PropTech, the combination of the words Property and Technology is not a new concept. We’ve previously witnessed the coming together of Finance and Technology (FinTech), Wealth and Technology (WealthTech) and Insurance and Technology (InsurTech). As James Dearsley, Co-Founder of Unnisu, the global leader in PropTech information, data and research, points out; “the term PropTech is really a marketing term. It’s not an actual change.” Rather than heralding a completely new phenomenon the coining of the term PropTech instead marks a point in the real estate industry where actors of all sizes and shapes are truly starting to integrate technology into their day to day business. The birth of PropTech has come about thanks to a number of favourable factors. As Marion Peyinghaus, Managing Director of the Competence Center Process Management Real Estate in Germany puts it, “We currently have a historic opportunity and PropTechs have a significant share in it. But only a part of it. Other forces have an impact, such as the huge capital currently available on the market. Investors are looking for good investment opportunities and are supporting PropTechs in ways that have rarely been seen before.”
The real estate sector, with its many entities and stakeholders has not historically been a sector that has been at the forefront of technological innovation. Taking the example of a construction project, many stakeholders will be involved including engineers, designers, architects and developers. The amount of actors that are part of one single real estate project means that relationship building and communication can at times be stilted, as each stakeholder abides by their own regulations and workflows. This has historically meant that cross company collaboration has not taken place and innovations across the industry have not spread as quickly as they have in other sectors, such as the transportation sector.
PropTech real estate: it’s about working together
Thanks in part to a wave of offers presented by a number of cutting-edge start-ups, the real estate industry has seen the advantages of opening up to welcome in new ways of working. As Thomas Bardawil, Director at Plug and Play Smart Cities explains, “It’s not about telling people your secrets, it’s about the implementation of new technologies. You can know all the trends, you can know everything that is going to happen, but if your company doesn’t have the tools to implement those trends or changes, you’re not going anywhere.”
Dan Hughes, the founder of Alpha Property Insights and LIQUID Real Estate Innovation, reiterates the point by saying, “This is about how technology can help what we do already. The structure of the sector is extremely siloed and so it is difficult to achieve these things. Technology is therefore becoming about analysis and allowing that transparency to come through.”
As well as the breaking down of silos, the PropTech movement is also fuelled by a human desire for changing interactions with a building. As Dan Hughes points out, “If we take an office building, it is no longer a box that we go to work in but an environment and experience that really helps you to do your job. This could be through someone’s better understanding when designing the building for you, the app that you use at work or the sensors in the building which make sure it’s a better experience. Technology should be a tool that is used to make our lives significantly better and more efficient and the building environment itself should be much more responsive and better for letting us do whatever we want to do, whether that’s working or shopping. I think technology and data are going to be significant drivers to the built environment.”
It’s like a car with no gas, without it the car will go nowhere. It’s the same with technology and sustainability, without technology you can’t assess how sustainable a building is, without it it’s only an idea, a promise
The sustainable building: made possible with technology
One area where building owners know that there is significant room for improvement in the building is in the area of sustainability. PropTech offers an effective way to meet the sustainable standards which many people are now calling for. Marion Peyinghaus explains how without technology a sustainable building can never truly be sustainable, “It’s like a car with no gas, without it the car will go nowhere. It’s the same with technology and sustainability, without technology you can’t assess how sustainable a building is, without it it’s only an idea, a promise.”
With landlords now becoming more and more aware of the technology available to them, it is a question of understanding which solutions are out there and how they can really harness them for their building. James Dearsley explains, “Landlords know they have this issue, that they have got to be more responsible and drive energy usage down in their buildings, but they may not know the solution to the problem. For example, sensors, IoT, Big Data analytics and artificial intelligence will all help to solve that problem but they’re not aware of that because they don’t know the PropTech solutions that exist.”
This is about how technology can help what we do already. The structure of the sector is extremely siloed and so it is difficult to achieve these things. Technology is therefore becoming about analysis and allowing that transparency to come through
Real estate: opening up to innovation
The real estate sector is certainly going through a moment of change, opening up to new ways of working to welcome in greater collaboration, not just within the sector but from outside parties. This collaboration seems to be what is ultimately going to propel innovation and create the most change in the sector in the coming years. As James Dearsley says, “It is on both sides of the industry: property and PropTech. It’s a willingness and an understanding that they may have to instigate change within the organisation. This is everything from a technological change to a network based-change, to allow open connectivity with outside companies.”
Thomas Bardawil is of a similar opinion, explaining that the process of working with different stakeholders has taken some time but that the industry is now well on its way to making this a part of the business, “We’re going towards a stage where companies understand what they have and what they still need to learn. It’s time to really start looking outside of the company for further knowledge and deployment of the initiatives that they have started building.”
Whilst exactly how PropTech will manifest itself in the real estate industry is harder to predict, what we can be sure of it that the future looks connected. Human desire for connection is really forcing through change and technology, rather than creating distance, will be used to draw people closer and respond to needs, like sustainability, which were previously unmet. As Dan Hughes sums up, “If we take about the future, so the next 20-30 years, it’s going to be about connectivity. I mean that in all sense of the words, so at the most basic level with broadband and WIFI and more than that connectivity between residents and people.” Watch this space.
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