PropTech everybody has heard of it by now, but what exactly does it mean again?! We give you a short introduction to the most important PropTech areas, use cases and terms.
1. What is PropTech?
The term PropTech (property technology) is used to describe any technology, which helps individuals and companies research, buy, sell and manage real estate. This can span software, hardware, materials or manufacturing.
- software & web applications: e.g. online property portals, lead generation tools, augmented reality and virtual reality softwares
- hardware: e.g. sensors, virtual assistants, smart light bulbs
- materials: e.g. bricks serving as solar panels, smart paint
- manufacturing: e.g. 3D printing, offsite manufacturing
2. PropTech sector verticals: Smart Real Estate, Shared Economy and Real Estate Fintech
Smart Real Estate examples:
- security surveillance system that warns property owners of a threat
- a smart thermostat that regulates the temperature of uninhabited units
- smart light bulbs that can be turned on by a smartphone app
Shared Economy examples:
- car-sharing e.g. of autonomous vehicles
Real Estate FinTech examples:
- Tokenizations of real estate assets
- online real estate marketplaces
- Crowdfunding platforms for real estate projects
3. PropTech Generations
The recent buzz sometimes makes it seem as if PropTech is a completely new phenomena. Even though it goes back to the mid 1980s. One distinguishes between three consecutive generations.
The key initiator for PropTech was the introduction of the personal computer in the late 1970s. Excel quickly turned into the industry standard platform for the organisation and analysis of data and also influenced the way realtors dealt with data. With the emerging internet accessibility online listing of sites grew more popular and marked the first generation of PropTech. Also PC-based technologies for industrial applications were used very early on in constructions (ConTech).
Faster computers, the internet, the increased use of data analytics and emerging technologies such as virtual reality defined the second wave of PropTech innovations and startups and paved the way for more specialised services for customers. One of the most popular application, which changed the way we travel for ever, had a huge impact on the housing market and served as a leading example in regards to the sharing economy, was for example Airbnb.
Today we are witnessing the third generation of PropTech innovations and companies, which uses emerging technology such as drones, virtual reality tools, IoTs and blockchain to provide solutions for the problems of the 21st century. Sustainability and customer centricity are two of the driving forces behind PropTech 3.0.
4. PropTech's important drivers and circumstances
In recent years there has been a big hype around PropTech and emerging technologies in general. Investments shoot through the roof and the media report daily on trends and new developments. Why now, one might ask, if you consider that PropTech has been around for quite a while?!
"We are in the midst of the fourth industrial revolution which is seeing the lines between the physical and digital worlds merged ever closer." Jeremy Rifkin
There are various forces and factors that fuel these developments:
- Mobile generation: The mobile generation is beginning to enter the job market. They grew up doing everything on their smart phone: discovering the world, shopping clothes, educating themselves, listening to the news, paying their coffee, furnishing their first apartment, finding first dates etc. They are 100% mobile, used to the 'on-demand-economy' and customer-centricity. They are embracing new technologies and mobile applications to shape the world after their visions.
- Climate change: There is a great demand for technologies, which help the real estate developer, the construction companies as well as the inhabitant to lower their CO2 footprint. That could be for example sensors controlling the temperature to solar bricks, turning a building energy neutral.
- Breakthrough in technology: There has been a breakthrough in technologies in various sectors, such as augmented reality, machine learning or Blockchain. Ideas, which have been out for a long time, are now able to be applied e.g. when it comes to autonomous vehicles and other robots.
- Wifi: The emerging technologies depend on a strong and fast internet broadband. The implementation of 5G is a big step in this direction. The hyper-connectivity allows the use of technology everywhere and enables for example drones to shoot an overview of the construction site and load it up to a cloud in real time. Making it accessible immediately for investors, managers or landlords.
- Digitalisation is challenging every aspect of the real estate sector today. From the digitalisation of plans, processes and lists - which was brought upon the sector by PropTech 1.0, to online market places and shared economy businesses (e.g. Airbnb, WeWork) brought by PropTech 2.0 and the latest wave digitalisation tackling processes, marketing, content creation and customer experiences.
5. How far are you with tackling this transition today?
- Do you use a CRM?
- Do you use programmatic advertisement?
- Do you quiz with your leads?
- Do you offer virtual visits of your properties portfolio?
- Do you use a property management software?
Thank you and kind regards,