The PropTech sector has grown at a CAGR of over 40% for the past 7 years. A booming global property market might just be what it needed to explode.
The purchase of a piece of real estate has almost always been a rather arduous affair. It often turns out to be expensive and time-confusing – especially in aspects such as compliance inspections, property zoning and seemingly endless contracts and affidavits. But, that technology upends industry is now a fact well known.
The world of real estate has seen a boom in the technology-boosted category of websites, products and services – ‘PropTech’ – designed to “streamline and modernise the cumbersome process of browsing, buying, and building real estate.” According to Statista estimates, the total value of capital raised by PropTech firms stands at about US $20 billion, with Airbnb the top funded real estate tech firm globally.
Although the COVID crisis proved a major dent to the global real estate industry back in 2020, with the recovery of 2021 offering hot housing markets and soaring prices around the world, the PropTech sector looks primed for further development.
Research from consulting firm PricewaterhouseCoopers in 2020 revealed that across 1000 interviewed heads from investors, property firms and real estate service companies, 64% of the businesses invested in property start-ups one way or another. Here are some of the trends to keep in mind:
- Rising demand for virtual home tours: The boom of virtual home tours has boomed amid the pandemic and other social distancing regulations. US-based real estate giant Zillow, for example, recently upgraded Zillow 3D, adding features that create interactive floor plans by integrating it with machine learning modules.
The ML feature is designed to give prospective buyers both an accurate depiction of floor plans and a glimpse of the layout.
Agents have started greatly benefiting from this growing trend, with listings marked as ‘saved’ rising over 32% for houses with a virtual walkthrough. ExplodingTopics reports:
“This is not a fad: 72% of agents say they will continue to offer virtual tours after the pandemic ends. So whether via a virtual reality headset or a mobile device, it looks like virtual home tours (and home buying) is here to stay.”
- E-signing, the new norm: Fuelled by the pandemic, digital contracts for real estate is set to become the mainstream solution soon, with the global digital signature market set to grow at an average 26.3% CAGR from 2021 through 2027, expected to reach $5 billion by 2025 and almost $24 billion by 2030.
The major reasons for this outrageous growth projection are (a) flexibility and (b) insecurity; and with strategies to build integrations with cloud-based technologies to facilitate document exchanges and signings already underway, it’s only set to expand.
San Francisco-based start-upHelloSign, for example, was recently acquired by DropBox to ‘expand workflow and e-signature market share’. With Dropbox thus entering the market and a cloud platform set to provide security and simplicity to its users, the e-signature surge – having already disrupted the virtual notarisation process – is only set to expand further.
Smart contracts via the blockchain is set to be a trend to keep an eye on for the future as well, withconsulting giant Deloitte naming blockchain the ‘next big thing’ in commercial real estate.
- Proprietary advertising solutions: New digital advertising platforms trying to increase the ease and efficiency in real estate advertising are aiming to disrupt the real estate space and provide custom solutions for clients.
US-based Nextdoor, the neighbourhood social networking app, builds local communities for users to interact with others and allows local agents to sell homes and put-up listings – allowing them to connect with local homeowners and buyers and build community presence.
With almost 300,000 listings in 11 countries, it continues to build hyper-localised community ad platforms.
- Property management and automation: Owing to expanding platforms, multi-family property management apps can provide tools and support that adapt to property owners’ needs.
Knock CRM, for example, automates much of the grunt work in property management, providing property managers greater flexibility to manage larger client portfolios. They report a 20% increase in lead-to-lease rates when new users switch over to their platform.
The property management market is expected to reach nearly $24 billion by 2026.