In recent years, digital transformation has shaken up the real estate industry so much that in 2021 the European PropTech market reached a share of around 20% of global investments and around 31% of commercial real estate investors plan to invest in PropTech companies.
Let's take a closer look at what PropTech is exactly, what is behind the PropTech umbrella, and why real estate professionals see it as the future of the real estate industry.
What is PropTech?
PropTech, or real estate technology, refers to technology solutions in the real estate industry that aim to streamline various processes for all parties, including investors, buyers, sellers, brokers, lenders, and landlords. For example, PropTechs include virtual reality software that allows potential tenants to virtually tour the property, smart repair reporting software, automated online payments for retail spaces, and applications for buying and selling real estate assets.
Since PropTech is based on advanced technologies such as artificial intelligence (AI) and Big Data, companies and real estate users benefit from PropTech mainly through the automation and digitalization of processes. Therefore, this type of real estate technology has the potential to minimize costs and resources associated with real estate transactions, maximize efficiency through intensive data gathering and analysis, save time, and personalize property management.
Types of PropTech: Residential and Commercial Property Tech
According to Deloitte, PropTech uses technology to transform and improve the way we buy, sell, plan, build and manage residential and commercial real estate. Basically, this means PropTech can be used for both business-to-consumer (B2C) and business-to-business (B2B) solutions.
Residential Property Tech
From an end-user perspective, residential real estate technology focuses on smart property solutions for individuals in order to facilitate the way people own or rent their houses or apartments. An example of a residential property platform is Airbnb, which is designed to help individuals rent out homes on short notice. Despite the rental platforms, there are also residential property technology solutions such as:
- Property Sale Tools,
- Property Search Tools (listings and marketplace, agent and find-your-home tools),
- Property Management Tools (IoT-powered home improvement and rental management tools),
- Financing Tools (alternative financing, digital lenders, and brokers),
- Mortgage Lender Software (loan application and origination),
- Real Estate Closing Tools (insurance, transaction management, valuation, etc.),
- Loan Management Systems (loan securitization, refinancing, etc.).
TechCommercial Property Technology, or CREtech, is designed to help real estate companies and property professionals efficiently manage, search, lease, and sell property assets. While Residential PropTech is used by individual residents, CREtech means using all innovative tools for business purposes.
Examples of commercial real estate platforms include Kterio, which allows property owners and operators to visualize and manage all assets, and LoopNet, a platform for leasing and buying commercial real estate. CREtech tools can be divided into:
- Property Search Platforms (listings and marketplaces, brokerage CRM, etc.),
- Financing tools (equity financing platforms, transaction underwriting, debt financing platforms, etc.),
- Construction planning and management tools,
- Property management tools,
- Asset Utilization (co-working, co-living, event space, management of retail and industrial buildings).
PropTech in Numbers
The number of new PropTech companies is increasing every year. A look at the statistics shows that the United States hosts the largest group of PropTech companies at 59.7%, followed by Europe (27.2%) and Asia (3.5%).
The European market has become increasingly popular for PropTech companies in recent years. According to PWC, the PropTech market in the EU is expected to reach $69 trillion by 2033. The leading PropTech country in Europe in 2021 was Spain, with $2,500 million in investments. Spain is followed by the UK, with the largest number of companies (709) and $2,300 million in investments. The PropTech market in the UK is expected to grow at a compound annual growth rate (CAGR) of 17.1% through 2032. Germany rounds out the top three with $2,100 million in investments and an expected size of $444.39 million by 2028.
What do PropTech Solutions Bring to Landlords, Property Managers, Tenants, and Investors?PropTech is changing the way people sell, buy and rent properties. Here we highlight some groups in the real estate industry that can benefit from innovative tech solutions.
Landlords and Property Managers
Landlords and property managers can use this smart technology to simplify and streamline processes, such as:
- Finding the right tenants - smart algorithms can match landlords with suitable tenants and save them time.
- Screening tenants without being there in person, thanks to smart devices and sensors (IoT) that provide all the data about the building's security and maintenance on a mobile app.
- Home tours and inspections - thanks to virtual reality, property managers and landlords can do all this from the comfort of their own homes.
- On-time collection of rent and security deposits.
- Managing finance and contract processing.
Digital PropTech solutions offer tenants a flexible experience in a variety of ways:
- Tenants looking for spaces have better insight into what is available and can take a virtual tour, simplifying the selection process.
- Thanks to IoT, they have better access to information in their home, such as security, temperature, lighting, etc.
- The connection between PropTech and FinTech can automate and simplify rent and security deposit payments.
- Reporting a malfunction through property management apps.
- Simplify communication with landlords and property managers.
The goals of PropTech for real estate investors are to increase efficiency and profitability. PropTech enables real estate investors to:
- Accurately plan construction projects and meet deadlines,
- Get clear predictive analytics on the risks of investing in specific buildings and projects,
- Automate paperwork,
- Secure digital contracting in the real estate buying and selling process.
Remarkable Property Technology Solutions with Examples
Property software developers are creating new apps, software, and platforms every day for various purposes in the real estate industry, so the subcategories of PropTech companies far exceed the dozens. In this article, we will mention some of the most popular.
Commercial Real Estate Software
Kterio is a unique platform that provides its clients with best-in-class solutions for managing, analyzing, and optimizing commercial real estate portfolios of any size. This platform has been enhanced by the developers at Valcon to provide benchmarking, reporting, and asset-level control. This way, owners are no longer tied to the equipment vendors' proprietary systems and maintenance programs.
Rental and Sales Platforms
Bloxs is a revolutionary Dutch software provider specifically for real estate organizations. The software is based on the three pillars of ERP, hyper-automation, and data analytics. Bloxs is aimed at companies operating in all sectors of the real estate industry: from residential to office to retail and logistics properties.
Real Estate Professionals’ Software
Convect is a user-friendly, innovative, and reliable software for real estate professionals. This software offers several special features such as the online editor for annual reports, integration with email, automatic exchange of collection and payment files with banks, or the central search engine. This way, real estate professionals can work more efficiently, get a clear overview of all incoming invoices, contracts or repair requests, handle booking and payment processes fully automatically, as well as manage VAT or payroll administration.
Real Estate Chain Software
Luxs is software that works with the entire real estate chain, including ERP systems, contractors, suppliers, etc., ensuring an audit and data solution with extensive visualization capabilities without human intervention. This software uses smart data to create the digital twin and provides services that improve processes around real estate. This way, all parties involved in the real estate chain can derive more benefits from the data.
How Real Estate Companies Can Keep Pace with PropTech
In order to take a step forward in the real estate industry and provide higher-quality services, companies must adopt innovative approaches and take full advantage of modern technologies. Without prior experience in the technical field, this may not be an easy task. But Valcon can jump to your rescue. Our developers have a lot of experience in the PropTech space and have worked for many industry giants like Bloxs, Luxs, Kterio, and many more.
Focus on your business, and we'll make sure you get the best PropTech solutions.