The Internet and mobile technologies have fundamentally altered the way we live.
This internet boom has significantly impacted all sectors of the economy.
The real estate industry has been a laggard in adopting this technology.
Proptech is a buzzword among the startup community. Hundreds of startups are backed with millions of dollars and are attempting to bring technology advancements to the real estate industry.
Most of these startups won’t survive the next couple of years. The few who stay are likely to impact the slow-moving real estate industry profoundly. Proptech is the new name for these startups trying to integrate mobile and internet telephony into the real estate industry.
Proptech Definition
Proptech still needs to be defined clearly. Proptech is often referred to as a small component of digital transformation in the real estate industry. Changes could be technical or related to buying processes, which have been a part of real estate for a long time. Proptech is a broad concept encompassing the real estate sector’s financial and construction sides.
Proptech is a term that can be used to describe any real estate startup offering innovative products or services which heavily use technology. Proptech is a relatively new trend, so it’s likely to change in scope over time.
Proptech Verticals:
Proptech currently has three primary verticals. Here is a description of each vertical:
- Smart Real Estate Smart real estate is geared more toward home construction. Proptech can include, for example, the technology used to create energy-efficient homes. Most startups in this field use the Internet of Things (IoT) to collect data on the construction of houses or the day-to-day maintenance of these homes. These data are then used to create an energy control system that automatically regulates energy consumption to maintain efficiency.
- Intelligent real estate has two functions.
- The first level is a superficial informational level. On the second level, corrective action can be taken based on information.
- This technology can be used to manage single buildings or entire cities. This vertical has a high focus because it is not a unique selling feature to deliver energy-efficient green buildings. It is now something the market demands.
- Intelligent real estate does not just concern the environment. It is because well-designed buildings will have low electricity and power consumption. Realtors can then offer prospective tenants a lower lease price and gain their business.
- Share Economy The sharing economy has been a significant economic force in recent years. The sharing economy has already produced unicorn startups such as Uber and Airbnb. Companies like WeWork are building shared offices. The Internet allows for easy supply and demand aggregation, which is critical to sharing real estate. Online tools are also available for managing and billing the property.
- The sharing economy is now commonplace in cities with high real estate costs. It is due to prohibitive costs that make full ownership difficult. Sharing and temporary license has become the norm.
- Two ways for startups to participate in the shared economic system
- They can be simple brokers who earn a commission on every transaction.
- Second, they can provide services or act as an intermediary.
- In places like Central London, where it is difficult to find real estate and the traditional lease contract is rigid, shared working spaces are up from 1% to 14 %.
- FinTech in Real Estate Fintech in real estate is a term that encompasses many new ways of financing. Fintech is the umbrella term for all these new methods in real estate. Startups in this sector primarily provide information to buyers and sellers to facilitate a sale. Currently, brokers tend to keep this information private. Brokers can only make a living if they have a limited number of high-rewarding transactions. This inefficient model of brokering will likely be replaced in the future by technology.
- Many startup companies like Trulia or Zillow allow their customers to rent property online without a broker. Some of these companies also offer services that facilitate online payments between landlords and brokers.