PropTech: What it is and why it matters to homeowners
Property technology, or “PropTech,” is the term used to describe the broad application of technology to real estate markets. It refers to the myriad tech companies working to transform the real estate industry, based on a rapidly changing digital landscape and ever-shifting consumption trends and patterns.
Also known as “real estate technology,” PropTech aims to help property owners, landlords, and tenants better manage their assets. In short, the goal of PropTech is to make owning, leasing, or working in a building easier and more efficient for everyone, whether it be through reducing paperwork for property management or streamlining transactions between tenants and landlords.
PropTech often overlaps with the following sectors:
FinTech, which refers to financial technology startups that use innovative digital methods to provide financial services. (Think: Mobile banking platforms or online tools that help you pay friends.)
Smart Real Estate, which involves tech devices and systems that help build and run smart cities and smart homes. (Think: Smart lighting in your home or security systems that stream to your mobile device.)
ConTech, which includes construction technology products and startups that have changed the way we build. (Think: 3D printing or aerial mapping performed by drones.)
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When did PropTech emerge?How PropTech is disrupting traditional real estateWhen did PropTech emerge?
PropTech companies first entered the tech scene during the late 1990’s “dot-com boom” when global internet usage skyrocketed. Tech companies—the majority of which were based in the San Francisco Bay Area—were rapidly transforming the landscape of online sales.
Throughout the early 2000s, real estate tech received significantly less venture capital funding than, for example, FinTech companies (even though real estate ranks as the largest asset class in the world). According to industry experts, this is largely because the real estate industry was slower to adopt to the digitalization of its processes.
But the current wave of PropTech has accelerated quite rapidly in recent years, driven by a wide range of new technologies such as artificial intelligence and big data. (Tens of billions of dollars of VC funding has flooded the real estate sector to follow.) Throughout the COVID-19 pandemic, these PropTech innovations have evolved even further as the real estate sector attempts to carve out its future in a post-lockdown world.
How PropTech is disrupting traditional real estate
There are currently many PropTech startups attempting to disrupt and improve the market across several areas within the real estate sector. Advances in residential real estate technology, for example, tend to focus on home selling, buying, and financing with products that enable remote access to loan signing opportunities, virtual property tours, and real-time alerts about listings. They can also facilitate secure fund transfers and other forms of more centralized document management.
But PropTech doesn’t just impact residential or commercial real estate tenants—it can make a number of processes easier for landlords when it comes to property management as well. For instance, while PropTech technologies allow tenants to make rent and lease payments via mobile devices, landlords can do things like send push notifications to alert tenants of building news, offer virtual tours of vacant units, or communicate with renters—current or potential—via text, email, or social media.
PropTech innovations can help the real estate industry draw out a more stable, successful future in a post-COVID world. It’s highly likely that the longest-lasting PropTech products and services will be the ones that save people time and money while encouraging the use of automation and remote working. PropTech can be used in even more ways than described in this article, but the goal will always be the same: to create an easier, more efficient user experience.
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