PropTech - Bringing Real Change to Real Estate
Bringing Real Change to Real Estate
Real Estate is the world’s largest asset class—worth $277 trillion, and forecasted by the 2021 Real Estate Global Market Report to grow from $2687.35 billion in 2020 to $3717.03 billion in 2025.
Real estate, in the broadest sense—developing, buying, selling, maintaining, living and working in buildings and properties—is a fundamentally physical industry.
Based on actual brick and mortar, it’s an old and traditional sector. Historically, it has resisted disruption, tending to be old-fashioned, complex and cumbersome in its methods and business practices, and slow to transform. When it comes to modernization and evolving for the digital economy, the name itself—real estate—hints at why been challenging for real estate to adapt to new technologies and virtual experiences. It requires a paradigm shift, a major mentality change.
Enter proptech. Short for property technology, this new vertical has been fast-tracked in a conventional industry.
A rapidly growing class of innovative technologies, proptech is transforming the way we search for, buy, sell, rent, use, manage, maintain, and conceptualize property.
Proptech was already very much on the rise pre-pandemic—Forbes reports that the use of property technology in the real estate industry jumped 1072% from 2015 to 2019. And already in 2020, 81% of real estate organizations were planning to implement new digital technologies in their business processes.
But Covid-era movement restrictions, plus health and safety requirements for buildings, put new demands on commercial real estate owners, developers, managers, and sellers—increasing and highlighting the need for new systems, and accelerating the adoption of new technologies. Stay-at-home orders changed they way people live and work, substantially altering how they use and think about the spaces they occupy.
Increasingly, we live in an experience economy. Across various asset classes, an industry’s value and function are now based on user experience, and must evolve to meet the demands of modern tech-savvy users and consumers who expect responsive, real-time, personalized services and a high degree of autonomy.
For Commercial Real Estate companies, digital transformation will not only streamline business processes and eliminate inefficiencies, proptech will also create diverse types of value for the customer, and play a pivotal role in attracting and retaining tenants by focusing on human need.
So, what are the “real world” uses of proptech? What does proptech mean for Commercial Real Estate companies and users—consumer and business alike?
Here are some areas in which Proptech is breaking (digital) ground—making huge strides in leveraging big data and modernizing the real estate industry across the board:
As blockchain technology facilitates transparent, secure, fully encrypted digital transactions that can be made without a trusted third party, and real estate properties can be digitized as fungible or non-fungible tokens (NFTs), proptech can expedite diverse processes and transactions (deals, leases, reports, financials), eliminating various middlemen and intensive paperwork.
At the property level, smart buildings improve health and safety compliance in a hyper-vigilant world: air quality, location security, touchless technology, streamlined mail handling. Proptech can eliminate inefficient building systems and programming; replacing it with real-time and historical data that improves maintenance and preempts problems. AI and machine learning can facilitate predictive maintenance. Proptech will lead to greener buildings—increased sustainability, energy efficiency, and reduced emissions.
Proptech tools and digital solutions based on the Internet of Things (IoT) will help real estate organizations focus on tenant/user experience, analyzing and predicting what modern users need from various types of properties, from facilitating omnichannel offices to planning public spaces.
And a September 2021 CNBC report called AI “the holy grail for real estate agents hunting for listings in today’s ultra-competitive housing market.”
Proptech’s benefits to CRE will positively impact countless aspects of the customer experience, from simpler, smoother purchase and rental transactions to better built and managed spaces.
And at the individual level, virtual tools have already eased and expanded property searches, making detailed information—about availability, property type and value, history, location and more—readily available through numerous channels. A recent study by Matterport showed that 92% of prospective homebuyers research the Internet before contacting an agent, and that “property buyers and sellers overwhelmingly prefer listings with 3D tours.” Further, AI will soon allow homebuyers or renters to search for properties based on factors beyond location and number of bed- and bathrooms. Forbes reports, “in the near future…AI may enable these sites to recommend properties based on preferences, personality traits, and values.”
Proptech can benefit companies across countless industries, and play a key role in modernization. Lukasa can help your organization implement the precise proptech tools it needs as part of a customized, future-focused path to strategic growth.
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