While FinTech with its crowdfunding models, cryptocurrency, and collaborations between incumbents and startups have been here for nearly 10 years, PropTech has just begun to gain momentum.
Property companies support digital transformation and incorporate digitization into their everyday operations.
Digital property guides, marketing and real estate management have already brought the domain to the newest level.
It’s the best time yet to come. Hot developments that represent a major change in the vision and organizational paradigm of real estate industry are transforming the consumer experience and the social impact of real estate companies.
PropTech field in numbers
PropTech is a buzz word meaning “the use of digital innovation and technology in all processes related to the search, purchase / sale and management of assets.”
PropTech — RealTech, CREtech, ConTech and RealEsTech — has several synonyms which are commonly used to characterize a modern mainstream.
As of 2010, PropTech firms have saturated the market.
2014 was the most fruitful year in the real estate world, with 261 new enterprises.
The number of newcomers has decreased considerably over the past six years; in 2018, only two new PropTech firms were founded.
The market cap as of August 2019 was $10.15bn. The PropTech received funding estimated at $13.85 billion in 2018 alone.
In only the first six months of 2019, the real estate industry has earned a record-breaking $14 billion in investment, according to CREtech.
In particular, SoftBank has raised around $1.76 billion to grow the PropTech market.
The automation and digitization of key business processes such as property inquiry, acquisition and management has contributed to an increase in sales of assets.
There was a trend for mergers and acquisitions throughout the last year: the number of deals exceeded 100. Reonomy, Property Partner, Open Door, Crowdstreet, Compass are amongst the top PropTech companies right now.
Survey by CREtech shows:
- 65 per cent of respondents predicted that the combination of “real estate and technologies” would have a huge effect on commercial property worldwide;
- 31 per cent of investors in commercial real estate are planning to invest in Proptech companies;
- 26 per cent view this opportunity as an opportunity for disruptive projects to make money;
- Smart cities and houses, AR / VR components for online property platforms and multi-level biometric protection are the top PropTech trends for 2020;
- Tools and techniques commonly used in Proptech: generative design, knowledge building modeling, digital twins.
KPMG has conducted research on the effect of tech advances on the property domain among top management of real estate companies.
Key findings of this 2019 KPMG Global PropTech Survey:
- 58 per cent of real estate firms have a digital plan and 95 per cent have a senior employee in charge of executing it;
- Key areas for embracing key technology trends in PropTech services — real-time asset performance data, optimisation building, transactions and customer data;
- Enhanced performance (65 per cent), cost savings (47 per cent), more efficient decision-making (44 per cent) are main factors for innovation in modern IT and PropTech;
- Respondents admit that the main barriers to further digitalization are unclear ROI (40%), other strategic priorities (40%), lack of strategic specialists (34%) and inadequate in-house talent (27%);
- 25% of PropTech companies have a Big Data strategy and have for some time been capturing the most valuable data sets in order to generate insight and support decision making;
- The decision-making process in 10 per cent of companies is data-driven and supported by an integrated data visualization infrastructure;
- 67 per cent of respondents are sure of their expertise in cybersecurity;
- Of the KPMG real estate respondents, the top priority was asset management to use PropTech solutions for 44 percent.
The trends in Proptech 2020 you should know
In 2019, the winds of change began to blow: the real estate industry recognized the promise of emerging technology and took the first steps toward their full transformation.
Land as a Facility
The Property as a Service model is putting the clientele in the spotlight. Now it’s the customers who rule the day. We set quality of service standards and control business processes within real estate.
There are three main target classes that any property company would concentrate on — clients (tenants / renters), customers (space-interacting individuals), and capital (stakeholders).
Clientel ‘s thorough analysis will help you define your business’ roadmap and prioritize your goals.
Hi-tech startup collaboration is one of the most popular ways for the incumbents of real estate to move from the innovative strategy to its implementation.
This should be remembered that many businesses are merely trying to change well-established business models. Instead of actually innovating every part of their company, they seem to play at the “innovation theatre.”
Startup collaborations are intended to help RE companies adapt easily to new market conditions and gain a competitive advantage.
Ninety-three percent of respondents who took part in the 2018 KPMG Global PropTech Survey agreed that cooperation between incumbents and start-ups is crucial for adjusting to the changing global climate.
