Property technology

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Property technology (also known as by the portmanteaus proptech,PropTech,prop-tech and also known as real estate technology) is used to refer to the application of information technology and platform economics to the real estate industry. [1] [2] Property technology overlaps with financial technology, including uses like online payment and booking systems. [3] [4] Grammatically, the portmanteau "proptech" is formed from two common nouns: "property" and "technology." As such, capitalizing it is grammatically incorrect (just as "email," "romcom," "webinar," and other portmanteaus are all lowercase). [5]

Contents

Overview

Property technology encompasses any application of digital technology or platform economics in the real estate industry. Some examples of property technology include property management using digital dashboards, smart home technology, research and analytics, listing services/tech-enabled brokerages, mobile applications, residential and commercial lending, 3D-modeling for online portals, automation, [6] crowdfunding real estate projects, shared spaces management, [7] as well as organizing, analyzing, and extracting key data from lengthy rental documents. [8]

According to economist Richard Reed, the real estate industry has historically been conservative in its approach to technology, and is slower to adopt new technologies than other industries. [9]

Advances in the residential side of real estate technology encompass some target areas, but generally aim to reduce friction in the purchase, sale, or rental of a property. [10] Areas of focus include finding a home, selling a home, financing a purchase, closing on a property (including valuation, title & escrow, and title insurance), managing a property, managing loans, and mortgage lending software. Many proptech companies have seen a spike in demand for these solutions as the COVID-19 pandemic has jolted management companies from their "business as usual" routine. [11]

History of real estate technology

The history of property technology is often divided into three stages of development. These stages broadly correspond to the period from 1980 to 2000, from 2000 to 2008, and from 2008 to the present. [12] [13]

Digital technology began to be adopted by the real estate industry during the 1980s, when personal computing became more common. Spreadsheet and accounting software like Microsoft Excel began to be used by real estate companies when they were first introduced. [13] Advancements in the area of investment analysis also allowed real estate investors to more accurately assess the value of commercial real estate using larger databases of information. [12]

The second stage began as real estate technology first targeted consumers during the dot-com bubble. At a time when most sales and residential listings were on print media and real estate offices, companies began to focus on moving listings onto the digital media. [14] From 2008 onwards, the widespread availability of high speed internet meant that real estate companies could move more of their data and services online. [13] Real estate databases such as Zillow are an example of information such as geographic data, property valuation and real estate advice being moved online. [15] This has been successful, with companies like Zillow (US), Rightmove (UK) and PriceHubble (CH) being in the top listed companies in their respective markets.

The rise of digital technology during the 21st century has led to the development of a sharing economy, where applications such as ridesharing platforms became common. This also extended to real estate, as websites such as Airbnb and WeWork made it possible for property owners to rent out their property for part of the year. [3]

The COVID-19 accelerated the adoption of information technology in the real estate industry. [16] [17] The pandemic helped to drive e-commerce and resulted in the closure of many traditional retail stores, which has impacted the commercial real estate industry. [18] Blockchain technology has also been used to track property for the purposes of land registration and resolve potential ownership disputes. [19]

Post pandemic, proptech is increasingly influenced by wider societal concerns, such as town planning, and public sector applications. An example of this can be seen in the UK, where the government started a 'proptech innovation fund'. Under the banner of 'proptech' this saw initially investment in citizen involvement solutions. [20] More recent developments see applications in land assessment. [21]

Investment in real estate technology

During the 2010s, numerous property technology startups were created, dealing with aspects of real estate such as design and construction, listings, and transactions. [22] These startups have been supported by seed funding and investment from a range of sources, particularly venture capital funds. [23]

In 2015, investment into property technology grew, with more than $1.7 billion in funding being invested across over 190 deals. This represented a 50% increase year-over-year and a 821% increase in funding compared to 2011. Deal activity also increased, growing 378% with respect to 2011's total, and 12% year-over-year. [24] [ better source needed ] This investment appeared to increase further in 2017 to £8.5 billion. [25] In the first six months of 2019, $12.9 billion of venture capital funding was invested into real-estate technology startups, which surpassed the $12.7 billion of investments in 2017. [26]

Related Research Articles

<span class="mw-page-title-main">Research and development</span> General term for activities in connection with corporate or governmental innovation

Research and development is the set of innovative activities undertaken by corporations or governments in developing new services or products. R&D constitutes the first stage of development of a potential new service or the production process.

Mitsubishi Estate Company, Limited is one of the largest real-estate developers in Japan and is involved in property management and architecture research and design.

<span class="mw-page-title-main">Zillow</span> American real estate website

Zillow Group, Inc., or simply Zillow, is an American tech real-estate marketplace company that was founded in 2006 by co-executive chairmen Rich Barton and Lloyd Frink, former Microsoft executives and founders of Microsoft spin-off Expedia; Spencer Rascoff, a co-founder of Hotwire.com; David Beitel, Zillow's current chief technology officer; and Kristin Acker, Zillow's current technology leadership advisor.

