Cloud based technologies, the internet of things and i-beacons are the buzzwords of yesteryear – in 2018 PropTech is where it’s at. The latest jargon pertaining to digital transformation of the Property Sector. But what is it? How did it evolve? And What’s next?
The 21st century tech-boom has changed the world – impacting on all facets of our lives and the sectors we work in. The Property sector is no exception.
PropTech is the coming together of property and digital technology to drive change. This drive has seen the industry harness new technologies to make the property sector more efficient, more reactive, more aligned to our needs, more glamorous and perhaps most importantly - more profitable.
PropTech focuses on two key areas: Trading and Developing (Buying, Selling, Renting, marketing, Financing and investing); and Management and Operation of Properties (Smart Real Estate). Its evolution revolution has been underpinned and supported by advancements in three other areas, all inherently interlinked.
InfoTech: information technology – encompassing the hardware and software that enables the transition of information in digital form from the internet to mobile technology. InfoTech enables information to be quickly moved, manipulated and managed and was key to the beginning of the digital revolution.
FinTech: financial technology utilises InfoTech to support digital transactions e.g. lending, payments and personal banking, money transfers, and crowd funding.
ConTech: construction technology utilises advancements in IT to improve the building design process prior to construction. From the early use of Computer-Aided Design to BIM today. This supports the property industry enabling more accurate management and operation of properties in use.
PropTech How did we get here?
The digital transformation of the property sector began over three decades ago in the late 1980s. This is where we start our journey into understanding PropTech.
PropTech 1.0 | 1980 – 2000: Computing goes global
With access to computers the Property Market Analysis (PMA) was founded in 1981 - a property consultancy dedicated to providing high quality, objective, research and forecasting. In 1985 the Investment Property Bank was founded - UK wide property analysis and trend mapping followed. The property market became more transparent almost overnight.
In the late 1980s the micro-computer entered the office, along with software enabling estate agents and property professionals to analyse data in order to track trends and leverage opportunities.
InfoTech advancements: the design and construction process gains efficiency as computer-aided design evolves (ConsTech), the first version of CATIA is realised in 1982 quickly followed by Autodesk for PC. Excel is established in 1985 (other brands were available) enabling property firms to hold and manage information using a computer, streamlining property management from valuations to portfolio analysis.
The birth of the Internet: In the 1990s email arrives; data can be transferred between organisations and individuals at the click of a button. Between 1995 to 1999 the internet entered the home, quickly followed by a new wave of property focused sites - Homes Go Fast (2000), Rightmove (2000), Hatched (2006), Zoopla (2008). Home internet changed the way we buy, sell, rent and market property. We no longer visit estate agents on foot, simply searching for properties on the internet.
PropTech 2.0 | 2000 – Present Day: Added Value
By late 2000 PropTech 1.0 had saturated the market, bringing a need for “added-value” propositions and kick-starting the PropTech 2.0 era, where we find our selves today. Whilst PropTech 1.0 focused on transactional innovation; PropTech 2.0 impacts on trading and developing as well as management and operation.
Trading and Developing:
Buying and Selling: Nested launched in 2016. The PropTech firm focuses on breaking the chain when selling properties. Customers get an advancement on their home of up to 97% making buying a new property easier and quicker. While you buy your new home, Nested sell your existing one - guaranteeing customers that in only 90 days they will sell your property for 95-98% of the market value. In 2017 the company gained an £8 million investment through fundraising.
Renting: AirBnb, SpareRoom and MoveBubble just three of the companies harnessing technology to change the way we rent, from finding a place just for the weekend to long term letting of space. These online marketplaces enable tenants, home owners and holiday makers to rent and let spaces on-the-go and in almost real-time.
Marketing: With ever quicker broadband and mobile 4G high resolution photographs and video have become key to selling property; in the age of Instagram the picture perfect home is shared worldwide.
Developing: The low interest rates in banking are pushing investors toward the property market in search of larger returns on their capital. The digital connectivity between sellers, buyers, landlords and investors turns property into a commodity that can be traded at higher speeds than ever before, in the same way as shares are by the same investors.
Managing and Operating:
Property Management: Innovation in software has brought new platforms to commercial property managers. Storing property and estates data centrally enables smart management of properties via trends analysis, informed preventative and corrective maintenance and audit control.
Smart Apps and super efficient systems: From automated thermostats and smart sensors to solar technologies and tech-ready buildings we can now improve the environment in which we reside, reduce the impact of our property and control it remotely.
The Edge, Amsterdam. A 40,000m2 building and BREEAM rated Outstanding it has been labelled the smartest building in the world and is a best in class example of the opportunities PropTech brings to building management and operation.
The Edge uses 70% less electricity than other office buildings of its type incorporating solar panels, an aquifer thermal energy storage system and heat pump it boasts some of the most innovative technology available. The occupancy, movement, ethernet powered LED lighting, humidity and temperature are also continuously measured to maximise efficiency.
It also enables the occupier to manage its space and adapt to changes in workforce requirements as they change over time.
PropTech 3.0 | The future
Market experts suggest we are on the cusp of PropTech 2.0 becoming the norm. As PropTech 3.0 emerges, what might this look like?
Trading and Developing:
Artificial Intelligence advancements will soon enable the sale and purchase of property without the need for agents and online portals. Using ‘big data’ and AI algorithms software will be able to identify and target potential buyers via visual searches and social media. AI will identify the type of property you are attracted to, and locate similar houses and offices available, making the chance of liking a property significantly higher.
Managing and Operating:
Smart Design and life cycle: by combining Virtual Reality with CAD and Building Information Modelling PropTech innovators hope to develop a new generation of tech-driven smart buildings. Build with efficiency in mind, and managed to optimise life cycle and reduce cost. Buildings will be constructed in the cloud enabling FM to identify faults, buyers to view the property remotely and property managers to manage assets with increased precision maximising profits.
Artificial Intelligence will not only impact the trading of property but also the management. The addressing of maintenance issues will be automatic. Immediately reducing the onus on facilities managers and engineers. But whilst AI has the potential to find efficiencies - reducing resourcing needs, increasing asset life through optimised maintenance and provide over all cost savings for organisations. These cannot be achieved without professionals overseeing the process, problem solving and managing stakeholders. So we are not redundant yet.
The digitisation of the property industry has seen those who cannot keep up be pushed out. To stay in the game established players are investing hard; harnessing technological advancements and targeting challenges to deliverer new products and processes to their clients.
CBRE have just launched the second edition of their PropTech challenge in which they aim to find, mentor and develop Digital Talent in the Property Sector. Whilst JLL Spark (a division of JLL) are utilising their expertise and resources to identify technology-based innovations and products to deliver them direct to their clients.
So how are you ‘keeping up’? and is this enough?