The top management is ready to train and educate their employees to adopt emerging innovations, organize industry conferences where experts can share their experiences with each other and create an overall culture of innovation.
Exchange of information and of the business community
The incumbents in real estate and startups are like ice and fire: the former likes to play it safe when it comes to taking a chance associated with property deals. When the latter reaches new markets they are ready to swim or sink.
Their collaboration is mutually beneficial: RE companies are more agile and less risk-averse while startups better understand the business and core demand.
What happens next? PropTech ‘s primary predictions for 2020
Below is a list of this year’s PropTech forecasts made by industry experts — Forbes, CRETech, KPMG.
1. Stepping up deals
A increase in investment in real estate in 2019 is not the end. The amount of funds pumped into commercial and residential property this year is expected to hit $30 billion. The explanation for this is that growing numbers of RE owners and organizations are implementing property development technologies.
2. Pragmatische Investitionen
Backers are more positive. Earlier, they developed approaches focused on the return rate evaluations of startups. Experts now expect that existing investors would be more conservative in evaluating prices on mature and vertical markets.
KPMG expects that more landlords will monetise their properties by selling them, using excess inventory, or refinancing by 2020. Their key goal is to “maximize returns from their investments and ensure tenants are drawn to their buildings.”
3. A new start for fitness stores
In 2019 plenty of retailers pushed into repositioning their brick-and – mortar business by several external factors, the increase in e-commerce and rising operating costs in particular. Some retail schemes have been converted to the residential property to accommodate tenants who are searching for lower rents and longer periods of rent-free.
Given many obstacles such as the high restructuring costs and volatility surrounding rental prices, this standard is expected to remain in 2020. Retail property repositioning involves the collective efforts of local authorities, retailers and landlords.
4. Employers enter the Purchase-to-Let
2020 marks a re-shaping of the buy-to-let industry with partnering institutional investors. Businesses are blocking reservation rooms to rent them to employees.
This ensures that landlords do not get a waste of space and eliminates the need to find occupants for periods of vacuum. Employees like the concept of conveniently positioned high-grade housing, and affordable rents.
5. Large data and housekeeping
Many real estate firms have already seen the beneficial impact of using Big Data for pricing, forecasting return rates, and patterns in projecting. In the future, data gathered from organisations providing care of the property and the feedback of tenants can be used to avoid unexpected incidents. This will anticipate and forestalled pipe explosions, electrical fires and other infrastructure issues.
6. PropTech Globally Spreading
North America has always been the cutting edge of creativity in the real estate market. Everything will change in 2020—Asia (APAC) market and European (EMEA) real estate tech are stepping on the toes of the US in terms of the total volume of the deal (total number of deals).
It is noteworthy that mega angels copy the custom of SoftBanks and make multi-billion investments in tech real estate firms. For example , in 2018 Anida, a Spanish real estate platform operator, closed an investment of $5.82bn. Even RE businesses create their own proprietary investment funds to participate in successful PropTech projects.
8. Immersive Tours in AR / VR
Digital walkthroughs and interactive tours, planning and 3D models make the search process much easier and help real estate agents cut costs. For the National Association for Realtors’ respondents, 46 percent found virtual tours very useful. Potential buyers are curious about getting to know space in digital spaces.
There’s no need to have face-to – face meetings with both sides at a suitable moment. With interior and exterior design the buildings under construction become real. Matterport software allows the introduction of digital assistants to give customer directions about how to use services.
9. Building up
The volume of real estate tech merger and acquisition activity in 2019, according to Statista, reached 104. Small and medium-sized startups are consolidating their ability to draw more angel funding. The VTS merger with Hightower demonstrates the advantages of having a bigger share of the market and cost reduction. Outcome of the merger is:
A stronger company that delivers more value to the end-user;
Consumer base broader;
Larger Native Investor Pool.
10. FinTech is with us
Real estate was one of the domains until 2019, relying mainly on traditional financing schemes. With the introduction of PropTech, RE incumbents turned to ways to reduce the financial dimension of buy / sell / rent processes. In 2019 alone, it has invested an estimated $3.70 billion in FinTech real estate. Deloitte reports that FinTech is able to benefit real estate in many ways, notably by expanding the lender base and providing access to the real estate market for clients.
11. IoT or Intelligent Tech
Smart devices in property inspections can replace humans and lead to energy savings.