<span class="mw-page-title-main">Box, Inc.</span> Cloud content management program

Box, Inc. is a public company based in Redwood City, California. It develops and markets cloud-based content management, collaboration, and file sharing tools for businesses. Box was founded in 2005 by Aaron Levie and Dylan Smith. Initially, it focused on consumers, but around 2009 and 2010 Box pivoted to focus on business users. The company raised about $500 million over numerous funding rounds before going public in 2015. Its software allows users to store and manage files in an online folder system accessible from any device. Users can then comment on the files, share them, apply workflows, and implement security and governance policies.

<span class="mw-page-title-main">Accel (company)</span> Venture capital firm

Accel, formerly known as Accel Partners, is an American venture capital firm. Accel works with startups in seed, early and growth-stage investments. The company has offices in Palo Alto, California and San Francisco, California, with additional operating funds in London, India and China.

<span class="mw-page-title-main">JLL (company)</span> Real estate consultancy firm

Jones Lang LaSalle Incorporated (JLL) is a global real estate services company, founded in the United Kingdom with offices in 80 countries. The company also provides investment management services worldwide, including services to institutional and retail investors, and to high-net-worth individuals, as well as technology products through JLL Technologies, and VC investments via its PropTech fund, JLL Spark. The company is ranked 193 on the Fortune 500.

Ben Kinney is an entrepreneur, professional speaker, author, real estate agent, brokerage owner, and co-founder of PLACE, Inc. that started in Bellingham, Washington and now operates across the U.S., Canada, and the U.K.

Spencer Rascoff is an American entrepreneur and businessman. He was the co-founder and former chief executive officer of Zillow Group, as well as one of the co-founders of Hotwire.com. Rascoff was on the board of directors of Palantir. Additionally, Rascoff held the position of Visiting Executive Professor at Harvard Business School where he co-created and co-taught the “Managing Tech Ventures” course.

Fintech, a portmanteau of "financial technology", refers to the application of innovative technologies to products and services in the financial industry. This broad term encompasses a wide array of technological advancements in financial services, including mobile banking, online lending platforms, digital payment systems, robo-advisors, and blockchain-based applications such as cryptocurrencies. Fintech companies include both startups and established technology and financial firms that aim to improve, complement, or replace traditional financial services.

<span class="mw-page-title-main">Patrizia SE</span> Investment manager in the real estate market across Europe

Patrizia SE has been active as an investment manager in the real estate market across Europe for more than 38 years. Based in Augsburg, Germany, the company is listed on the Frankfurt stock exchange and, among others, is a member of the SDAX and MSCI World Small Cap Index.

Financial technology is an industry composed of companies that use technology to offer financial services. These companies operate in insurance, asset management and payment, and numerous other industries. FinTech has emerged as a relatively new industry in India in the past few years. The Indian market has witnessed massive investments in various sectors adopting FinTech, which has been driven partly by the robust and effective government reforms that are pushing the country towards a digital economy. It has also been aided by the growing internet and smartphone penetration, leading to the adoption of digital technologies and the rise of FinTech in the country

<span class="mw-page-title-main">Ryan Williams (entrepreneur)</span> Real estate technology entrepreneur

Ryan Williams is a technology entrepreneur best known as the CEO and founder of Cadre, a New York-based technology company. He was named to Fortune's "40 under 40" list for 2019, Forbes' "30 under 30" list for 2018, "Crain’s 40 under 40" list for 2017, is one of Commercial Observer’s "30 under 30" and has been profiled in Forbes, Ivy, and other publications. In February 2019 he was profiled and on the cover of Forbes Magazine in the "FinTech 50" issue; in 2022 he was a Business Insider "Top 100 Global Leaders Changing Business."

HomeLight is a real estate technology company founded in San Francisco, CA and based in Scottsdale, AZ.

<span class="mw-page-title-main">Fifth Wall (firm)</span>

Fifth Wall is a venture capital firm founded in 2016 by Brendan F. Wallace and Brad Greiwe. It manages the largest fund specialized in real estate technology The firm's name refers to a fifth wall of technology it provides in addition to the four physical walls of a building. It is part of an emerging category of "PropTech" investors. Major financial backers include large real estate industry companies that agree to be matched with the products and services of the firm's portfolio of start-up companies. The firm has separate funds for investments in emerging retail brands and climate technology to help real-estate companies reduce carbon emissions from their buildings.

Deep technology or hard tech is a classification of organization, or more typically startup company, with the expressed objective of providing technology solutions based on substantial scientific or engineering challenges. They present challenges requiring lengthy research and development, and large capital investment before successful commercialization. Their primary risk is technical risk, while market risk is often significantly lower due to the clear potential value of the solution to society. The underlying scientific or engineering problems being solved by deep tech and hard tech companies generate valuable intellectual property and are hard to reproduce.

Andrew Baum is a British academic. He is Emeritus Professor and former professor of Practice at the Saïd Business School, University of Oxford. His research is primarily focused on property funds, development and technology, property finance and international real estate investment.

<span class="mw-page-title-main">Fusion LA</span> Israeli startup accelerator

Fusion VC is a venture capital firm and an accelerator for Israeli startups in the United States. It was founded in 2017 and is headquartered in the United States with offices in Israel.

