Property technology (also known as proptech, PropTech, prop-tech, and real estate technology) is used to refer to the application of
information technology
Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of Data (computing), data . and information. IT forms part of information and communications technology (ICT). An information te ...
and
platform economics to the
real estate
Real estate is property consisting of land and the buildings on it, along with its natural resources such as crops, minerals or water; immovable property of this nature; an interest vested in this (also) an item of real property, (more general ...
industry. Property technology overlaps with
financial technology
Fintech, a portmanteau of "financial technology", refers to firms using new technology to compete with traditional financial methods in the delivery of financial services. Artificial intelligence, blockchain, cloud computing, and big data are r ...
, including uses like
online payment
An e-commerce payment system (or an electronic payment system) facilitates the acceptance of electronic payment for offline transfer, also known as a subcomponent of electronic data interchange (EDI), e-commerce payment systems have become incre ...
and booking systems.
Overview
Property technology encompasses any application of digital technology or platform economics in the real estate industry. Some examples of property technology include
property management
Property management is the operation, control, maintenance, and oversight of real estate and physical property. This can include residential, commercial, and land real estate. Management indicates the need for real estate to be cared for and monit ...
using digital dashboards,
smart home
Smart or SMART may refer to:
Arts and entertainment
* ''Smart'' (Hey! Say! JUMP album), 2014
* Smart (Hotels.com), former mascot of Hotels.com
* ''Smart'' (Sleeper album), 1995 debut album by Sleeper
* '' SMart'', a children's television se ...
technology, research and analytics, listing services/tech-enabled brokerages, mobile applications, residential and commercial lending, 3D-modeling for online portals, automation, crowdfunding real estate projects, shared spaces management, as well as organizing, analyzing, and extracting key data from lengthy rental documents.
According to economist Richard Reed, the real estate industry has historically been conservative in its approach to technology, and is slower to adopt new technologies than other industries.
Advances in the residential side of real estate technology encompass a number of target areas, but generally aim to reduce friction in the purchase, sale, or rental of a property. Areas of focus include finding a home, selling a home, financing a purchase, closing on a property (including valuation,
title
A title is one or more words used before or after a person's name, in certain contexts. It may signify either generation, an official position, or a professional or academic qualification. In some languages, titles may be inserted between the f ...
&
escrow
An escrow is a contractual arrangement in which a third party (the stakeholder or escrow agent) receives and disburses money or property for the primary transacting parties, with the disbursement dependent on conditions agreed to by the transacti ...
, and
title insurance
Title insurance is a form of indemnity insurance predominantly found in the United States and Canada which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans. Unlike ...
), managing a property, managing loans, and mortgage lending software. Many proptech companies have seen a spike in demand for these solutions as the COVID-19 pandemic has jolted management companies from their "business as usual" routine.
History of real estate technology
The history of property technology is often divided into three stages of development. These stages broadly correspond to the period from 1980 to 2000, from 2000 to 2008, and from 2008 to the present.
Digital technology began to be adopted by the real estate industry during the 1980s, when personal computing became more common. Spreadsheet and accounting software like
Microsoft Excel
Microsoft Excel is a spreadsheet developed by Microsoft for Windows, macOS, Android and iOS. It features calculation or computation capabilities, graphing tools, pivot tables, and a macro programming language called Visual Basic for App ...
began to be used by real estate companies when they were first introduced.
Advancements in the area of
investment analysis
In finance, valuation is the process of determining the present value (PV) of an asset. In a business context, it is often the hypothetical price that a third party would pay for a given asset. Valuations can be done on assets (for example, inve ...
also allowed real estate investors to more accurately assess the value of commercial real estate using larger databases of information.
The second stage began as real estate technology first targeted consumers during the
dot-com bubble
The dot-com bubble (dot-com boom, tech bubble, or the Internet bubble) was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet.
Between 1995 and its peak in March 2000, the Nasdaq Compo ...
. At a time when most sales and residential listings were on print media and real estate offices, companies began to focus on moving listings onto the digital media. From 2008 onwards, the widespread availability of high speed internet meant that real estate companies could move more of their data and services online.
Real estate databases such as
Zillow
Zillow Group, Inc., or simply Zillow, is an American tech real-estate marketplace company that was founded in 2006, and was created by Rich Barton and Lloyd Frink, former Microsoft executives and founders of Microsoft spin-off Expedia; Spencer ...
are an example of information such as geographic data, property valuation and real estate advice being moved online. This has been successful, with companies like Zillow (US) and
Rightmove
Rightmove plc is a UK-based company which runs rightmove.co.uk, the UK's largest online real estate property portal. Rightmove is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.
History
Rightmove was incorpor ...
(UK) being in the top listed companies in their respective markets.
The rise of digital technology during the 21st century has led to the development of a
sharing economy, where applications such as
ridesharing platforms became common. This also extended to real estate, as websites such as
Airbnb
Airbnb, Inc. ( ), based in San Francisco, California, operates an online marketplace focused on short-term homestays and experiences. The company acts as a broker and charges a commission from each booking. The company was founded in 2008 b ...
and
WeWork
WeWork Inc. is a provider of coworking spaces, including physical and virtual shared spaces, headquartered in New York City. As of December 31, 2021, the company operated of space, including in the United States and Canada, in 756 locatio ...
made it possible for property owners to rent out their property for part of the year.
The current wave of proptech is driven by a range of new technologies available, such as artificial intelligence and big data, which has already disrupted other areas such as finance. The application of these new technologies is furthermore shaped by social distancing requirements and regional lockdowns arising out of COVID-19 that have introduced changes in the way we are required to deal with real estate.
The
COVID-19
Coronavirus disease 2019 (COVID-19) is a contagious disease caused by a virus, the severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The first known case was identified in Wuhan, China, in December 2019. The disease quickly ...
accelerated the adoption of information technology in the real estate industry. The pandemic helped to drive
e-commerce
E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain managem ...
and resulted in the closure of many traditional
retail
Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and ...
stores, which has impacted the
commercial real estate
Commercial property, also called commercial real estate, investment property or income property, is real estate (buildings or land) intended to generate a profit, either from capital gains or rental income. Commercial property includes office b ...
industry.
Blockchain technology has also been used to track property for the purposes of
land registration and resolve potential ownership disputes.
Investment in real estate technology
During the 2010s, numerous property technology startups were created, dealing with aspects of real estate such as design and construction, listings, and transactions. These startups have been supported by seed funding and investment from a range of sources, particularly venture capital funds.
In 2015, investment into property technology grew, with more than $1.7 billion in funding being invested across over 190 deals. This represented a 50% increase year-over-year and a 821% increase in funding compared to 2011. Deal activity also increased, growing 378% with respect to 2011's total, and 12% year-over-year. This investment appeared to increase further in 2017 to £8.5 billion. In the first six months of 2019, $12.9 billion of venture capital funding was invested into real-estate technology startups, which surpassed the $12.7 billion of investments in 2017.
References
{{Reflist
Real estate industry
Financial technology