Recent Trends in the Real Estate Market
Real estate transactions can be a lengthy process, with not much having changed in the last ten years. Real estate professionals and potential buyers come together to review the listings in a given area. They examine each property’s square footage and features as a collective. If the customer has a desire to view the property, the real estate agent arranges a viewing. If the investor or buyer changes their mind, they have to start the process all over again.
Professor Andrew Baum from Oxford University has asserted that the real estate industry is somewhat resistant to new technologies. This, however, presents a great opportunity for those who are entrepreneurial and have an understanding of the latest technological advancements. According to Baum, the potential for success lies not only in the size of the business, which is yet to take full advantage of digitalization, but also in the industry’s practices which are hindered by inefficient processes and substantial transactional costs, and are safeguarded by self-interests of individuals and institutions.
The influx of Millennials into the property market is an important factor to consider. According to Housing Wire, by the end of 2023, Millennials will make up 45% of all new mortgages, with Gen X comprising 36% and Baby Boomers making up the remaining 17%. In response to Millennials’ need for technology-based solutions to industry problems, real estate professionals are turning to software outsourcing strategies.
In this essay, I’ll give you a high-level overview of the PropTech business and explain why outsourcing is so important to the sector’s future.
Examining the condition of the real estate technology industry
The merging of information technology and real estate in order to meet the needs of customers has been the focus of innovative business owners. This merging has been referred to as ‘PropTech’ by industry experts, though ‘CREtech’ (Commercial Real Estate Technology) and ‘REtech’ (Real Estate Technology) are two alternative terms used to describe the same concept. What, then, is PropTech, and can it be accurately defined?
The word “PropTech” is used to refer to any new piece of real estate technology, product, or service.
The demand for ProTech products has been increasing at a rapid rate. Funding for the property technology industry in 2023 averaged approximately $2 billion, and grew exponentially each year, reaching an impressive $12 billion by 2023. This impressive growth of 162% between 2022 and 2023 is indicative of the industry’s popularity and success.
According to Baum, since 2023, the PropTech sector has witnessed an exponential influx of over 2,000 successful enterprises, each of which has managed to raise an average of between $25 million and $40 million. This begs the question as to what is driving this expansive growth, and how are leading PropTech firms capitalizing on the opportunities presented by the emergence of this sector?
New property technology
The majority of people who use property technology (PropTech) do not realise that they are doing so. Big Data, Augmented Reality/Virtual Reality (AR/VR), Blockchain and the Internet of Things (IoT) are the key technologies driving the growth of the PropTech industry.
Identifying the correct companies to collaborate with and the best personnel to recruit can be a challenging and arduous task, given the various characteristics of these technologies. In order to facilitate their expansion, however, some PropTech organizations are outsourcing such technology. By utilizing offshore or nearshore companies to assist with areas such as Big Data or IoT development through outsourcing, it can significantly enhance market penetration and stimulate growth.
Briefly describing each of these technologies and how outsourcing might improve their capabilities:
Big DataAs businesses increasingly benefit from the advantages of the Internet, they are now able to acquire and store vast amounts of data related to their products, customers and internal processes. This phenomenon has given rise to the concept of ‘big data’, although its specific definition is still somewhat ambiguous.
According to Forbes, Big Data is defined as “a compilation of data from both traditional and digital sources within and outside a company, which can be used for ongoing identification and investigation”. The term “Big Data” encompasses a wide range of data, including website analytics, social media metrics and customer information, as well as inventory and financial records.
PropTech companies are increasingly leveraging large sets of data to improve the way property is bought and sold. Companies such as Zillow, Trulia, and Redfin are just a few examples of platforms that offer up-to-date information for those looking to lease or purchase property. According to David Penn of Finovate, the use of big data, geolocation, mapping, and machine learning are making the process more efficient for potential buyers and investors, as these technologies present them with the most relevant and attractive options.
Big data and artificial intelligence (AI) are closely related, with many controllers and regulators using a combination of both technologies to optimise the operation of different machinery and systems in buildings. Examples of the application of big data and AI include the use of HVAC systems, smart home appliances, and security systems.
Despite the potential for PropTech businesses to successfully manage data, there is a risk of issues arising if data is not properly managed. Consequently, it is essential that reliable means of storing and protecting data are available, as well as efficient systems for data retrieval. This necessitates a high level of expertise, particularly as the data associated with real estate transactions can often be highly sensitive. One way of ensuring the efficacy of PropTech systems and services is to outsource big data services, or big data analytics. This approach can be hugely beneficial and can help to guarantee that the data is managed in a secure and effective manner.