Managers may consider the current state of a home or apartment with the past records of property maintenance, and take preventive steps. Furthermore, Smart Tech is not limited to personal devices; it takes the form of smart buildings, and even cities.
Such disruptive innovations, of course, remain PropTech ‘s hot theme. With the help of artificial intelligence and machine learning, the big data gathered at the research stage is translated into the understandable result. Each area can be taken to a new level from the property search results to the customer assistance. For example , technological developments in the future may help people locate a property according to their personal characteristics or past experience.
We partner with real estate crowdfunders
Luxury shares are a perfect example of PropTech working together and shared economy. It’s an online crowdfunding site for fractional ownership that is expected as a more efficient way of using a property to replace timeshare.
Fractional real-estate investors provide funding for safe and stable ventures and are willing to resell their stakes.
Potential Luxury Shares clients are real estate developers, realtors, holiday & travel companies.
Luxury Shares is a complex platform made from LenderKit – our white-label solution for online crowdfunding, especially real estate, business.
- Verification of user’s SMS identity;
- Payments on line via MangoPay;
- KYC / AML searches automatically;
- Payments made in digital currency;
- VR tours to walkthrough.
The product architecture addresses the needs of the main consumer-individuals searching for luxurious property of high value. Professional media, bold fonts and immersive experience come with it.
It’s another company we built an online presence for in the category PropTech. Shojin is a UK-based investment platform for real estate developers offering opportunities for co-investment and equity funding.
We were responsible as a tech partner for linking an existing backend to APIs, testing the website and enabling core functionality. An improved platform can take particular transactions across a variety of financial networks, including ISAs and UK pension schemes.
The platform has built-in offline KYC and AML tests performed via MangoPay. It’s built into Contentful CMS, has an interactive investor questionnaire and a fun Parallax animated construction site on the homepage.
- Constructed with PHP framework Yii2;
- Back-office diffitek;
- Payment portal MangoPay;
- Optimized responsive interface for mobile devices.
Rise of Capital
CapitalRise was an early stage venture capital startup in which we partnered together to build a crowdfunding investment platform for real estate investments.
We were among the leaders in introducing creative ISA finance to their UK product line in 2017.
Just like Shojin, founders of Capital Rise are investing their money alongside other angels in projects.
Our task was to build a stable backend and an easy-to-use app front-end using high-level technologies. Also, we helped the company integrate with an online portal all the third party systems that they used.
We continue to work with Capital Rise and offer our assistance in increasing their online presence. Our partnership results in large production volumes and increased operating performance.
- Flexible onboarding process for investors;
- Extensive descriptions of the properties;
- Investment Reselling Bulletin Board;
- Integration of Goji investments;
- Generation of Digital PFDs
- Integration of geocoding services predictable to PCA.
Homegrown is a dedicated provider of investment platforms to investors interested in supporting developers of existing properties.
We have deployed Symfony, Jquery, CSS and HTML to upgrade the Homegrown web site. It is our duty to integrate Autopilot CRM into an existing platform and to move the website to AWS ( Amazon Web Services).
- Back-office diffitek;
- KYC status controls through GBG;
- A system for referring customers;
- Integration into gateway GCEN;
- Clean interface with an easy to use menu and eye-catching CTAS;
- User Areas with data tracker performance;
- Pixel-friendly mobile design perfect.
The website improvement and increase’s main goal was achieved – better customer management and performance on the website.
With the latest trends in the PropTech industry, this domain no longer constitutes fiction.
2019 was rich in considerable shifts in the organizational structure, new business collaborations, changes in business processes and models and the re-establishment of PropTech geography.
2020 promises a more thoughtful approach to the adoption of innovations, property management and customer experience:
- New, technology-driven business models, including Property as a Service ( PaaS), are opening up in the real estate sector.
- Brick-and – mortar stores are repositioning to lower rents into the residential property and offer longer periods of lease-free.
- Big data is used for setting prices, predicting return rates, project trends and preventing unforeseen events.
- Taking data to a new level using AI and ML — from the property search results to the customer assistance.
- In 2020, alternative financing of the real estate industry will continue its development with more developers finding funding from online funding platforms.
We will continue to watch how the environment of the real estate changes, and keep you updated.
Would you like to say hi, or tell us your brilliant idea? We are all ears-drop a line for us!