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  • May 20
  • Vinit

A question many have in mind is “What is PropTech?” It is not unusual to have this as the term has become increasingly more common in today’s real estate industry. Look at the Bay Area, New York, London, Munich. Something which is common is high-tech infrastructure with all sorts of facilities and amenities for occupants. Whether it is office, multifamily, residential, or retail, the properties have a high level of technology incorporated in them, which increases their and enables developers to command higher rents. Just as fintech focuses on the use of technology in finance, “PropTech” uses digital innovation to address the needs of the property industry.

PropTech is designed to streamline and connect processes for participants in all stages of the real estate market, including buyers, sellers, brokers, lenders, and landlords. Popular PropTech technologies include virtual reality software that allows website visitors to virtually walk-through properties, software for reporting repairs, splitting rent payments and crowdfunding upcoming real estate projects.



Proptech consists of three components –


Smart Home

  1. Digital platforms that monitor, manage, or operate specific property assets in smart homes
  2. Example includes a security surveillance system that warns property owners of a threat, a smart thermostat that regulates the temperature of uninhabited units or smart light bulbs that can be turned on by a smartphone app or digital assistant


Sharing Real Estate

  1. Technology that facilitates the processes involved with sharing or renting real estate assets such as land, offices, storage, and apartments.
  2. Example includes an automatic online payment for retail spaces occupied in a building owned by a property management company


Real Estate Fintech

  1. Applications that involve selling and buying real estate assets
  2. Example could be a platform that reduces the amount of paperwork involved in being approved for a purchase

According to “PropTech: The Future of Real Estate in India”, by the Elara Group, investments in the PropTech segment in India have also seen an upswing in the last few years. Till date, $2.4B have been invested in India’s PropTech industry across 225 deals. The report attributes the growth in the segment to a fast-growing middle class, rapid urbanization, adoption of technology, an increasing internet user base of over 500 million users, a young demographic base and a gradually consolidating real estate canvas.



The newly established platforms for search and discovery of potential properties have evolved since the pandemic broke out. The platforms are helping the buyers track all the processes in a property-buying deal from the comfort of their homes. In fact, COVID-19 would have hit the real estate market much harder had it not been for the PropTech industry growing and maturing constantly in the country in the last few years. The segment is likely to see a tremendous boost soon amid the growing use of technology such as virtual reality, drones, big data, and artificial intelligence in home purchases. This is expressed through the fact that real estate in the country is slated to become a $1-trillion market by 2030.

Another major way technology is helping the industry is cost effectiveness. The industry players can control costs a lot easier with the use of modern tools adopted by them. They can now keep a tight leash on the costs more effectively now. This is helping them transfer the benefits of cost optimization to their customers who get properties at lower rates. Developers are able to bring new paradigms in client servicing, apart from meeting project deadlines easily and taking the quality of construction to the next level. Such efficiencies will continue to accrue to the industry as the technology itself evolves and with adoption of more technology by the companies.



The real estate technology sector is poised for renewed growth after a turbulent 2020. Even as the effects of the COVID-19 pandemic disrupted economic activity for many commercial assets, we also saw an acceleration in the adoption of new technologies. While large swaths of retail and office properties have experienced diminished activity since March 2020, an exodus of people from urban areas has created strong demand for housing in residential real estate and new expectations for the offices of the future. As vaccine distribution reaches its zenith later this year, many workers will return, though not all, and those that do will likely find the office enhanced with more tech-enabled convenience and safety measures. With more technology comes the ability to extract more data, allowing property managers to make informed financial and operational decisions about their assets while simultaneously creating more personalized experiences for tenants. Real estate tech offers a substantial investment opportunity via a $500 billion market encompassing commercial, residential, and construction startups. As capital invested in 2020 declined more than 50% compared to 2019, the pandemic forced even glacial tech adopters to rethink their digital strategy, creating tailwinds for solutions such as digital mortgage products, building analytics, and autonomous construction robots. For commercial operators in particular, a post-pandemic normal will necessitate a greater embrace of big data and investments into technology.



Bibliography


Pitchbook. “2021 Vertical Snapshot: Real Estate Tech,” n.d.


Online, FE. “How Proptech Is Changing the Way Real Estate Works.” The Financial Express. The Financial Express, July 13, 2021.https://www.financialexpress.com/money/how-proptech-is-changing-the-way-real-estate-works/2289255/ .

Contributor, TechTarget. “What Is PropTech (Property Tech)? - Definition from WhatIs.com.” WhatIs.com. TechTarget, December 29, 2018. https://whatis.techtarget.com/definition/PropTech-property-tech#:~:text=PropTech%20(property%20technology)%20is%20the,needs%20of%20the%20property%20industry

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