Introduction to Proptech
Proptech applies technology in sectors related to properties like risk assessment, planning, smart construction, renting, marketing, user data analysis, smart building maintenance. It is changing relationships and introducing new dynamics in the real estate sector across its value chain.
‘Data’ is increasingly driving construction and brokerage firms. They are collaborating with startups, established Proptech firms, and software tech-companies for analysis, risk modeling, blockchain systems, and to design and develop software solutions related to the real-estate sector.
Applications of Proptech
Proptech firms design and develop solutions that help brokerage firms, sellers, renters, governments, customers, and workers, buy, sell, rent, or manage properties easily and conveniently. Advanced technologies analyze data better and make fine-grained reports. We can use them to extend innovative design solutions to newer parts of the real-estate value chain.
Some of the Proptech applications in the real estate value chain are:
- Land/Property Management System – Governments and their property registration and taxation departments across the globe are collaborating with Proptech firms to digitize processes of ownership. So, buyers, sellers, leaseholders, lessee, mortgagor, mortgagee etc can manage their properties conveniently. We are moving towards a more inclusive platform where the agency/department can verify documents a user submits through the registration website and forward them to insurance companies or construction firms. This is timesaving for both the customer and the businesses involved and builds a secure Rights Management System. AI and blockchain advancements now enable designing such secure systems and solutions.
- Property Utility Management: AI-enabled digital software products plan and design buildings more accurately. Data analytics predict customer’s needs and construction trends better. Some of these analyze captured data and feed it back into the software to customize buildings better for consumers’ needs, or to make the buildings more energy efficient. Software firms are coordinating with planning and regulating agencies to digitize approving construction of buildings for agriculture, residences, office, factory, school, hospital, etc.
- Risk Management of property: Construction, property buying, and selling is a highly risky business. Insurance companies and construction firms must gauge these risks constantly for encumbrance issues, safety, and security. As the ecosystem gets more digitalized and changes in the ecosystem get faster, data analytics can gauge the large number of risks better and design efficient and customized solutions. Many CEOs of real estate firms now believe they cannot make business decisions without analyzing data. Data is an essential asset now, for real-estate firms and insurance companies.
- Environmental Management: Construction creates more than a third of the world’s pollution. Proptech is minimizing carbon footprint with sustainable practices. Green energy systems, IoT devices help us construct and maintain energy-efficient green buildings with zero carbon footprints. Conscious customers can check the green rating of buildings before purchasing them. Again, it is data analytics checks tradeoffs with green technologies. It helps construction companies design profitable yet ecologically friendly solutions.
- Inheritance Management: Digital solutions in Proptech are not anymore just listing websites. They check the validity and relevance of collected information. They apply the laws of the land for managing property efficiently, be it inheritance, trust or endowment, etc. These intelligent systems make governance simpler, objective, and efficient by understanding and incorporating laws.
- Planning and Design Management: Planning a building is different from planning community infrastructure. Governments make macro-level plans that direct a local body (city, town, or village) towards planned growth. Construction firms and the government should apply these at a micro-level. This is only possible by analyzing data and designing tools incorporating various variables. A single individual or a group cannot make isolated decisions as they need to consider many factors. Designing an AI-enabled data analytic system is an efficient solution that can meet the planners’ needs.
- Asset Maintenance: Many would agree building maintenance is more difficult and expensive than building construction. Software companies build apps and products that can collect and analyze user preferences and local climatic conditions. They design buildings accordingly for brokerage firms. Buildings designed to suit residents’ needs are easy and affordable to maintain. Energy-efficient digital devices using IoT make building services and facility management sustainable.
- Asset Management: As real-estate firms grow bigger, their risk increases many folds. It is unwise to take risky decisions and hope to get lucky. They need to consider and evaluate the many factors that affect a portfolio’s performance. As the firm grows big, the evaluation gets tougher, cumbersome, and hence unreliable. AI software systems make these evaluations repeatedly and reliably and aid in increasing property portfolio’s performance.
