Property technology, or “proptech”, refers to any technology used in real estate. This can include everything from online conveyancing software and smart home technology, to construction robots and utilising data to make intelligent decisions during the pre-build phase.
Forbes defines proptech as “businesses using technology to disrupt and improve the way we buy, rent, sell, design, construct, and manage residential and commercial property.” In other words, proptech is any form of technology that improves the way the real estate industry operates.
Proptech startups identifying inefficiencies are reshaping Australia’s $7.8 trillion real estate market with tech-driven solutions aimed to streamline old processes and improve productivity and efficiency. Though a relatively young field, proptech startups have raised over $43 billion in funding worldwide since 2012.
What are the trends to watch?
We’re barely into 2023 and already all eyes are on the proptech space. The real estate industry has undergone massive disruption over the past decade, propelled even further by the global pandemic in recent months.
The global proptech market is only growing bigger, tipped to expand from $18.2 billion in 2022 to $86.5 billion in 2032. This means there are still significant opportunities for startups and further tech developments in the coming years.
Consumer expectations, rapid urbanisation, Mobile-first Millennials and Gen Z are all major factors that are currently driving innovations in the property sector.
Here are some proptech trends to look out for in 2023:
AI and automation
Artificial Intelligence (AI) has been ongoing within the real estate industry, but there have been major advancements in recent years. Demands from customers for a seamless journey present a big opportunity for proptech startups to meet end-user expectations.
Enhanced efficiency is by far the most important benefit of AI and automation. For example, AI can help realtors make clear and objective appraisals and property valuations so everyone is on the same page. AI also allows potential buyers to take virtual tours of properties and provide personalised property recommendations saving customers valuable time in an often long, drawn-out process.
Virtual reality
Like AI, the use of virtual reality (VR) and augmented reality (AR) is not a new trend. However, recent shifts in the market are accelerating these proptech trends and serving up some exciting innovations.
VR is the most-needed proptech trend in a post-COVID world. To make it through the pandemic, businesses have had to become creative; opening up a range of VR-driven solutions including virtual home tours and AR for retail that lets consumers virtually ‘try on’ furniture in their homes. A great example is IKEA, which has developed an AR app that lets consumers use their smartphone to see what a piece of furniture will look like in any room of their home.
In addition, VR will be increasingly used in the rental business, with a growing number of landlords and short-term rental hosts offering virtual tours with their listings to attract renters.
Urban planning technology
With rapid urbanisation resulting in close to 70% of the world’s population shifting to cities by 2050, ‘Smart Cities’ will be a focus in the coming years.
Some challenges that proptech startups are looking to address when it comes to Smart City planning include crime and insufficient housing, more connected transportation systems and services to reduce environmental impacts.
ESG proptech seems to be a big focus, as it helps the real estate industry reach renewable energy targets and develop infrastructure that encourages residents and visitors to adopt climate-friendly practices, such as installing EV chargers.
PropTech vs Fintech
Proptech and fintech are closely aligned, just as real estate and finance is. No property can be built, bought or sold without some sort of finance and banking. For this reason, many refer to fintech as the “big brother” of proptech, since fintech is slightly further along the maturation journey than proptech is.
With that said, proptech investment will likely outperform fintech investment. In fact, proptech startups have a great shot at success owing to the fact that proptech innovations are becoming more customer-focused; creating solutions for consumers and not just for the issues faced by builders or real estate agents. And let’s face it, consumer confidence is important in this day and age – especially in the real estate industry.
Furthermore, investors are now pouring more capital into the sector than fintech, a trend that is likely to continue. Just in the first half of 2022, the US proptech market attracted $8 billion in growth equity, debt funding and M&A transactions.
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