What is proptech?

Asked “what is proptech?”, pun­ters could be for­giv­en for think­ing it some shiny new smart­phone phe­nom­e­non, all giz­mos and gad­gets. They would be wrong: it is actu­al­ly all about them.

For a start, proptech already has pedi­gree. Res­i­den­tial behe­moths Right­move and Zoopla were pio­neer­ing progress ten years ago.

Nor is tech­nol­o­gy the whole sto­ry. It is plain­ly impor­tant to proptech – the clue is in the name – but there is more to mar­ket trans­for­ma­tion than the minia­tur­i­sa­tion of hard­ware and pro­lif­er­a­tion of sen­sors. Machine-learn­ing and cloud com­put­ing are enabling, not defin­ing.

For all the hype, proptech is often under­sold, argues Alex Edds, direc­tor of inno­va­tion, at JLL UK. “On the face of it, proptech is the dig­i­tal­i­sa­tion of real estate, but beneath the sur­face there is so much more to it than that. At its core, proptech address­es fun­da­men­tal ques­tions of how we expe­ri­ence and extract val­ue from real estate,” he says.

Where­as val­ue extrac­tion has seen an influx of ven­ture cap­i­tal and pri­vate equi­ty into the sec­tor, the focus on expe­ri­ence has opened the door to cus­tomer expec­ta­tions.

Mr Edds says: “Proptech is a reflec­tion of the real­i­sa­tion that the con­sumer expe­ri­ence needs to be at the very heart of real estate. Where the end-user was once for­got­ten when it came to deci­sion-mak­ing, proptech is turn­ing this on its head. Proptech is shift­ing the bal­ance of pow­er in real estate.”

Data is a gamechanger

Not sur­pris­ing­ly, res­i­den­tial was an ear­ly adopter of proptech, as sim­ple search­ing and shop­ping func­tions start­ed to open up online prop­er­ty port­fo­lios to prospec­tive buy­ers and renters.

Fast for­ward to 2019 and a “walk through” is now on the wish list, mak­ing aug­ment­ed real­i­ty (AR) almost a must-have invest­ment for devel­op­ers, accord­ing to Helen Bar­low, sales and mar­ket­ing direc­tor at Sev­en­Cap­i­tal. “AR is par­tic­u­lar­ly ben­e­fi­cial for off-plan devel­op­ments, where a poten­tial buy­er needs to ‘view’ the prop­er­ty to feel con­fi­dent in what they’re plan­ning to pur­chase, before it’s actu­al­ly built,” she says.

Also fast on to the orig­i­nal proptech scene was man­age­ment and engage­ment app Mall­comm, now accessed by more than 250,000 users in 250 loca­tions, across Europe and Amer­i­ca.

In the dig­i­tal age of the inter­net of things, con­sumers expect a lot more from their expe­ri­ence of the phys­i­cal world, says Mall­comm chief exec­u­tive and founder Michelle Bux­ton.

“The con­nect­ed con­sumer wants to con­trol their expe­ri­ence of real estate: how they park, how they access the build­ing, con­trol the tem­per­a­ture, light­ing, air con­di­tion­ing and util­i­ties, how they are reward­ed for pur­chase and get tai­lored offers, book ser­vices and pay rent, plus source com­mu­ni­ty news and infor­ma­tion. They now expect it all at their fin­ger­tips,” she says.

Accord­ing to Ms Bux­ton, data is the game-chang­er, not just as col­lect­ed from con­sumer insights, but inte­grat­ed with mar­ket, retail­er, build­ing and occu­pi­er data. As a result, the mod­ern prop­er­ty mantra is no longer “loca­tion, loca­tion, loca­tion”, she con­tends, but “loca­tion, expe­ri­ence, ana­lyt­ics”.

