What is PropTech and how it affects the real estate industry?
The ins and outs of digital real estate.
While the financial sector has already experienced digitalization with fintech (financial technology), the real estate world is currently still in the infancy of the digital age. More and more new ventures are trying their best to come up with sophisticated solutions to help the real estate world, which is the largest financial asset class in the world with a market cap of around 320 trillion dollars, to make a digital breakthrough.
What is “PropTech”?
Just as Fintech is made up of “Finance” and “Technology”, a closer look at the term “Proptech” reveals the breakdown “Property” and “Technology”. It is thus the general term for any company that wants to lead the real estate industry into digitalization.
The first and probably best known “PropTech” company in the world was AirBnB. A company that enabled the renting of apartments via private individuals worldwide and thus turned the entire tourism and hotel industry upside down. A breathtaking example of how technological development can plunge entire industries into financial debacle when already market-leading ventures miss the jump on the digitization bandwagon.
What are the verticals within PropTech?
Since we are talking about an overarching term here, it can of course be subdivided into further smaller segments. For example, the following more in-depth classifications have emerged just in the last few years:
Shared Economy Real Estate
This is the term used to describe any PropTech platform that offers the shared and/or joint use of a property. As mentioned above, AirBnB is one of the best-known PropTech companies driving the shared economy.
Fintech / Real Estate Fintech (Finance-Technology)
As mentioned above, is the older brother of PropTech, which has digitized the financial sector to make it easier for customers and businesses to access financial services. The two industries meet at Real Estate Fintech, which focuses on facilitating financial processes in the real estate sector.
Describes the use of digital design tools to more efficiently implement modern materials and sustainable approaches to the construction process.
Which advantages does PropTech bring?
If the previously mentioned hurdle of harmonizing all the data in this industry is overcome, all parties involved will be able to benefit greatly. The following are some examples of advantages that are already becoming clear.
For real estate brokers:
- It will be much easier to collect information about properties and customers and apply it to AI marketing in an automated and cost-efficient way.
- It will streamline a lot of the work processes and therefore make general back-office activities a lot more efficient.
- Secured digital transactions and contracts are already an integral part of this industry and a clear early result of digitalization.
- Digital customer contact will gradually intensify and save a lot of work and time.
For administrations and employees
- Management will gain more and more insight into the actual use of rented properties, as smart home devices, security sensors and other technologies installed in houses offer a constant stream of data and thus know in detail 24/7 about the condition of the rented property.
- Communication between management and tenants will become more efficient and digital. This will save a lot of time.
- Thanks to detailed 3D visualizations and 360-degree camera shots, apartment inspections will no longer be tied to geographical locations. You want to see an apartment in New York without traveling there? PropTech makes it possible.
For real estate investors
- Thanks to digital twins & co. any investment planning processes are simplified by worlds. This enables clear and efficient communication, which previously required far more effort.
- Analyzing portfolios and potential new purchase and construction projects becomes a breeze.
What are the tools that real estate agents use?
Real estate agents have long relied on their expertise and interpersonal skills to guide clients through the buying and selling process. However, as the PropTech industry continues to grow and evolve, agents are increasingly incorporating digital tools into their workflows to enhance their efficiency and effectiveness.
Drones are an increasingly popular tool in the PropTech industry, offering a range of benefits to real estate agents and buyers alike. One key advantage is the ability to capture high-quality images and videos of properties from a unique perspective. By flying a drone over a property, real estate agents can provide potential buyers with an aerial view that showcases the full extent of the property, including the surrounding area.
In addition to providing aerial footage, drones can also be used to create accurate 3D models of properties and neighborhoods. This technology allows real estate agents and buyers to explore properties in a more immersive way, providing a more detailed understanding of the layout and features of an asset.
Virtual Reality (VR) and Augmented Reality (AR)
Virtual Reality (VR) and Augmented Reality (AR) have become powerful tools for the proptech industry, providing real estate professionals with new ways to showcase properties and enhance the buying experience for clients. One way that VR and AR can help professionals is by creating immersive property tours. By creating a 360-degree virtual tour of a property, agents can offer clients a more realistic experience of the property, even if they’re located in another city or country. This is particularly useful for high-end properties or properties that are still under construction, allowing potential buyers to visualize the space and its potential before making a purchase.
Another benefit of VR and AR is the ability to showcase properties in a more engaging and interactive way. With AR, for example, agents can create interactive experiences that allow clients to explore a property in real-time, overlaying digital information onto the physical space. This can be particularly useful for commercial properties, allowing businesses to envision how they can use the space before signing a lease. Overall, VR and AR are powerful tools that can help real estate professionals provide a more engaging and immersive experience for clients. As these technologies continue to evolve, it’s likely that they will become an increasingly important part of the PropTech landscape.
Internet of Things (IoT) devices
IoT devices have a wide range of applications in the PropTech industry, offering real estate professionals new ways to monitor and manage buildings and assets. One key application is building automation. By integrating sensors and devices throughout a building, managers can gain real-time insights into everything from temperature and lighting to occupancy levels and energy consumption, using property management solutions. This data can be used to optimize building performance, reduce energy costs, and improve the overall user experience for tenants.
IoT devices can also be used to enhance building security and safety. By integrating devices like smart locks, surveillance cameras, and smoke detectors, property managers can monitor and control building access and respond quickly to potential safety hazards.
Proptech companies can gain a deeper understanding of how buildings and assets operate with the use of digital twins. This technology can help identify opportunities for improving efficiency, reducing costs, and enhancing the user experience. Areas for improvement can be identified, such as optimizing HVAC systems or adjusting lighting levels to reduce energy consumption and operating costs. This not only benefits building owners but also helps to create a more sustainable environment.
Digital twins can also be used to improve the user experience for occupants of a building. PropTech companies can simulate the layout and design of a space in a virtual environment, which can be used to test different configurations and layouts. By doing so, companies can find the optimal design that maximizes functionality and comfort for users. This approach leads to increased tenant satisfaction, improved productivity, and a more attractive property for potential buyers or renters.
One for all and all for one
The biggest challenge we and our competitors in the PropTech market have to overcome is the harmonization of all available data. While various public as well as private providers offer different types of real estate-related data, it is highly fragmented due to the large number of different sources and can currently only be collected with a lot of effort. In Europe alone, there are now more than 3,000 independent PropTech companies that obtain their data from a wide variety of sources and are all trying to assert themselves independently on the market.
The situation is comparable to the development of the smartphone. Where before the first iPhone we used flashlights, radios and calculators from a wide variety of manufacturers, Apple has managed to harmonize all these tools in programming a language and offers them united on one platform. The basic building blocks for the digitization of the real estate industry are therefore in place – it’s just that we’ve been waiting for this one platform that unites them all. But the wait is now over.
Nomoko is not just a PropTech company, but an attempt to distribute the applications of all PropTech companies on one platform and also make them locally usable. So with Nomoko, you can already access the largest collection of public and private real estate data in Switzerland and analyze it in depth supported by our Nomoko Store with third-party applications directly on our platform.