What is Proptech in Real Estate and its types [2024]

Today, online tools like ManageCasa have become a go-to platform for quicker communication between tenants and property owners. Well, that is precisely the world of Proptech. As new is the term, so are its smart and innovative services.  

In fact, today, the real estate field is mostly dependent on digital assistance from tools like Trulia, CriteriaCorp, etc., for top deals. From getting an immediate virtual tour of a US-based property to completing paperwork, everything is possible because Proptech is there.

Now, it’s your turn to unlock the specialty of this concept. Hence, explore this article for more –

What is Proptech?

Proptech, short for property technology, is the intersection of real estate and technology. It encompasses using technology, software, and digital platforms to streamline, innovate, and enhance various aspects of the real estate industry.

This proptech definition encompasses various applications, from online platforms for property searches and virtual tours to software solutions for property management and investment analysis.

Depending on your perspective, these cutting-edge technologies are also known as Real Estate Tech, Retech, Realtech, and Commercial Real Estate (CRE) Tech. 

Some of the top Proptech examples include HomeLight, WeWork, Airbnb, and much more.

History of Proptech and Its Impact

Even though welcoming the Proptech Platform is a relatively new idea, its definition dates back thousands of years, specifically from 1980 to 2000, the Microsoft age.

Now, it’s time for a story –

• After the advent of personal computers, real estate companies discovered that in order to evaluate investment and portfolio management effectively, they required increasingly sophisticated property technology. 

• Consequently, software businesses emerged to address the demand for enhanced capabilities to execute labor-intensive real estate tasks including underwriting, accounting, and analytics. In contrast to the complex software solutions that are widely used today, these older tech goods were not interoperable.

• Even during the dot-com boom of 2001–2007, it was still somewhat difficult to get information about real estate or to buy or rent a home completely online. Real estate tech giants like Redfin and Zillow arose during this period and were the leaders in proptech. These organizations recognized the housing industry as a hub for disruption, which sped up and greatly benefited proptech. 

• Fast-forward to the years between 2008 and today. Now, you’ll see some of the outcomes of tremendous progress in data processing and storage, in addition to the billions of dollars that have been invested in real estate tech businesses that follow Proptech.

Now, below are three important impacts that Proptech has shown –

• PropTech 1.0

Real estate professionals were initially hesitant to embrace PropTech 1.0. It’s possible that, in 2000, you had never heard of renting or selling a home online!  However, Proptech trends  were gradually adopted by the real estate industry following the acclimatization of E-Commerce.

• PropTech 2.0

PropTech 2.0 made use of previously developed shared economy ideas, such as smart houses, smart buildings, and other shared areas. In 2008, the globe witnessed a completely new approach to real estate services through the specialized application of virtual reality and data analytics, increasing interest in and broadening the scope of proptech.

• PropTech 3.0

Finally, some of the biggest names in technology that are involved in this project are solar power, 5G, autonomous drones, big data, UAVs, and artificial intelligence (AI). It has developed into an intricate network of solutions that support various real estate industry segments and provide creative and intuitive process guidance right from the start.

Types of proptech

Let’s examine the primary real estate proptech categories, each of which contributes to a more promising future for the sector:

1. Construction Technologies (ConTech):

The construction industry is undergoing a transformative shift through innovative solutions known as ConTech or Construction Technology.

Through inventions like robotics, 3D printing, modular building, and architecture apps, Proptech is transforming the construction industry. This increases efficiency through accelerated design iterations, shortened construction schedules, enhanced accuracy, and resource optimization, all of which lower costs.

Example – SketchUp, Cedreo, Roofr

2. Smart Home Technologies: 

Proptech integrates Internet of Things (IoT) technologies into the domain of smart houses. Through real-time monitoring, residents can optimize energy use, increase security, and regulate many aspects of their homes remotely.

Example – BOSCH, KATERRA

3. Property Management Platforms:

As central hubs, these systems automate duties, including communication, maintenance requests, and rent collection. User-friendly interfaces allow owners and tenants to monitor financial transactions, manage properties easily, and quickly attend to each other’s requirements.

Example – Airbnb, WeWork

4. Real Estate Fintech:

Fintech services are essential to the safe and open transactions of real estate between buyers and sellers in the field of real estate proptech. Leading the charge in this revolution is blockchain technology, which reduces the possibility of fraud while also providing record security and accuracy.

