You've all heard of Fintech - a portmanteau of 'finance' and 'technology' - companies disrupting and changing the way we think of finance, from contactless payments to instant home loans. But what about its cousin Proptech?
Proptech is just starting to gain momentum.
According to Unisuu, funding in the first 5 months of 2020 was $5.86 billion dollars. While the amount only just over two-thirds of the same period the prior year, its a strong result given the impact of COVID-19 on overall business confidence, its definitely an area investors are paying attention to.
Not only that, the arrival of COVID-19 has also introduced a number of social distancing requirements, which has affected the traditional way we are able to deal with real estate, increasing the relevance of these new platforms.
Proptech is the use of technology to help individuals and organisations including home buyers, renters, investors, and real estate agents improve the way they research, sell, buy and manage real estate.
Proptech is expected to digitally revolutionize the real estate industry, the same way Fintech took the financial sector by storm through digital innovation, to meet the growing expectation and needs of
both real estate professionals and consumers.
Proptech has innovated in many real estate spaces. However, where we are seeing the greatest growth is in areas helping overcome the social distancing requirements which has impacted traditional ways we deal with real estate.
In particular, property sales and leasing functions are moving to digital platforms, with improved property analytics being key to continuing to assessing property while maintaining social distancing requirements.
Buying and Selling Real Estate Platforms
Buying and selling real estate platforms as the name suggests enables buyers and sellers to get together without the need for a bricks and mortar estate agents.
Normally, a real estate agent facilitates the buying and selling of property. Running open house and inspections and taking prospective purchasers to different properties, a good agent was central to bringing prospective buyers experience the property.
However, the fees that came with this service were pricey, taking a large cut of the transaction value, sometimes from both sides, depending on the location. With social distancing requirements in play their value are being questioned.
Numerous proptech buying and selling platforms are digitizing this and bringing the process into the digital space; buyers and sellers can communicate, make offers, and conclude deals, all from the comfort of their smart phones. Not only is it easier to buy and sell, but also the service comes at a fraction of the price usually charged by bricks and mortar real estate agents.
Most Landlords will confess managing residential leaseholds are tedious at best. Typically the process is outsourced to a leasing office to handle the end-to-end.
With social distancing requirements in play it no longer makes sense for landlords and tenants to be in and out of leasing offices to make rent payments, sign leases, collect keys, or make inquiries.
Given fees of leasing offices aren't cheap either, their value is also being questioned.
Much of the processes - with perhaps the exception of key handover - can actually be done online.
These platforms are now becoming more prominent as the relevance of physical offices are decreasing. These apps remove the need to pay an expensive leasing company to market your property or organise rent receipts. Everything is done through an app, simplifying tasks which could take could take up a lot of time.
Data is big business. Proptech data platforms collect, hoard and analyze information on all types of real estate deals, ranging from present and historical prices of commercial and residential real estate as well as rental rates for residential leasing.
This invaluable information helps investors and researchers make informed decision as they are able to look at the data and find profitable trends. Some of the prominent companies in the Data
Analysis sector include Datscha (SE), LandInsight (UK).
While arguably most individual buyers start their property search through internet real estate listing portfolios, portfolio buyers looking for their next investment or development opportunity still scout the streets to find and evaluate their next purchase.
Through these platforms this can be done all from the comfort of the home, which is particular relevant where regional lockdowns are in place.
Proptech companies while offering incredible opportunities to improve productivity usually face many challenges and hurdles.
While early adopters have jumped at the idea of using a more innovative solution, there are still hoops that proptech companies need to jump through to receive widespread acceptance.
One of the key challenges is lack of motivation: the existing system
is sufficient and serves its purpose, no one likes to change the way things are done, there is too much risk of trying something new.
The arrival of COVID-19 has given consumers more motivation to try these these new companies.
How proptech companies retain their consumers following the end of the pandemic will be the key to their success.
While there is resistance to change, it is undeniable that proptech companies have a lot to offer.
There is potential for them to tremendously improve the effectiveness and efficiency of what we do, even after the end of the pandemic.
The main difference to traditional property companies is that proptech companies makes everyone's' lives simpler by saving them time and money.
In a nutshell, proptech is the future and the future is limitless.