What Is PropTech: How It Is Shaping The Real Estate Industry Today
We gather info on Property Technology (PropTech), its evolution, features, and impact on the real estate industry, sales, and new home buying processes.
The recent technologies in the past several years have made their way to the property industry. We no longer search for flats in newspaper ads or have to view properties face-to-face exclusively, let alone modern real estate businesses operations.
PropTech History and Evolution
The property sector lagged behind other industries regarding the implementation of new technologies. Perhaps old stereotypes and the perception of new tech as a disruption to established market patterns have played the principal role here.
The real estate industry is a giant economic sector: the UK residential real estate industry was worth £251bn in the year to March 2019. Yet, venture investors have not been in a rush to finance the tech in the industry until recently. The recent PropTech studies reveal a 36% annual increase in property technology investments, with a potential growth as new real estate tech solutions and venture investors enter the market.
But why is there a sudden PropTech investment boom in the industry that has been so reluctant to changes and new technologies?
The answer lies in data – the property industry is essentially data-driven. The first wave of PropTech started in the mid-80s with the PCs and data management systems implementation that made private data available for public consumption. This wave lasted well into the 00s.
Later development of PropTech and shifting conservative model of the real estate industry to a dynamic, modern, and evolving sector boosted various property businesses. For example, property technologies today eliminate truckloads of manual labour and extra costs in sales, allowing estate agents to focus on deals that actually involve potential clients.
PropTech in a Nutshell
In short, PropTech stands for property technology, meaning any tech for the real estate industry that makes core processes (buying, managing, selling, renting, planning etc.) more efficient and easier. PropTech can be software solutions (various real estate portals), hardware, or services.
For example, modern virtual property tours use VR and AR technologies, businesses get AI-based analytics, while buyers enjoy user-friendly property marketplaces.
PropTech solutions are most likely to dominate the real estate industry. Nowadays, you can hardly find anyone who is more likely to make 1 or 2 tedious face-to-face property viewings instead of quick online tours, particularly during the first stages of the property buying process.
But property technology is part of a larger ecosystem. Four main verticals are affecting PropTech and affected by it: Investment and Finance, Planning and Building, Buying and Selling, Management and Operations.
PropTech is not just a pathway to the digitalisation of real estate but an active implementation of innovative technologies that inherently change the traditional business patterns in the real estate industry and replace them with more efficient, data-driven solutions.
Core Drivers of PropTech
It is little surprise that the Internet and the rising number of savvy web users became the central drivers for the swift implementation of new technologies in the real estate industry. Particularly millennials, also known as Generation Y, have significantly contributed to the changes in property businesses.
Here are some core findings on the recent property trends:
- Half of the millennials use smartphones to search and choose new homes, while approximately 26% proceed to the next steps in the buying process, likewise using a mobile device.
- According to the 2018 Real Estate Tech Trends Report, 95% of modern homebuyers look for new homes using the web. Moreover, 54% indicated the Internet as the first step in their home buying journey.
- More than 90% of estate agents have implemented AR or VR technologies to offer better services for buyers.
But PropTech is not about customer experience exclusively. In fact, it likewise markedly affects other processes in the massive real estate industry.
PropTech Impact on The Industry
The recent property technologies have changed the way we view property in general and smoothly came into our daily lives, rapidly transforming the business processes simultaneously.
Sales and Marketing
PropTech has clearly changed the ways how estate agents approach sales.
Before the Internet, agents had to place ads in newspapers, meet with numerous clients who often were not potential buyers, and arrange multiple viewings.
Later on, the Internet and global digitisation initiated changes in the real estate industry, but at a sluggish pace. For example, estate agents continued to be at the centre of many property processes, often dealing with side tasks.
But the recent PropTech wave introduced new opportunities, tools, and services that have altered these processes. New solutions exempt realtors from side processes and costs, such as advertising, meaning they can now focus on their very core purpose – providing a quality buying experience and securing sales for ambitious buyers.
New Homes Searches & PropTech
Today, buyers go through 3 simple steps when deciding to buy a new home. First, they check the available property online, contact an agent, and then proceed to the next step and set up an appointment.
The market data shows that roughly 90% of the millennials worked with estate agents to take further steps in home buying processes.
Therefore, tech-driven increased autonomy of buyers means more leads, allowing estate agents to focus on converting leads into sales.
And with many new leads coming to estate agents, it is today more critical than ever for them to focus on efficiency, reputation, and swiftness. According to data from Properties Online, 88% of buyers expect a reply within just 1 hour, but only 30% of agents manage to do so.
Modern communications, such as social media and messengers, reduce the time gaps between applications and responses. However, there is an evident need for new property technology that helps real estate agents to manage new leads and their performance.
Current PropTech Trends
PropTech eliminates a truckload of manual labour in property sales, exempts from side tasks, and shines the spotlight on real estate agents. New solutions allow agents to focus on actual potential clients rather than alternative tasks. Unsurprisingly, getting well-qualified leads is the most critical part of a property sale, and the PropTech solutions shine here.
However, new real estate technologies offer more than customer experience and better sales. There are business solutions that make other industry branches likewise more efficient.
Artificial Intelligence (AI) & Real Estate
Not only do modern property solutions generate leads and manage marketing, but some also implement the newest PropTech solutions such as RAIYA (Real Estate Artificial Intelligence Your Assistant). This technology has earned positive feedback from property professionals reporting higher leads and sales.
But AI is shaping the industry in various ways. For example, common chatbots on websites optimise response times and decrease delays, while CRM systems allow quick communications and automatic workflows to clear the way for top-priority tasks.
Around 90% of decision-making in real estate is data-driven. The industry is now moving from traditional analysis methods towards drawing hypotheses and searching for investment opportunities.
Data analytics in real estate allows:
- For brokerages to get deeper insights on their businesses and review the agents’ performance.
- Reduced risk by price predictions and estimations.
- Better marketing, engagement, and reach based on data.
- Deep understanding of the latest trends and market risks.
PropTech is already here and, pushed by the pandemic, will only gather momentum. It shapes the industry by replacing traditional models with more efficient tech-based solutions from lead generation to simple data management and analytics.
Undoubtedly, PropTech has subverted the assumption of the industry immunity to new technologies. Discover one of the PropTech solutions that allows choosing new builds in the capital effortlessly – both completed or off-plan property in London.