Example – Zoopla, Rightmove

Benefits of Proptech

Check out some of the most amazing benefits that only a Proptech service can offer –

Increased productivity

Property administration indeed takes a lot less time. Well, thanks to real estate proptech systems that automate repetitive chores, optimize workflows, and facilitate effective communication. Proptech assists real estate players in refocusing their attention toward more strategic decision-making and improved customer relations. This includes automated document generation and real-time communication between buyers and sellers.

More transparency

Proptech brings about a new era of transparency in the real estate industry. Blockchain technology makes property transactions more secure, while smart contracts guarantee that all parties have access to correct records. 

Savings on expenses

Proptech integration benefits the real estate ecosystem by generating actual cost savings. In fact, the automation of transaction processing and property management decreases the demand for manual labor. 

Making decisions based on facts

Proptech uses data analytics to give real estate professionals insightful information that makes decision-making easier. For example, stakeholders can make the best decisions to minimize risks and maximize returns by studying market trends and customer preferences. 

Improved Advertising

Proptech offers cutting-edge resources to improve marketing campaigns. Proptech systems direct marketing efforts towards the most relevant audience by matching properties with the individual tastes of potential purchasers, hence optimizing effectiveness.

Proptech Company Examples

Below are some of the top companies who are successfully running their proptech assets and making a game changer in the world of real estate –

Trulia

The thriving American online real estate company Trulia has skillfully incorporated user participation and innovation into its platform. Customers can purchase, sell, and rent houses with the aid of Trulia. However, the interactive map overlays, which provide a fascinating look into neighborhood dynamics, are its most notable feature.

Snappt

Snappt is an AI-driven fraud detection platform that combats fraud in the never-ending war against fraud. The company says it has an amazing 99.8% success record in detecting fraudsters and is the only system that can check 100% of papers from financial institutions.

Guesty

Guesty is a hassle-free short-term rental management platform with options for all kinds of properties, including guesthouses and outdoor stays. By building strong partnerships with market leaders such as Booking.com and Airbnb, Guesty has established itself as a reliable partner as well!

Residential and Commercial Property Tech

You are aware of proptech in its entirety. But what does it mean in terms of certain property types? What exactly are commercial and residential proptech, and why?

Residential proptech

The area of residential properties comprises gated communities, senior living complexes, multifamily structures, and student housing.

Typical proptech settings seen in residential properties comprise:

• Products for access control, such as package rooms, keypads, and video intercoms.
• Smart thermostats and locks are examples of smart home solutions.
• Chatbots on websites and AI leasing assistants are examples of property management tools.

Commercial proptech

Commercial properties include office buildings, retail establishments, event locations, coworking spaces, and industrial spaces.

Typical proptech settings seen at commercial projects comprise:

• Software for managing the climate that will automatically switch the lights and temperature to low electricity when not in use.
• Sites for online reservations to make sure no spot is reserved twice.
• Products for access control, such as package rooms, keypads, and video intercoms.

Proptech Market Size

Innovations in any market usually take time to grow. However, the probability of success in proptech marketing is predictable.   

Yes, it’s found that from 2023 to 2033, the scope of Proptech is expected to grow at a substantial Compound Annual Growth Rate (CAGR) of 9.3%.  Specifically, the market is anticipated to increase from US$19,608.1 million in 2023 to US$47,842.5 million in 2033. 

Now, if you are wondering what the secret is to such massive numbers, here is what you need to know: 

The Proptech industry is expected to increase as a result of the adoption of various cutting-edge technology-based real estate solutions and services. 

Here are below more reasons why you might see the rise of  Proptech in the market –

• As the need for information and improved house buying and selling experiences increases, the communication gap between established real estate companies and PropTech startups is narrowing. Current trends in the proptech business might well be a way for them to expand their reach and improve customer experience.

• Some of the most current proptech marketing trends include artificial intelligence and data automation in real estate. There are also big data and the digitalization of property data assets, sustainable technology in construction and maintenance, and IoT and IIoT with drones for 360-degree presentations.

• Since proptech reduces operational expenses and helps agencies save money, there is a significant demand for it. Digital and virtual services are offered to customers, and agents can work remotely. Profits and productivity increase as a result.

How are proptech startups disrupting the industry?

Proptech solutions can increase productivity in all areas of an organization. They do this by streamlining procedures such as maintenance, inspections, and property management, which ultimately saves time and energy.

Hence, it’s no surprise that 3,045 proptech businesses were located in 66 countries at the end of the 2022 fiscal year!

