such as Foxtons are early adopters of VR.
Especially with FinTech overlap in home insurance and mortgages, the residential market is currently at a more advanced stage of PropTech development and integration. However, change is on its way for commercial property, Davis believes.
“At the smaller end of the commercial property market there are opportunities to mirror some of the successes PropTech has had in the residential sector, where transactions could become more automated across online platforms,” he explains. “However, where you’re dealing with hundreds of thousands of square feet, this isn’t practical.
“It’s a huge undertaking that requires the expertise of a property agent who adds market-based and technical experience; experience and knowledge which will make the difference between striking an exceptional deal or a bad deal. So, what I think we’ll see over the next five years is a dramatic change in the role of the traditional agent, from broker to adviser,” Davis adds.
Tapping into Big Data
While PropTech will help real estate streamline transactions, it also has potential to provide the industry with richer, data-based insights, Davis believes. Where PropTech meets building intelligence, it can leverage digital assets developed during design and construction phases, as well as from facilities management, to create Big Data across the whole real estate lifecycle.
From Computer Aided Design (CAD) incorporating AR and VR, to Building Information Modeling (BIM) software, application of technology in construction, or ‘ConTech’, is on the up. This shared knowledge resource is underpinning delivery of a new generation of tech-driven buildings.
A prime example is The Edge, in Amsterdam, unofficially crowned ‘the most intelligent building in the world’. Its extensive array of smart features and super-efficient systems – from app-driven hotdesking and custom temperature control, to remembering how you take your coffee – are all controlled via an army of 30,000 sensors.
Touted as a successor to the ‘most intelligent’ title is the Intel HQ in Tel Aviv, due for completion 2019. Built around the company’s IoT technology, it could take personal interaction – and surveillance– to a new level.
The new tech-driven normal
In a world where people are increasingly reliant on technology, PropTech carries the potential to significantly transform their daily interaction with real estate – whether it’s customizing the home environment via smart phones or personalizing workspace in the office.
As Davis says: “We’re at an interesting juncture in real estate, a tipping point if you like. Until now, PropTech has been slow to materialize, partly because the wider industry has been slow to innovate. Compared to financial services, things move at a much slower pace and there hasn’t been the same level of focus to come up with the next big thing – be it an app, an online platform or algorithm.
“So innovation is taking longer to emerge but PropTech has the same potential to disrupt, and early adopters will have the edge,” he concludes.