Real Estate Technology What is PropTech and how is it changing the Industry

25 May 2018
Is the Real Estate sector the next major sector to be disrupted by new technologies? How is the Industry 4.0 revolution effecting Real Estate businesses? ‘PropTech’ is the newest thing Real Estate leaders want to keep their eye on.
If you Google ‘PropTech’ you will find that there are dozens of definitions. Major players in the PropTech, or synonymously used CRETech, space even have their own explanations of what they think it really is.  All things considered, PropTech is simply a term that describes a small piece of a large puzzle that can be defined as a large digital transformation in real estate technology. Over the last few years, PropTech start-up companies in the real estate space have been able offer new products that will ultimately change the way business models are formed when it comes to property management and investing.
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Like all other technology advancements, the use of PropTech will transform the real estate industry by using predictive analytics from big data dumps that can be manipulated in ways that will align exactly with respective business models.  What are the benefits? Real estate owners can use this data in real time to solve real world problems, which can increase revenue, create business efficiency, and mitigate risk. These real estate owners can begin to syndicate multiple streams of data, such as tenant and lease information among all properties owned as well as the value of such properties, which in today’s industry, are not tracked simultaneously.  By using PropTech, property managers can enhance building operations, remove antiquated processes, and make business predictions and investments that could ultimately increase the return on investment.

On the contrary, PropTech has also enabled groups of small investors, who, in the past, could not pay to play, to invest in attractive real estate projects.  Also known as ‘crowdfunding’, this alternative investment option allows these small investors to drive up capital funds in portfolio properties or new construction projects. The real estate industry, which is not known for being on the forefront of technological advancements, is now starting to see the benefits of innovation.  These real estate technologies are transforming the processes of buying and selling property. Securing funding in today’s real estate industry no longer takes months as investor decisions are now secured by accurate data, reports, and property valuations.

Much like the recent buzzwords FinTech or blockchain, PropTech is the digital trend permeating the real estate industry.  It is currently making a lot of noise, mostly because there is a lot of catching up to do in this industry regarding software and technology applications.  There is fear that this digital application will disrupt the current real estate industry.  Change is inevitable, and if real estate managers and investors do not get ahead of the curve, they may find themselves left behind.

By Rebecca Machinga, HLB USA

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