What is Real Estate Technology?
Real estate technology is also known as PropTech, Property Technology. It’s technology to make real estate services faster and more efficient. In addition, it aims to reduce the paperwork and lengthy meetings accustomed to dealing with property.A good example is Zillow in the US. The company provides complete real estate services online, whether you’re buying, selling, or renting. Since Zillow, a handful of unicorn and multi-million dollar PropTech companies have sprouted over the years., providing solutions in different real estate domains.
However, there’s more to PropTech than multi-million dollar startups. It’s essentially simplifying the way we do business.
9 Disruptive Real Estate Technologies
1. AI & Machine Learning
Like it or not, artificial intelligence is one of the real estate technology trends rocking the industry hard — by simplifying search, research, and payment processes for buyers, agents, and investors.
We know the majority will search online at a particular point in the home buying process for buyers. Soon, with developments in AI, they’ll be able to get ultra-specific results based on their personality traits, values, and more.
Also, advanced AI and ML tools now help investors predict and evaluate property values with hard data and in real-time. Such data is crucial to a business’s success when underwriting a deal in the fast-paced and competitive market. They can compare thousands of data on retention rates, market trends, and other standard metrics to effectively evaluate a property in a matter of seconds. Au revoir to making decisions based on gut feelings.
Agents don’t miss out on the fun either. With record housing shortages during the pandemic, agents had to go door-to-door to find homes. But PropTech giants, Compass, said their agents fared well using AI.
Sirosh, a CTO at PropTech giants, Compass, explains,
“AI helps you find the homes that are most likely to sell in the next 12 months, and it does so by triangulating all the data associated with the home, like when the home last sold, how long the owner has occupied the home, what rate the home sells at in that particular area.”
Artificial intelligence is taking away the hard work in transactions — finding homes, going through paperwork, research, and so on — and leaving us to close deals. As a result, most real estates AI startups, like Skyline AI and Architrave GmbH, are fast-growing while more and more are entering the fray.
2. Flexible Office Spaces
Flexible office spaces are the new normal for modern organizations. And commercial real estate agents and investors have to keep up with this trend to stay in business. Working in a flexible office space means adjusting to workers’ schedules and mobility demands. Examples include coworking spaces, hot desks, and open office floor plans with power and data. A flexible workspace is what the owner wants it to be. Any investor sticking to rigid office plans will struggle in the new wave of real estate.
In a survey of over a dozen senior decision-makers of Australia’s largest companies and commercial landlords, the future of physical office space post-COVID-19 was clear.
- No one-size-fits-all workplace
- Preference for hybrid and flexible workspaces
- Tenants will demand increased flexibility on their leases
- Data analytics and technology to be a core offering
- Head offices will evolve into teamwork and collaboration hubs
- Increased collaboration between tenants and landlords
One PropTech startup providing flexible office space services is Eden Workplace. It is a desk-booking software that allows hybrid workers to view, book, and reserve available desk spaces in advance. An app like EW is a living testimony of the coming change.
3. Property Search Platforms
Property search platforms are now a home buyer’s first port of call. According to the National Association of Realtors, fifty-one per cent of buyers find their homes online.
Websites like Zillow, Opendoor, and Trulia, harness the power of big data to deliver bespoke results to property searchers. And while they are at it, they connect people with listing agents and also trade homes. With the proliferation of these real estate databases with millions of visitors, agents should take to them to find buyers or sell properties.
Veteran real estate agent may solely rely on connections, newspapers magazines to sell properties. While this undoubtedly works, it’s no shame to widen your horizons by hopping on the trend of e-property platforms.4. 3D Virtual Tours and Augmented Reality
3D virtual tours make it appear like your users are inside a building physically. For example, they can walk into a hotel, house, or industrial building behind their desks. And inspect rooms and basic amenities with an immersive 360° view and accurate up to floor measurements.
If you’re intrigued and curious about what virtual tours are like, you can check out a sample below:
Unsurprisingly, the use of VR in real estate was accelerated by the pandemic in a bid to reduce the spread. Now, despite eased restrictions, over seventy-seven percent of clients want a VR house tour before visiting in person. Why not?
Virtual reality saves money and time resources on property tours and helps sellers attract interested clients. The house is staged for the VR shoot and doesn’t have to be kept sparkling clean for open houses until a showing is booked. Also, buyers can go “Sherlock Holmes” on a property as long as they like without an agent rushing them.
And it remains useful after a property has been acquired.
“Instead of lengthy written instructions on how to use the thermostat or environmental controls, for example, a virtual tour could quite literally walk the tenant through the process, demonstrating each step along the way.”
Also, virtual reality can create architectural blueprints and walkthroughs to help investors understand properties before construction takes place. In the future, clients will be able to taste, smell, and touch with VR innovations such as haptic technology. So, it’s safe to say this PropTech trend isn’t leaving soon.
5. Drones
From the very beginning, drones have been abuzz in real estate. These Unmanned Aircraft Systems (UAS) quickly became the go-to method of taking aerial shots of a property. A decade ago, helicopters and planes were the only options, and their high service costs prevented many agents from tapping using them.
Now, with drones, you can get aerial shots or a virtual tour of a property for as low as $100. Agents with over five listings a year find it cost-effective to buy their own drone for around a thousand bucks — which’s still cheaper than renting a chopper.
In 2015, when commercial drone operators were first given exemptions, 350 of the first 1000 permits were for real estate marketing. And last year, over 10 million drones were sold worldwide.