Mixed reality (augmented and virtual)The use of Augmented Reality (AR) and Virtual Reality (VR) technologies is experiencing a noticeable surge in popularity. AR involves the process of augmenting a user’s physical environment with digital media, such as images or videos, which are then displayed in the user’s field of vision. In contrast, VR requires the creation of an entirely virtual universe, rather than simply overlaying the user’s existing environment with digital elements.
Businesses in the real estate and construction sectors are beginning to utilise augmented and virtual reality technologies. Skycatch and other firms are leveraging drones and data processing “base stations” to generate highly accurate maps and point clouds to expedite, refine and reduce the cost of property surveys and development. Clients can also annotate and incorporate CAD files into drone-captured videos and still images, taking advantage of the company’s augmented reality capabilities. On top of this, these technologies can assemble point data to generate 3D models of both existing and projected items.
As the relationship between technology, real estate development, and property ownership continues to strengthen, the use of augmented reality (AR) and virtual reality (VR) in the property industry has become increasingly prevalent. Nevertheless, creating a successful PropTech company is no easy feat. Coding, engineering, and machine learning capabilities must be accounted for, as well as the recruitment of experienced AR/VR developers. It can be difficult to identify the most suitable candidate for the role following brief interviews, due to the complexity of the technology. Nevertheless, companies can benefit greatly from outsourcing AR/VR developers, thus avoiding the difficulty of competing for local talent and enabling their PropTech visions to come to life.
The Distributed Ledger Technology, or BlockchainThe adoption of cryptographic currencies continues to rise, with consumers increasingly turning to digital currencies such as Bitcoin, Ethereum, and Ripple for online and in-store purchases. All of these virtual currencies rely on the technology of blockchain in order to function.
The concept of blockchain technology has been around since the early 1990s, but it was not until 2009 that it was first implemented in the form of Bitcoin. Blockchain is a distributed ledger technology that works by generating and verifying “blocks”, or chunks of data, across a network of computers. This network of computers verifies the details of any transaction, such as the time, date, and amount, before the transaction is approved.
The use of blockchain technology within the real estate sector is on the rise, with multiple listing service (MLS) providers such as imbrex being just one example. According to Forbes, a centralised blockchain MLS system could be a significant breakthrough in PropTech, as the current landscape of real estate data is often characterised by restricted accessibility, as well as fragmented, missing, or even erroneous data.
Furthermore, organisations such as ManageGo are endeavouring to modernise the rental industry through the introduction of cryptocurrency payment options for tenants. Not only could this positively affect both the online reputation of both tenants and landlords, but it could also increase the overall trust and confidence in the rental market.
Despite the potential benefits that a blockchain platform could bring to the real estate and rental industries, developing one may be challenging. This is due to the fact that the technology is still relatively new, and it can be difficult to find someone with the necessary expertise. This individual should have a good understanding of mathematics and be confident when it comes to encryption. One possible solution to this problem is to hire a blockchain consultant. Furthermore, by employing a remote team of engineers, cryptographers and mathematicians, the development time and costs associated with the platform can be reduced.
IoTThe Internet of Things (IoT) is a term used to describe the connection between a variety of different electronic devices that are linked together and communicate data wirelessly. Examples of this include smart lighting systems, home security camera systems, and other similar home-automation and monitoring devices. The IoT has become increasingly commonplace in recent years, and it is likely to continue to grow in popularity as technology advances.
As the Internet of Things (IoT) technology becomes increasingly prevalent within the property development and building industries, developers are starting to consider a future of “smart cities” with the installation of advanced sensors and monitoring equipment. A recent article has suggested that the use of such equipment within structures such as bridges, tunnels, highways, and utilities could enable the assets to detect and actively respond to any issues as they arise, thus minimising downtime and increasing operational efficiency. This has resulted in a rapidly expanding market for intelligent, resilient, and weather-resistant IoT devices, as this vision of the future is gradually becoming a reality.
If you are looking to create Internet of Things gadgets, then you may want to consider enlisting the help of experienced offshore and nearshore teams. Outsourcing the project could be the most beneficial option, as it allows you to utilise the expertise of engineers and programmers. This could be a great way to ensure that the project is completed to the highest of standards.
Future of Real Estate Technology
As the business landscape continues to evolve, certain jargon will shift, but the underlying technology remains. The latest buzzword in the IT industry is ‘PropTech’, and its influence on the property industry is set to be far-reaching. Driven by advancements in big data and the Internet of Things, PropTech is expected to experience rapid growth and widespread adoption. To ensure their innovative products complement modern life, PropTech companies require the assistance of talented engineers, developers and analysts from around the world. Companies can stay ahead of rising demand for advanced technology in the property market by utilising outsourcing.