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">Venture capital</span> Form of private-equity financing

Venture capital (VC) is a form of private equity financing that is provided by firms or funds to startup, early-stage, and emerging companies that have been deemed to have high growth potential or which have demonstrated high growth. Venture capital firms or funds invest in these early-stage companies in exchange for equity, or an ownership stake. Venture capitalists take on the risk of financing risky start-ups in the hopes that some of the companies they support will become successful. Because startups face high uncertainty, VC investments have high rates of failure. Start-ups are usually based on an innovative technology or business model and they are usually from high technology industries, such as information technology (IT), clean technology or biotechnology.

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 Rich Barton, Zillow's current CEO, 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">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 190 on the Fortune 500.

Corporate venture capital (CVC) is the investment of corporate funds directly in external startup companies. CVC is defined by the Business Dictionary as the "practice where a large firm takes an equity stake in a small but innovative or specialist firm, to which it may also provide management and marketing expertise; the objective is to gain a specific competitive advantage." Examples of CVCs include GV and Intel Capital.

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 USA, Canada, and the U.K.

Spencer Rascoff is an 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 is on the board of directors of Palantir. Additionally, Rascoff he held the position of Visiting Executive Professor at Harvard Business School where he co-created and co-taught the “Managing Tech Ventures” course.

<span class="mw-page-title-main">Magic Leap</span> American augmented reality hardware manufacturer

Magic Leap, Inc. is an American technology company that released a head-mounted augmented reality display, called Magic Leap One, which superimposes 3D computer-generated imagery over real world objects. It is attempting to construct a light-field chip using silicon photonics.

<span class="mw-page-title-main">Unicorn (finance)</span> Startup company valued at over $1 billion

In business, a unicorn is a startup company valued at over US$1 billion which is privately owned and not listed on a share market. The term was first published in 2013, coined by venture capitalist Aileen Lee, choosing the mythical animal to represent the statistical rarity of such successful ventures.

<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.

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<span class="mw-page-title-main">Cadre (company)</span> New York-based technology company

Cadre is a New York–based financial technology company that provides individuals and institutions direct access to real estate investment properties, including commercial properties. The business and financial press describe it as a platform that "makes the real estate market more like the stock market" by allowing investors to select the individual transactions in which they participate, while investing a smaller amount than would be required to fully fund a transaction. For example, 12 institutional investors participated in a $60 million office building purchase. The firm was named to Forbes' "FinTech50" for 7 years in a row starting in 2016. In 2019, Cadre was the cover story of the Forbes "FinTech 50" issue. In 2018, a partnership with Goldman Sachs was announced through which Goldman Sachs' private wealth clients committed at least $250 million (USD) real estate investments through Cadre. In 2020, Cadre announced its "Direct Access" fund intended to include smaller investors with a $400 million target raise. The company also offers a managed portfolio service and a real estate secondary market, as well as a cash holdings account called "Cadre Cash". The company has announced plans to address racial injustice in the United States by investing at least 10% of its Direct Access fund investments with minority-owned operators and increasing its cash held in black-owned banks.

<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.

Upfront Ventures, formerly known as GRP Partners, is a Santa Monica-based venture capital firm that invests in early-stage technology companies. It is one of the largest venture capital firms in Los Angeles, with $2 billion in total raised funds. Since its founding in 1996, Upfront Ventures has invested in more than 200 companies, with notable exits including Ulta, Overture, PayPal Credit, TrueCar, Disney Digital Network, Kyriba, and Ring.

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.

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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 housekeeping.

Property Finder is an Emirati multinational online property portal, headquartered in the United Arab Emirates. Property Finder has a collective presence in 6 countries across the United Arab Emirates, Egypt, Turkey, Saudi Arabia, Qatar and Bahrain.

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. 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. ↑ https://www.localdigital.gov.uk/fund/proptech-engagement-fund/
  21. ↑ https://www.localdigital.gov.uk/digital-planning/funding/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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