Sec­tor growth oppor­tu­ni­ties are even attract­ing the atten­tion of gov­ern­ment, flex­ing its own dig­i­tal mus­cle in sup­port. Call­ing for a “dig­i­tal rev­o­lu­tion in the prop­er­ty sec­tor”, UK hous­ing min­is­ter Esther McVey announced plans to release data held by local bod­ies to help UK proptech thrive.

The chal­lenge for the prop­er­ty sec­tor, how­ev­er, is to mobilise its tech­nol­o­gy strat­e­gy quick­ly enough to man­age change, warns Ms Bux­ton. “Com­pared to oth­er sec­tors, real estate is a dinosaur when it comes to evo­lu­tion, but dis­rup­tion has the sec­tor in its grips and there is gen­uine pan­ic,” she says.

Smart homes and social good

The impact of tech­nol­o­gy on real estate, how­ev­er, takes many forms, with proptech a poten­tial force for envi­ron­men­tal and social good, tack­ling cli­mate risk and pub­lic health.

So-called active build­ings, for instance, inte­grate renew­able tech­nolo­gies for effi­cien­cy, with dig­i­tal dash­boards that mon­i­tor ener­gy con­ver­sion, stor­age and usage, to pro­vide prop­er­ty man­agers and home­own­ers greater con­trol.

The sus­tain­abil­i­ty ben­e­fits are mul­ti­ple, says Pro­fes­sor Dave Wors­ley, direc­tor of the Active Build­ing Cen­tre. “Proptech in active build­ings empow­ers home­own­ers and ten­ants through cre­at­ing ener­gy self-suf­fi­cient struc­tures. Fur­ther ben­e­fits to soci­ety include address­ing fuel-pover­ty con­cerns, improv­ing air qual­i­ty through reduced emis­sions and encour­ag­ing adop­tion of elec­tric vehi­cles.”

In York­shire, Leeds City Coun­cil and the City of York are joint­ly har­ness­ing the help of proptech to boost the health and wel­fare of local hous­ing ten­ants. Backed by Inno­vate UK, the scheme seeks to improve liv­ing stan­dards and air qual­i­ty, by mon­i­tor­ing humid­i­ty and detect­ing damp in homes.

Proptech is prov­ing a boon for belea­guered prop­er­ty agents, under pres­sure to com­ply with fast-evolv­ing leg­is­la­tion on crime pre­ven­tion and secu­ri­ty. Strict iden­ti­ty checks, for exam­ple, help com­bat mon­ey laun­der­ing and fraud, says Rhys David, chief exec­u­tive of Credas, an iden­ti­ty ver­i­fi­ca­tion tool that uses facial recog­ni­tion to con­firm buy­ers and renters are who they say they are.

“The reg­u­la­tor is very active in issu­ing new reg­u­la­tions, but equal­ly active in enforc­ing them via fines and penal­ties. We are like­ly to seea lot of regtech-proptech crossover in the com­ing years, to pro­vide solu­tions to the chang­ing legal land­scape,” he says.

From analogue to digital

Ulti­mate­ly, proptech rep­re­sents part of property’s grand dig­i­tal trans­for­ma­tion, which calls for the sec­tor to embrace skills train­ing and cul­ture change, as much as tech­nol­o­gy shift and evolv­ing con­sumer demands.

For­ward is the only way, con­cludes James Dears­ley, co-founder of glob­al prop­er­ty and proptech plat­form for busi­ness Unis­su. “No oth­er indus­try that has gone through a dig­i­tal trans­for­ma­tion has ever gone back,” he says. “Just like the music and auto­mo­bile indus­tries, real estate is chang­ing for­ev­er.”

The future is writ­ten, the future is dig­i­tal. “We’re wit­ness­ing the dig­i­tal­i­sa­tion of a large­ly ana­logue indus­try and the oppor­tu­ni­ties it presents are mas­sive. Con­tin­ued growth is inevitable. This is not a fad or spec­u­la­tion of future growth. Proptech is here and here to stay,” Mr Edds con­cludes.  

Data is a gamechanger

Smart homes and social good

From analogue to digital