Proptech is a buzzword made up by shortening property technology – so far so good. While it is difficult to pinpoint its actual precise meaning, it can more broadly be said that it stands for the use of modern technology, namely digital technology, to solve challenges and provide new solutions for the real estate sector as a whole.
While some might assume it is a newly coined 21st century term at a time when so many old industries get disrupted, its roots can actually be traced back when 3D software like Autodesk and similar programmes came up in the early 1980s and started to replace architectural drawing and modelling of floorplans and entire buildings. That’s when the industry started to change and becoming digital.
“But proptech didn’t really spring to life in a big way until the mid-2000s, when cloud computing, broadband connectivity and mobile devices enabled startups to grow and show investors the value of disrupting real estate through technology,” says Nathan Dever, head of commercial real estate technology at California-based Ten-X, a commercial real estate online platform that lets investors buy and sell residential and commercial real estate via desktop, laptop and mobile devices and matches supply and demand through algorithms derived from big data and based on artificial intelligence. The ten-year old company is just one of so many proptech firms currently sprouting all around the globe, backed by big-ticket investors and used by large industry players.
For example, Ten-X is fueled by large venture capital investors such as Blackstone and Oaktree and has literally all large global real estate companies, including CBRE, JLL, Knight Frank or Colliers International, as clients.
Smart city ecosystem
Proptech is much more than online property platforms, it has a lot more verticals that include virtual reality, smart contracts based on blockchain technology (a system that the Dubai Land Department is already working on), smart sales, marketing and customer relationship management tools for brokers, tools for landlords to simplify tenancy administration and payments, as well as real estate databases with refined search algorithms that save prospective buyers or tenants much of their time looking for a property and actually cut most agents and their fees out of the equation.
Another vertical is of course building administration and maintenance-related proptech which includes things like smart meters, sustainable building management tool and tools to increase efficiency of utility supply by data collection and analysis in interconnected buildings based on the Internet of Things and big data. At the end of that line, proptech has the potential to become an integral part of a smart city ecosystem alongside the sharing economy, the home building industry (contech), environmental technology (cleantech), finance (fintech) for new ways of home financing, including with Bitcoin, insurance (insurtech) and blockchain.
The new consumer
The question is, however, who are the people who will handle all this, live in proptech-powered homes they bought per mouse click from the comfort of their home with an augmented reality headset on?
“Underlying this new endeavour is a clash of generations and the advent of the digital native,” says Andrew Baum, property expert and visiting professor at the Saïd Business School at the University of Oxford, which just recently released a comprehensive report on the issue entitled “PropTech 3.0: the future of real estate.”
“Many of the proptech startups are driven by, and aimed at, millennials,” Baum explains, defining them as people who grew up with ideas of the sharing economy, who are more frugal and into time-saving and used to getting information and striking deals when and how they want it.
Regionally, proptech in its current form has established itself well in the US and Western Europe over the past years, but the biggest potential is seen in data-driven cities in countries such as China, Japan, Singapore and India, and of course also in the UAE.
Dubai, an ideal city
Dubai is obviously the ideal city for proptech to make its footprint in the UAE. Even more so as a study commissioned by HSBC and produced by JLL released in July last year found that “the proptech revolution has arrived in the UAE.”
The report entitled Beyond the Bricks, The Future of Home Buying assessed the views of over 9,000 people in nine countries on proptech, including over 1,000 respondents in the UAE. It found that property portals in the UAE are increasingly turning to innovative technologies such as artificial intelligence and virtual reality to transform each stage of the home buying process, and are also delivering additional automated services traditionally offered by estate agents.
“Physically visiting an estate agent’s office could soon become a thing of the past,” reckons Asma Dakkak, Research Manager with JLL in Dubai.
In the course of things, the aggregation of big data, predictive analytics, artificial intelligence and virtually reality would allow home buyers in the UAE to view many more homes instantly, narrow down their choice more exactly based on predefined parameters and even possibly “live” in a virtual version of their chosen home for some time to examine their potential purchase.
