The emergence of PropTech has resulted in more transparent and efficient property transactions and has even impacted the wider construction scene and planning of cities. PropTech has already transformed the ways in which real estate businesses, including investors and service providers, operate.
Listing platforms (Rightmove, Zoopla and OnTheMarket), hardware (smart thermostats, sensors and IoT), materials (batteries for solar panels and smart concrete) and manufacturing (3D printing, offsite manufacturing and mobile construction platforms) – all these are PropTech disruptions noticeable throughout the value chain. PropTech also takes data, automation, and artificial intelligence (AI) under its roof to help improve the processes of real estate, in particular logistics and supply chain processes.
The property sector is already realising the opportunities that innovative technology can bring. According to the annual report of KPMG 2018, a survey of 270 decision makers within real estate sector globally revealed that organisations in the property market are highly aware of PropTech’s potential impact – 97 percent respondents of the survey affirming it. With positive views about technology and innovation, a total of 73 percent consider PropTech an opportunity and an additional 25 percent consider it both a threat as well as an opportunity.
The report also shed light on the slow progress compared to last year – mainly because of intentions not being acted upon. It shows that the potential threats are only likely to materialise if these real estate incumbents fail to grasp the opportunities PropTech offers.
The amount of capital invested into PropTech is evidence of its potential and the likely transformative effect it can have on the real estate sector globally, benefiting everyone involved. In an analysis carried by Savills, it determined that the US was leading the way in PropTech investment, amounting to 57 percent of the investments by value. In second place was Spain with 12.4 percent of the investment volume. and the UK received 10.8 percent, making it number three on the list.
PropTech’s value proposition: Flexible,easier options
There are many examples of how PropTech has provided more, flexible and easier options to real estate investors. Starting from the traditional model of real estate investment – that is buying a buy-to-let property – Proptech has introduced alternative solutions. Now an investor doesn’t have to worry about tight regulations, time-consuming management of the property as well as a huge initial outlay required to be able to buy the property or to put down as a deposit for a buy-to-let mortgage (the criteria to qualify for which keeps getting tighter). Through unit trusts, property funds and property crowdfunding platforms, PropTech has reduced the threshold of minimum investment, in most cases with improved liquidity and requiring no management of the property assets. Also, the risk is likely reduced as it is being spread over different assets as part of a more diversified portfolio.
The findings above all help to validate the successful growth trajectory the PropTech sector has been on, and moving forward it has the potential to add increased value to the real estate industry and the global economy too.
Incumbents must evolve or be left out
The scope for PropTech will continue to evolve with the passage of time. It is certain that with the ever-changing digital landscape, the potential disruption of real estate sector is significant, led by the emergence of new companies in the PropTech space to solve real-life challenges. As these newer entrants begin to lead the way, industry incumbents will have no choice but to follow in their footsteps, or risk facing a similar fate as Nokia in the smartphone industry.