Current Developments in the Property Industry
The process of buying or selling real estate has remained largely unchanged over the last decade and can involve a time-consuming process. Real estate professionals and potential buyers collaborate to review property listings in a specific area. They scrutinise each property’s characteristics and square footage together. If the client expresses a willingness to view the property, the real estate agent arranges a viewing. If the investor or buyer has a change of heart, the entire process must be restarted.
According to Professor Andrew Baum from Oxford University, the real estate industry has been relatively resistant to new technologies. However, this presents an ideal opportunity for entrepreneurs with a sound understanding of the latest technological advancements. Baum emphasizes that considerable room for growth exists not only in the sector’s size, which has yet to fully embrace modern digitalization, but also in its practices generally plagued by inefficiencies and significant transactional expenses, as well as the self-interest of those involved in the industry.
The potential for success, therefore, lies in the hands of those who can recognize and address these inefficiencies.
If you are interested in learning more about this topic, we recommend checking out our post on the relationship between technology and business goals.
The emergence of Millennials in the real estate market is an essential consideration. According to Housing Wire, Millennials are projected to constitute 45% of all new mortgages by the end of 2023, with Gen X occupying 36% and Baby Boomers accounting for the remainder 17%. In her response to the growing need for technology-based solutions, the industry is adopting software outsourcing strategies to meet the Millennial’s demands.
In this piece, I will provide a broad introduction to the PropTech industry and outline why outsourcing is critical to the sector’s future.
Analyzing the State of the Property Technology Industry
Forward-thinking business owners have concentrated their efforts on fusing real estate with information technology to cater to customers’ demands, a phenomenon referred to as ‘PropTech’ by experts in the industry. However, two alternative terms, ‘CREtech’ (Commercial Real Estate Technology) and ‘REtech’ (Real Estate Technology), are also used to refer to the same concept. So, what precisely is PropTech, and can it be precisely defined?
Find out more about this topic by checking out our blog post on the future possibilities of the Metaverse.
The term “PropTech” encompasses any novel real estate technology, product, or service.
PropTech products are seeing increased demand at a rapid pace. In 2023, funding for the real estate technology sector averaged roughly $2 billion, with exponential growth each year, culminating in an impressive $12 billion by 2023. This eye-catching 162% growth between 2022 and 2023 reflects the industry’s thriving popularity and success.
Professor Baum states that since 2023, the PropTech sector has witnessed exponential growth, with thousands of successful enterprises having emerged, raising on average between $25 million and $40 million each. This raises the question of what is driving this expansion and how top PropTech companies are making the most of the prospects created by the rise of this sector.
Recent Advancements in Real Estate Technology
Most people who use property technology (PropTech) are unaware of doing so. The PropTech industry’s growth is primarily driven by significant technologies such as Big Data, Augmented Reality/Virtual Reality (AR/VR), Blockchain, and the Internet of Things (IoT).
With such a wide range of technologies in use, it can be a difficult and taxing undertaking to find suitable companies to partner with or employees to recruit. To expedite their expansion, several PropTech firms are, however, outsourcing such technology. By using offshore or nearshore firms to handle areas such as Big Data or IoT, outsourcing can significantly boost market penetration and stimulate growth.
A concise introduction to each of these technologies and an exploration of how outsourcing can enhance their capabilities:
Big DataAs more businesses harness the advantages of the internet, they can now gather and store vast amounts of data about their products, customers, and internal processes. This has led to the advent of ‘big data,’ although its specific definition remains somewhat vague.
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 various types of data, including website analytics, social media metrics, customer information, inventory, and financial records.
PropTech firms are increasingly using large datasets to improve the way real estate is bought and sold. Platforms such as Zillow, Trulia, and Redfin offer up-to-date information for those interested in leasing or buying property. David Penn of Finovate stated that the use of big data, geolocation, mapping, and machine learning has made the process more efficient for potential buyers and investors, presenting them with the most relevant and appealing options.
Big data and artificial intelligence (AI) are closely related, with many controllers and regulators using a combination of both technologies to optimize the operation of different machinery and systems in buildings. Big data and AI applications include the use of HVAC systems, smart home appliances, and security systems.
However, PropTech businesses run the risk of encountering issues if data is not correctly managed. It is therefore crucial to have reliable methods for storing and protecting data, as well as efficient data retrieval systems. This requires a high level of expertise, particularly since the data associated with real estate transactions can be highly sensitive. One approach to ensuring the effectiveness of PropTech systems and services is to outsource big data services or big data analytics. This strategy can be extremely advantageous and help ensure that the data is securely and effectively managed.
Mixed Reality (Augmented and Virtual)The use of Augmented Reality (AR) and Virtual Reality (VR) technologies is on the rise. AR involves 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 creating an entirely virtual universe, as opposed to simply overlaying the user’s current environment with digital elements.
Real estate and construction companies are beginning to utilize augmented and virtual reality technologies. Firms like Skycatch employ drones and data processing “base stations” to generate highly precise maps and point clouds that expedite, refine, and reduce the cost of property development and surveys. Clients can annotate and integrate CAD files into drone-captured videos and photos, taking advantage of the firm’s augmented reality capacities. Additionally, these technologies can compile point data to create 3D models of both existing and projected objects.
As the relationship between technology, real estate development, and property ownership continues to gain momentum, AR and VR usage in the property sector has become increasingly common. Nonetheless, creating a successful PropTech firm is no easy task. Coding, engineering, and machine learning abilities must be considered, as well as recruiting experienced AR/VR developers. Due to the complexity of the technology, it can be difficult to identify the best candidate for the position after a brief interview. Nevertheless, companies can greatly benefit from outsourcing AR/VR developers, avoiding the difficulty of competing for local talent and enabling their PropTech visions to come to life.
The Distributed Ledger Technology, or BlockchainThe popularity of cryptographic currencies is increasingly being observed, with consumers turning to virtual currencies such as The 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.