Opendoor Technologies Inc. is an online company that buys and sells residential real estate. Headquartered in San Francisco, it makes instant cash offers on homes through an online process, makes repairs on the properties it purchases and relists them for sale. It also provides mobile application-based home buying services along with financing. As of November 2021, the company operates in 44 markets in the US.

Brendan F. Wallace is an American businessman and investor. He is cofounder and managing partner of the venture capital firm Fifth Wall. He also cofounded career networking platform Identified, Inc. and the ridesharing service Cabify, and currently sits on Cabify's board of advisors.

NoBroker is a Bangalore-based brokerage-free proptech company that provides all sorts of real estate services under a marketplace, which includes buying, renting, packers & movers, and home services.

References

  1. ↑ Guttman, Jonathan (2015). "The Impending Opportunity In Real Estate Technology". TechCrunch. Retrieved 2018-10-10.
  2. ↑ Shaw, Joe (2019). "Platform Real Estate: theory and practice of new real estate markets". Urban Geography . 41 (8). doi:10.1080/02723638.2018.1524653. S2CID   150017205.
  3. 1 2 Liaw, K. Thomas (2021-06-14). The Routledge Handbook of FinTech. Routledge. ISBN   978-1-000-37573-2.
  4. ↑ Saull, A. (21 May 2020). "Can digital technologies speed up real estate transactions? - ORA - Oxford University Research Archive". Journal of Property Investment and Finance. 38 (4). doi:10.1108/JPIF-09-2019-0131. S2CID   219509584.
  5. ↑ "Associated Press Stylebook". Associated Press Stylebook. Retrieved 2023-09-28.
  6. ↑ Fields, Desiree (2018-02-02). "Automated Landlord". City Road Podcast (Podcast). Retrieved 2018-03-04.
  7. ↑ Emig, Josh (2016-08-14). "Buildings are Giant Computers – Product Research at WeWork". WeWork Blog. Retrieved 2017-12-13.
  8. ↑ Beaumont, Perry (2019-09-10). Digital Finance: Big Data, Start-ups, and the Future of Financial Services. Routledge. ISBN   978-0-429-62667-8.
  9. ↑ Reed, Richard (2021-03-30). Property Development. Routledge. ISBN   978-1-000-35994-7.
  10. ↑ "Tech firms disrupt the property market". The Economist. 2018-09-13. ISSN   0013-0613 . Retrieved 2019-01-27.
  11. ↑ "Proptech and the pandemic: Will coronavirus change how real estate works?". The Real Deal. 2018-09-13. Retrieved 2020-06-12.
  12. 1 2 Jones, Colin A.; Trevillion, Edward (2022-08-18). Real Estate Investment: Theory and Practice. Springer Nature. p. 285. ISBN   978-3-031-00968-6.
  13. 1 2 3 Reed, Richard (2021-03-30). Property Development. Routledge. ISBN   978-1-000-35994-7.
  14. ↑ Voices, Valley. "Modernizing Real Estate: The Property Tech Opportunity". Forbes. Retrieved 2020-07-23.
  15. ↑ Soules, Matthew (2021-05-04). Icebergs, Zombies, and the Ultra-Thin: Architecture and Capitalism in the 21st Century. Chronicle Books. p. 205. ISBN   978-1-64896-029-1.
  16. ↑ Forlee, Ron (2022-07-05). Real Estate Development Strategy for Investors. John Wiley & Sons. p. 219. ISBN   978-1-119-88732-4.
  17. ↑ Rishi, Sanjay; Breslau, Benjamin; Miscovich, Peter (2021-10-29). The Workplace You Need Now: Shaping Spaces for the Future of Work. John Wiley & Sons. p. 146. ISBN   978-1-119-81512-9.
  18. ↑ Piyush, Tiwari; T, Miao, Julie (2022-03-08). A Research Agenda for Real Estate. Edward Elgar Publishing. pp. 25–30. ISBN   978-1-83910-393-3.{{cite book}}: CS1 maint: multiple names: authors list (link)
  19. ↑ Jones, Colin A.; Trevillion, Edward (2022-08-18). Real Estate Investment: Theory and Practice. Springer Nature. pp. 288–290. ISBN   978-3-031-00968-6.
  20. ↑ "PropTech Engagement Fund Round 1".
  21. ↑ "Digital Planning Programme Funding 2023".
  22. ↑ "Where will the new wave of proptech companies take us?". Market Business News. 2020-07-17. Retrieved 2020-07-23.
  23. ↑ Hourie, Ilya (2022-04-19). "Proptech VC Funding Hits Record $4B in First Quarter". The Real Deal New York. Retrieved 2022-10-06.
  24. ↑ "Global Funding To Real Estate Tech Explodes, With Startups Raising $1.7B In 2015". CB Insights – Blog. 2016-02-17. Retrieved 2016-10-20.
  25. ↑ "Global funding for proptech sector grew to £8.5bn in 2017". Property Week. 2018. Retrieved 2018-10-11.
  26. ↑ Putzier, Peter Grant and Konrad (2 July 2019). "Commercial Property Joins Tech Revolution as Spending Soars". Wall Street Journal. Retrieved 2019-08-18.
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