PropTech & the incorporation of technology in the Real Estate Sector.
Currently, 151 of the 200 main real estate businesses in China have already digitalized their procedures and carry out their transactions online. Over the last few years in Europe and Spain too, we’ve seen the proliferation of PropTech and the digitalization of real estate companies. Sectors such as banking, insurance and asset management have already stepped into business models where the most technological innovation is possible. And the real estate industry has not been left behind in this shift in paradigm – according to a University of Oxford study, over 20,000 PropTech systems currently operate worldwide.
What is PropTech
PropTech takes its meaning from its acronym: property + technology. In other words, the application of tech innovations within the real estate sector. It isn’t exactly a new trend – in the 2000s we saw the growth of property portals for purchase, sale and rental. However, the appearance of big data, the Internet of Things and the collaborative economy are driving a network of companies that act as a support tool for both real estate agents and potential buyers or investors.
The use of technology in the Real Estate sector
It was already a rising trend, but the arrival of Coronavirus gave the definitive boost to incorporation of new technology in real estate, a sector that until recently made its living from the most traditional business model. According to a study carried out by Finnovating, 90% of real estate companies consider that digitalization is relevant in their industry.
Lets take a look at what some of the tech applications in the sector are all about.
Virtual visits
One of the fastest-growing additions because of lockdown has been virtual visits. They not only allow clients to walk through a property via a videocall and without needing to travel, but also mean they can ask the real estate agent questions in real time.
According to figures from Redfin real estate agency, in 2020, 63% of buyers in the US made an offer on a house that they had not visited in person. In Spain, over 6,000 virtual visits have been made so far this year using apps such as Nodalview that already works with more than 10,000 real estate agents. The companies that have obviously grown thanks to virtual visits are those offering 3D visualizations of space.
Big Data
The use of big data is key to boosting the online real estate sector. PropTech needs to combine huge volumes of data. To do this, knowing how to exploit them correctly and make the right use of the Math is vital for achieve optimization in the sector. This refers, for example, to the direct application of algorithms that make smart property valuations and obtain the market value instantly.
Peer to peer o crowdfunding
Participative financing has also led to the growth of opportunities in the real estate sector. For example, wecity headed by Rafael Merry del Val, searches for investment transactions in housing, retail and logistics using private contributions of €1,000. Participative platforms such as StockCrowd IN have managed to reach 40 financed projects for over €10 million in spite of the pandemic.
Ibuyers o instant buyers
Companies like Tiko (that doubled its business in 2020), Brickbest or Housfy (that announced the opening of its platform to all real estate agents in the midst of the pandemic) use technology to make instant offers on houses. Others, such as Clikalia, undertake online purchase and sale with offers in 24 hours to anyone wishing to sell their home and pays them in seven days, commission free. The Italian company, Casavo, announced a new app this year that allows remote visits of property, their valuation and purchase.
Portals and marketplaces
Some have been at the forefront of the sector for years for buying, selling and renting property, such as Fotocasa, Vivados, Idealista or Ruralia. P2P rental platforms like Wimbdu, Airbnb, Rentalia or Bemate have also seen impressive growth over the last few years.
Others such as Unlatch, a French pioneer in digital property sales, is seeking to reinforce its leading position and internationalization by adding new services and tech functions – in just over two years, 250 developers and retailers have started using it in Europe.
PropTech in Spain
Over the last year, the sale of homes in Spain went down by 18% according to the national statistical institute (INE in Spanish). And these figures only reinforce the need for urgent digitalization in the sector.
That said, the PropTech ecosystem in Spain lies in the fourth place in the European rankings, led by the UK. There are currently over 280 companies operating in Spain, according to the map of the sector made by the Proptech.es website, a Savills Aguirre Newman initiative.
In the last year alone, a further 20 companies have joined the system and given its strong growth, it’s very likely that the same amount again will join shortly. They do so in different categories, from big data, peer to peer portals and marketplaces to smart homes or the Internet of Things.
Hamzah Shamma, Head of PropTech Analysis at Savills Aguirre Newman, believes that there isn’t a bubble in the sector and that there’s still plenty of room for tech development. If we take a moment to look at the rapid consumer adaptation to the purchase of property online, it would appear that the sector is moving towards greater digitalization and more channels incorporating new technology.
Synesi analysis: PropTech and residential quality
Applying innovative technology should not be limited to how we buy property. At Synesi, we understand the PropTech concept in a much more ambitious context – a means to create smarter and more efficient homes.
One example would be the incorporation of health apps in the home that monitor the quality of the air or water. Or they could even do urine tests in toilets for the early detection of illnesses. It’s about having smarter spaces that demand less effort from the people who live in them. This means we could spend more time on other things that would, in turn, improve our quality of life.
In conclusion, the concept of PropTech could be another step towards the goal of actively putting our homes and workspaces at our service. So that they are not simply spaces we occupy but instead they help us to look after ourselves.
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