But here is where the disruption occurs. Yes, a survey of US real estate professionals found that big data, cybersecurity, and construction technology were the top three technological disruptors in the real estate sector in 2022. 

Below are some more factors that contribute to making Proptech an absolute disruptor to the existing market –

• Rental and Sales Marketplaces: 

Using a proptech tool like NavigatorCRE, one may search for rental properties online, similar to booking a hotel through Airbnb or Hotels.com. This is the most straightforward yet revolutionary type of technology. Additionally, sales marketplaces are expanding quickly and upending established brokerage practices. 

• Investor Platforms: 

Secondly, there is a rising number of platforms like Mashvisor catering to real estate investors looking to locate the most lucrative properties worldwide. This is essential as an investor marketplace is supposed to be a site where investors may look at all of the world’s countries when they wake up and quickly determine, based on facts and estimates, which city, region, or piece of real estate is ready for investment. 

• Blockchain & Smart Contracts: 

The real estate industry is currently witnessing a spike in technological investments, particularly in property management. Businesses are using blockchain technology to build a decentralized rental marketplace that will allow landlords and tenants to do business directly with one another.

The proptech startups are disrupting traditional methods and providing new real estate solutions. Because of this, the transformative potential of proptech can undoubtedly promote increased accessibility, efficiency, and transparency in the future real estate scene. Hence, real estate brokers will need to keep up with technological advancements and seize these opportunities if they want to prosper in the digital era.

Technology trends in proptech real estate

In recent years, Proptech has brought in new trends in real estate. Have a look –

• Back-office process automation using AI and machine learning

Today, it’s no surprise that over 500 artificial intelligence (AI) companies operate to provide real estate enterprises with AI-powered services that save money and increase productivity. This also means it can handle all of your property dealing tasks, including creating personalized email sequences for consumers based on their life events and providing strong search prediction functionality!

• Virtual reality to enhance online searching and the home-buying process

Do you know that by 2025, the virtual reality market in real estate is expected to reach $2.6 billion?

This is a result of the real estate industry’s growing usage of virtual tours of homes and augmented reality apps like roOomy, which is probably due to shifting consumer preferences, technological improvements, and the need for creative ways to market properties and enable remote interactions.

• Greentech and ClimateTech

Next are modern appliances that are becoming smarter as investors embrace new green construction techniques that prioritize creating sustainable, energy-efficient houses. Talking of which, SmartGrid refrigerators, washers, dishwashers, and mini ovens are becoming mainstays in every home. 

• Tokenization and Blockchain for Economical Investing

With decentralized and transparent methods, Blockchain technology has lowered market entry barriers . This helps in providing fractional ownership with the property as a digital token, making investments accessible to all investors, regardless of socioeconomic status.

Why do buildings need proptech?

Proptech is what makes a typical building smart. Furthermore, real estate’s future lies in smart buildings. So, what are the immediate advantages of property technology investment?

Here are some of them –

• Proptech streamlines procedures so you can better manage your assets and enhance the tenant experience in a variety of real estate settings, including single-family houses, multi-tenant offices, and flats.
• Proptech can boost energy efficiency and lower a building’s carbon footprint.
• Proptech facilities that help track and modify indoor temperature, humidity, and air quality may produce a more comfortable atmosphere in smart buildings.
• With AI-powered video surveillance, remote monitoring, mobile credentials, and cloud-based access control, robust, proactive security systems can assist in improving occupant safety, reducing owners’ liability, and simplifying building management. 

What is the future of proptech?

The future of PropTech is incredibly promising. There is no denying Proptech’s potential for expansion. Approximately 60% of real estate respondents stated that their companies are gaining competitive advantage thanks to Environmental, Social, and Governance (ESG) activities. They are willing to spend money on technological solutions to increase their operational effectiveness.

As a result, one can expect to see an increase in aspirational proptech businesses that continue to release cutting-edge blockchain, IoT, AI, and ML technologies.

Moreover, Proptech Platform and established real estate firms are expected to collaborate more in the industry, which will promote innovation and create a more dynamic ecosystem. 

So, this is the perfect moment to pitch your ground-breaking proptech idea! 

Final Words,

The planet today revolves around progressive and sustainable ideas. Proptech’s inclusion in real estate is one such example. From your New York office, you can now connect to an agent in Paris for a property tour. In fact, it’s also possible to manage your rental assets abroad seamlessly online. 

Well, there is an entire world that Proptech can offer. In fact, the predictability of a greater market value is already on its way. It’s time you bookmark this article and be the first to deal with top proptech.