Real estate firms are increasingly putting technology at the forefront of their business operations as the industry adjusts to a brave new world brought about by advancements in property technology (proptech). These are technologies applied in various aspects of the real estate business to generate more value.
A survey by Altus Group of 400 large real estate companies from across the globe found that 53 per cent of commercial real estate companies have already invested in at least one type of property technology firm while more than 40 per cent of firms are using automation for bench-marking and performance analysis, and 16 percent using AI for accounting and property management.
“The combination of new market entrants, new tech and changing demographics have created disruptive models within commercial real estate, this presents new opportunities for organisations which rapidly embrace innovation and proptech,” says Bob Courteau, CEO of Altus Group.
Real estate accounts for 13 percent of world GDP, but productivity growth has been poor in comparison to other industries, due to a lack of innovation, says Dr Bing Wang, associate professor in the practice of real estate and the built environment at Harvard University. But proptech investment has boomed since 2017.
According to CRETech, in 2018, venture capital firms raised a total of US$9.6 billion towards proptech. This was lower compared to US$12.6 billion raised towards the same in 2017, but higher still if you factor out Softbank’s single US$4 billion investment in co-working operator WeWork which skewed the figures significantly.
Growth in proptech has also been propelled by interest from other industries like logistics and e-commerce some of which rely heavily on real estate. At the core of the proptech ideal is the need to change the way property is built, used and managed in order to achieve more operational efficiency and cost reduction. But proptech is also changing the way decisions about buying and selling property is made in real estate markets.