Proptech Trends Shaping the Future of Real Estate
Whether we are aware of it or not, all of us are and will continue to be impacted by real estate and all the changes that occur within this sector. Currently, one of the biggest trends affecting the industry is the tidal wave of proptech and its vast definition. Also called real estate tech, or RealTech, proptech refers to the software, tools, platforms, apps, websites and other digital solutions implemented by real estate professionals for a wide spectrum of processes, and is part of the even wider digital transformation taking place in real estate in recent years. We know that proptech has the ability to improve many real estate processes in ways that have changed the way investors, agents, owners and customers operate, but what are the biggest trends within proptech itself that we are seeing in 2022?
More investment in proptech startups that work in construction and property management spaces
These were two sectors that were standout areas for investment within proptech in 2021, according to Crunchbase. As the worlds of proptech, fintech and contech (construction technology) collide more often than not, we’ll see the popularity of embedded finance (enabling payments online) rise even further as these three sectors continue to share common projects and investment sources in the future.
Proptech that supports green construction
Already creating buzz among investment rounds is the growing concept of green construction, and more proptech startups are focusing on helping build sustainable, energy-efficient homes. That means smarter, modern appliances, SmartGrid washing machines, fridges, microwaves etc. It also speaks to shifting consumer priorities, with one survey confirming over 75% of millennial homebuyers saying they were willing to pay more for greener homes that used sustainable materials.
Proptech Big Data and increased digitization of property data assets
Studies show that big data will only become an increasingly powerful tool, enabling real estate professionals to convey accurate insights, pricing and even risk assessment, based on up-to-date and prolific historical and real-time data sets. As one article puts it, ‘big data and real estate agents is a match made in heaven’.
Rise of co-living spaces
There’s been an increase of proptech solutions that aim towards end-to-end housing experience for millennials, who have become more open to sharing rather than owning property since 2020. Interestingly, the co-living sector was an early adopter of tech innovations such as AI and machine learning, as well as promoting safety and security through widespread use of CCTV surveillance and video door monitoring, smart locks and facial-recognition key management, trends that are only considered to increase in popularity.
The Internet of Things (IoT) and the Smart Home
Going one step further from the last point, the IoT, as far as proptech trends go, is firmly here to stay, being an early hit with investors when it comes to the kind of proptech category to keep an eye on. According to the PropTech Global Trends Report 2020 The Internet of Things (IoT) category is leading the pack with 16% of all proptech companies, followed closely by Long-Term Sales or Sale Search category with 14% of the companies. The IoT is the smart network of devices and sensors that send and receive data about a building to track overall state and predict failures, which means it’s a powerful, (often remote) tool for property owners. Agents can integrate these technologies into their marketing operations too, as buildings that have a robust IoT device system can contribute to high-quality property management, from the best heating and ventilation controls, to knowing everything about the building security. This is a trend that will make a particular impact on tech-savvy millennials and Gen Z customers, who are accustomed to and expect to be able to control lights, temperature and appliances, all from the convenience of their smartphones.
Automation backed by AI and machine learning
In 2022 (and beyond), it’s all about automating back-office processes, or at least working towards it. 78% of brokers say they still manage their back-office processes manually. Proptech companies dealing in AI and machine learning help make sense out of large amounts of data coming in, making it possible to create actionable, sustainable, and, importantly, repeatable steps, from bettering search prediction functionalities to creating highly-intuitive customer segmentation lists.
Improved CX with advanced chatbots or real estate robots
Chatbots have gone from an innovative nice-to-have to a crucial must-have feature for almost every website, and especially so for real estate websites. Its benefits are multifold, immediately addressing customer pain points whilst reducing manual labor on the agent’s behalf, and overall increasing customer satisfaction. According to Juniper Research, consumers and businesses will save over 2.5 billion hours of customer service by 2023 just by introducing chatbots, especially when implemented in multiple languages. The next generation of chatbots are designed to be more advanced and intuitive than ever; they’ll be able to send out promotions to potential customers, fill out user profiles based on key information given, provide information about the agency or agent automatically, send links to a virtual tour and send out best-fit recommendations and advice.
Industry M&A deals will increase
According to Forbes, the digitization of real estate means mergers and acquisitions (M&A) within the sector will continue to accelerate. In the proptech sector alone, there were 40 M&A deals closed by the end of Q3 in 2021, up from just 18 in 2020. The 2021 Real Estate Tech Venture Funding report revealed that VC funding equated to $32b in 2021, a 28% increase from 2020, proving that investors and real estate parties are realizing that proptech solutions, while still relatively little-known and a revolution in motion, are powerfully capable of addressing (and resolving) even the most minute details of the everyday pain points of modern day customers.