Proptech: How Will the Real Estate Industry Embrace The Digital Revolution?
Category Commerical Property News
PropTech: it's the latest buzzword, but how is the real estate industry really embracing the digital revolution? Other industries have jumped right into the middle of the technological disruption, but the property sector has been predicably slow on the uptake. What exactly is PropTech? And what does it mean for real estate professionals?
Real estate is the largest asset class in the world. This means that it not only has immense potential to compete in the technology space, but it also has a responsibility to consumers to be able to adapt with the times.
So, what is PropTech all about?
It's a new term: two years ago no one talked about PropTech. It remains a somewhat vague concept, but in essence, it is the integration of technology to provide innovative products and business models that improve customer experience and the industry as a whole.
It has been founded by a series of start-ups using technology to assist people and companies to better collect data, buy, sell and manage their real estate. PropTech uses digital innovation to address the needs of the property industry.
Through technology, we are able to find new ways of doing things with the intention to increase efficiency and productivity. James Dearsley, a serial entrepreneur and keynote speaker on technology defines Proptech as: "[...] one small part of a wider digital transformation in the property industry. It considers both the technological and mentality change of the real estate industry, and its consumers to our attitudes, movements and transactions involving both buildings and cities."
How did it all begin?
In the first industrial revolution we saw steam, water and power mechanisation, the second brought with it the introduction of electricity, assembly lines and mass production, the third automation and computerisation, and in the emerging Fourth Industrial Revolution (4IR) we are witnessing significant and revolutionary advances in technology. The potential this revolution brings will impact all disciplines, economies and industries, and even challenge our ideas about what it means to be human.
We have already been introduced to some of the expansions such as: artificial intelligence (AI) to genetic engineering, nanotechnology, 3D Printing, internet of things (IoT), big data analytics, cloud computing, robotics, virtual reality (VR), and digital currencies (based on Blockchain). These advances each promise huge benefits to society.
Never before have we had so much data within our reach. And never before has consumer behavior been so measurable and crucial to the success of industry.
PropTech has several vertical emergences such as the real estate market (PropTech), smart cities and buildings, the sharing economy, the home building industry (ConTech) and finance (FinTech). They all make use of integrated technology to enable easier, streamlined and enhanced functions of the industry. These bespoke technologies have been developed to better manage operations, data, finances and user experience and have changed the way a service is delivered from start to finish.
Graph taken from medium.com
The good, the bad and the reality
The need for PropTech has forced the giants of the property industry to remain relevant.
Start-ups, entrepreneurs and venture capitalists are claiming ownership of the space, offering tools and solutions for real estate professionals. They are at the centre of consumer evolution and are able to dig deep and analyse these changes to offer better solutions and improved customer experiences. Ultimately, they'll come out ahead.
The problem is these start-ups are intrinsically designed to find new ways that better cater to the end user, which hasn't traditionally been a focus of the property industry.
Hence the pressure to evolve - and fast.
The diagram below shows the significant increase in investment into the sector since 2014:
Graph taken from medium.com
Being able to use big data to locate a building, use blockchain technology to streamline the purchasing process, print 3D models of properties and use VR for online guided tours are slowly becoming the norm. The reality of tomorrow is no longer blurred and uncertain. Companies and people have an idea of what lies ahead of them with regard to technological disruption with the seeds being planted now. It's imperative that the real estate industry as a whole do the ground work now, in order to avoid becoming redundant 10 years from now.
What is the solution?
Change can sometimes feel uneasy, unnatural and a bit scary, especially for an established industry. However, once we realise that change is real and we need to embrace it in order to move forward, it becomes a must.
Here are top five helpful tips to guide real estate professionals in a time of massive transformation and change:
- Stay in tune and in touch with real estate news and industry trends. Read trade websites regularly. The more informed you are, the better your ability to anticipate changes in the market and meet the needs of your clients wherever they happen to be.
- Invest in digital tools, training, machinery and skills development to ensure that you are up to date with what's happening in the world of PropTech.
- Take risks by experimenting with new ways of doing things, new ways of communicating with your target audience and new ways of approaching business. In this way you will be able to identify what works best for you and your company.
- Spend time working on your competitive edge, how you can improve your service and your USPs.
- Keep in touch with clients, go the extra mile, ask for feedback, ask for recommendations, do satisfaction polls - all this is golden information and will help you stand out even in the age of PropTech.
Arnold Pretorius, Industrial & Commercial Property Broker / Director at Office Place believes that such innovation is a must. He says, "PropTech companies are simplifying the property market for property owners, consumers and agents alike. These innovators challenge the status quo and seem to be disrupting traditional real estate businesses. They make use of big data to reveal patterns, trends and associations relating to behaviour and interactions. Their service offerings range from discounted fees by property owners overseeing viewings of property for sale themselves to reward offerings for tenants paying their rental on time."
Having access to this information enables property owners and developers to make educated decisions regarding the future of their assets. Consumers will have market related data available to them instantly. They can easily educate themselves on an area of interest.
Pretorius adds, "At OfficePlace, we are able to use big data together with their traditional skills to work smarter and faster. The goal is to have our agents and clients collaborate to meet their specific property needs."
Forecast - What we can expect
"It is clear that there is a lot of confidence in the future of the PropTech business space as funding from venture capital locally and internationally has been huge. Both the residential and commercial markets are seeing a large number of prop tech start-ups each year and this is unlikely to slow down. Information has always been one of the fundamental keys to business success. Demand for information at our fingertips is increasing and the prop tech companies are poised to fulfil that need," concludes Pretorius.
------
Follow us on social media to get the latest news and updates: Facebook & LinkedIn
Author: OfficePlace