- Aspiration Management: A Property is an aspiration for some buyers, investment for others. What a seller/lessor/lessee perceives changes with time. A software solution in data analytics closely follows consumer trends and can help various parties involved make the right choice. It helps a seller market to the right consumer group. It enables consumers to buy properties that match their aspirational choices.
- Neighborhood/ Group Management: A new school, a new swimming pool, or a commercial building can drastically change any neighborhood. It might become desirable for some, and not preferable for some others. With cities growing and changing at a high speed, it is no more possible to track these changes and predict the real-estate future.
Users want to consider many things like restrictions of building usage, neighborhood conditions, schools’ proximity, road, and public transport connectivity before purchasing a property. They may want to check the neighborhood crime rate, analyze the happiness index of residents, or check bias meters. Apps can collect preferences from buyers and tell if their purchases are right for them.
- Services Management: With manpower getting scarce in cities, software systems are auto-maintaining buildings. These systems can report areas that need cleaning, appliances that need servicing or replacement, parts of the building that need maintenance, etc. Data collected from these systems can be used to identify, evaluate, and report problems. Digitalization is helping in designing proximate, efficient, and cost-effective solutions.
- Natural Resources Management: The quality of natural resources like water, air quality near a property affects its price. Residents’ quality of life depends on the proximity of a property to industries or other polluting agencies, quality management, and maintenance practices. Buyers also look for details of natural exigencies such as flood-prone, earthquake-prone, volcanic-prone, etc. With conflicting information available on the web, users seek reliable systems that analyze rationally. Firms are using advanced software systems to engage tenants/buyers.
- Change management: The pandemic brought new ways of assessing buildings. We are particular about cleanliness and ventilation in our houses. Offices are changing their working conditions to enable social distancing. We want better sanitation and HEPA filtering systems to assure that our workplaces are safe. These changes were not anticipated. The more digitized a company is, the faster it could anticipate and adapt to these changes.
Buildings or parts of them are being prefabricated in factories. These factories are going digital to tackle changes better and provide better flexibility to customers and property sellers alike.
Is Proptech disruptive?
Proptech started with listing websites. It is now building smart solutions for analytics and is digitalizing various sectors in the real-estate value chain. It is slowly but consistently pushing them towards complete digital transformation.
When Airbnb and Booking.com were established, they gave new employment opportunities to people traditionally outside the rental/hospitality industry. They changed the way people search for temporary accommodations. Though these are Proptech firms, they disrupted the hospitality and tourism industries too. Many Proptech solutions are bound to bring in new players, change dynamics and dependencies, and make some sectors redundant. However, technology is sure to make the ecosystem more transparent, sustainable, and reliable.
The growth of Planon, a leading global provider of software that supports corporate real estate and facility management, is a case in point. It has been partnering with various firms in the real estate sector to provide a wide range of mature software solutions for lease management, accounting, regulatory compliance, etc. Recently Planon joined hands with Schneider electric to provide smart workplace solutions and acquired a majority stake in another real estate firm, Reasult. Its customer base has been increasing with the growing need for integrated software solutions.
Advantages for various stakeholders (Both residential and commercial)
Proptech helps companies digitize and design solutions to:-
- Do business easier by making predictions, risk analysis, data analysis more accurate.
- Understand regulatory requirements and compliance laws and their ambiguities. Firms can effectively meet the rules.
- Integrate IoT, communication Bots, AI-enabled services that help customers make clear decisions and satisfactory purchases.
Advancements in Proptech can propel sustainable real-estate development. They can help customers make green choices and construction companies construct buildings with a zero or negative carbon footprint.
Proptech is disrupting not only the real estate sector but its allied sectors like finance, insurance, banking, governance. It has wide applications whose scope we do not yet know. Proptech firms are collaborating with software product companies to design integrated solutions, a single suite providing a wider range of property services. These new solutions leverage technology to simplify various operations and find innovative ways to engage all stakeholders (the customer may be a seller/buyer/ manufacturer/distributor/insurer etc). It is driving real estate companies, housing corporations towards digitalization.