The benefits of drones in real estate transcend cost measures alone. For example, a listing agent could see a seventy-six percent boost increase in the number of listings. And over eighty percent of home sellers prefer to work with agents using a drone, perhaps because they believe they’ll sell faster.
Lastly, drone application in PropTech goes beyond photography. These UAS devices carry out appraisals, heal-loss imaging, insurance inspections, and building management. The takeaway is that listing agents and property owners that aren’t using drones for their business are likely to get left behind.
6. Smarter Chatbots
There’s a saying that chatbots are only as smart as those who build them. So, if you find them annoying, have a change of heart because successful businesses are developing them into smarter and helpful customer service reps. Chatbots have been around for over 60 years and will continue to grow smarter with AI and Machine Learning advancements. By 2023, the AI Chatbot market is expected to hit $5.6 billion, per Business Wire. These evolving virtual beings improve customer service and lead engagement with real-time conversations. They attend to users’ questions 24/7, interact in multiple languages, follow up leads, organize virtual tours, and even book meetings with agents. Interestingly, chatbots can also provide mortgage options to users, ask for feedback, and store data. All of this help to save time and provide data analytics to make data-driven decisions. Soon, chatbots will not only answer customers’ questions but accompany them to showings. Some already do virtual 360 tours where available. Consequently, agencies can conduct more showings and satisfy clients passively, leading to business growth. With a growing population of eligible Millenials and Gen Z, smart and helpful agency chatbots will be synonymous with good customer care in the nearest future. And a real estate technology you won’t want to miss out on.7. Blockchain
With the bitcoin craze of 2020, it’s hard to find an industry that’s yet to be influenced by blockchain technology. Blockchain can be used to cut out third-party commissions during closings. Thereby saving both buyers and sellers money. Who wouldn’t appreciate a technology that could save them hundreds to thousands of dollars? Not me, and probably not you.
Smart contracts are one of the practical examples of how blockchain eliminates intermediaries during transactions. And they are already legal in states like Vermont and Arizona. Love, from the Netflix series You, in pop-up culture, signed the lease to her Madre Linda bakery, Fresh Tart, on Natalie’s (her agent) tablet. Oh, and the fictional town is set in Van Nuys, California.
The decentralization element of blockchain technology will also reduce fraud and the domination of real estate by wealthy individuals and corporations. Furthermore, it will open up real estate to more people through fractional property investments. Investors will be able to trade tokens of a property without any concern about management and rent. In a way, it’ll be like trading cryptocurrency.
All in all, blockchain technology could usher in the full digitization of the real estate industry with steady advancements.
8. Online Shopping
While people are flocking back to brick and mortar stores after vaccination, something’s changed. Nearly $1 of every $5 on retail purchases comes from digital stores. As a result, people now prefer to shop in online stores, and businesses tap into this trend. How?
As more transactions are done online, more physical space is needed to store products.
During the pandemic, online shopping experienced a record forty-three percent growth. And even though the trend has slowed significantly, it’s still on the rise. Sadly, due to the e-commerce boom, many stores closed or had to downsize, affecting the shop owners and their landlords.
But that doesn’t necessarily mean bad news for real estate. For one, it’s beneficial for logistics and warehouse real estate because large e-retailers need large spaces to store their inventory.“We have a thesis that retail and logistics are essentially merging as an asset class,” said Zach Aarons, co-founder and general partner at MetaProp, a venture firm focused on early-stage real estate tech startups that just closed a $100 million third fund.”Besides, we’ve seen developments of hybrid shops where, for instance, restaurants only need kitchen space , and the owners can rent out to another tenant.
The e-commerce boom has set many commercial real estate trends in motion. And the most notable is a surge in demand for industrial properties like warehouses and fulfillment centers.
9. Internet of Things (The Rise of Smarter Homes)
According to Millionaire Acres, the Internet of Things (IoT) is a more prevalent real estate technology than you think. And I’m in full support of that statement and pitch IoT to be a big deal in the industry, especially with the advent of 5G.
That said, IoT connects sensors to physical objects like doors and thermostats that enable them to exchange data over the cloud or the internet. These devices can function without human interaction and can collect and store data in real time.
We’ve seen many residential home applications where homeowners can control room temperature while away on vacation, turn off the lights in the bed, or open the garage door for a relative while sipping Mojito in Cancun.
Even better, landlords can employ IoT to save energy costs and take proactive actions in property management. For example, an IoT startup-like Enertiv, helps property owners monitor data from elevators, HVAC systems, boilers, water meters, etc., to save energy and take preventive measures when possible.
Without a doubt, the pandemic accelerated the use of IoT in property management. For example, some multifamily units now adopt IoT to open entrance doors remotely since they’ve been identified as major COVID transmission points. In addition, over 46 billion IoT devices will be installed globally in 2021, a landslide increase from an estimated 10 billion for the year.
The current obstacles to IoT are that buildings must be “connected,” and they are vulnerable to cyber attacks — soon to be solved with leaps in 5G and cybersecurity.
Unsurprisingly, property owners and investors are ready to tap its benefits. In a PWC real estate benchmarking survey, seventy-three percent of executives have IoT initiatives on their agenda.
Embracing Real Estate Technology Trends
Real estate technology, no doubt, started off slow but has boomed since the pandemic. PropTech innovations, like virtual tours, smart contracts, AI, IoT, and drones, are taking over the scene steadily. And with Millennials and Gen Z generation on the rise, they will flourish. Finally, PropTech isn’t here to steal our jobs. Rather, they are instruments that’ll foster detailed market research, increase lead generation, and reduce paperwork and stress associated with real estate.