The term “PropTech” comes from the union of the English words “property” and “technology” and identifies a business model where digital technologies are applied to real estate.
Specifically, by PropTech, we refer to the entire market involving those companies (mostly StartUp) that create and propose Tools and technological solutions that can transform and advance the real estate industry, thanks to innovative digital technology that is truly intelligent and serves both business professionals and the end consumer.
The entire Real Estate industry, which has tended to be very slow to change and embrace new things, has now, thanks to PropTech, entered a phase of profound transformation, encompassing every aspect of it-a phase that we might call evolution.
- PropTech Companies: Innovation at the Service of Real Estate
- PropTech in concrete terms
- PropTech is changing the Real Estate Market
- From product to service, the digitization of business
- Digitization of objects
- Digitization of processes
- PropTech and Open Innovation
- PropTech: Investing in the Real Estate of the Future.
Investors, builders, managers, intermediaries, and the end consumer are involved and benefit: from design to construction to buying and selling and maintenance, every single aspect is improved through technological and digital solutions.
- For landlords it means more construction efficiency and lower implementation costs.
- For managers, there is finally the possibility of agile, centralized management.
- For Intermediaries, every procedure can be simplified and automated.
- For the end user in a myriad of cutting-edge services that improve daily life, work, leisure, and many other aspects…
PropTech is transforming the real estate market from “analog” to “digital” and propelling it into the future, a future that is already concrete and one of the most viable and solid investment opportunities today.
PropTech Companies: Innovation at the Service of Real Estate
PropTech companies, as we anticipated, are able to develop smart technology solutions that can bring improvements to every aspect of real estate.
They stand out for their strong ability to innovate in the market through the creation of solutions that would have been “science fiction” just a few years ago: they develop disruptive solutions that enable not only the modernization of processes, but also the creation of new business models. These are young companies, fully immersed in the digital age, able to adapt quickly to change and fully meet the needs of ownership and users.
It is a buzzing sector, and in every part of the world there are active StartUp and established PropTech companies that are indispensable partners for large investors and real estate managers looking for modern, efficient and scalable solutions.
All are united by theuse of enabling technology, which brings operational benefits to every professional involved and facilitates the user experience of the end consumer, these are the different areas in which PropTech companies make their valuable contributions:
Technological solutions replace technical figures in different sectors. For each area of Real Estate, automated services can be offered that manage aspects such as land registries, property documentation, all phases of consulting, property presentation, and marketing.
Real Estate FinTech
Related to everything from buying and selling to collecting the documents needed to finalize the transaction.
It also includes portfolio management and activities such as brokerage, auctions, and investments.
In these areas, technology is making operations easier and more efficient, as well as creating innovative possibilities, such as services for financing real estate projects through crowdfunding sites (also open to individuals and with low entry fees).
Smart Real Estate
Solutions that broaden functionality and facilitate property management through the use of advanced digital technology platforms and systems that make the building “smart” and able, for example, to optimize consumption or give advance warning of the need for maintenance.
It includes everything related to the use of shared real estate, such as co-living and coworking. Smart technology allows for optimal access management and centralized and remote control of many aspects (consumption, opening of gates, space availability) with lower costs.
It is specific to the construction industry and mainly concerns the design and construction phases of real estate, where technology provides critical support in reducing project processing time and predicting investment costs/revenues.
PropTech in concrete terms
To further understand the contribution of PropTech companies to the real estate market, here are some application examples:
Brokerage services: they facilitate the relationship between seller and buyer and consist of platforms to match supply and demand. We could consider them as digital real estate agencies that take care of the whole part of analyzing and viewing the apartment (until a few years ago this was only possible in person), thus freeing up time and resources for both parties involved and bringing them to the meeting already with a clear idea.
There are also fully digital solutions, where buying and selling is entirely manageable online.
Services to facilitate real estate market processes: this includes those software programs that enable property management or capable of estimating, through powerful artificial intelligence algorithms, the value of a real estate property with accurate predictions of value after renovation or modernization.
Particularly interesting are applications that make it possible to view a property from a distance, even if it does not yet exist: by taking advantage of augmented reality, it is possible to “anticipate the experience and let people experience what it will be like.”
Services that embrace new ways of living, working and dwelling: this includes shared housing, student halls, coworking. PropTech solutions have made a vital contribution to the spread of these models by automating access control, making it possible to manage every common element, and facilitating the use of spaces and services (easily bookable by smartphone), all while ensuring maximum security.
It is probably the most attractive area for investors because it meets a rapidly growing market demand, and costs, precisely because of PropTech solutions, are being lowered. In addition, these technologies make the facilities easily scalable to meet the changing needs typical of an uncertain market conjuncture. And thanks to the technology platform, services can be integrated to diversify and increase revenue sources.
PropTech is changing the Real Estate Market
As we have seen, Proptech is aboutapplying digital technology to the real estate industry in order to make the whole process, from design and construction to brokerage, management and maintenance, more functional and efficient.
The many innovative solutions available are giving a big boost to real estate and the professionals who work in it: In recent years, the role of PropTech has been fundamental in giving a powerful boost to the entire real estate sector, which, after a period of deep crisis, is now finally finding a way to renew itself and offer services that respond perfectly to the needs of a dynamic market, thus returning to being a profitable sector for investors.
Thanks to PropTech, there has been a shift in thinking and gear that has initiated the development of more modern solutions that better facilitate and meet people’s needs.
Our lifestyles have changed thanks to digital technology, which accompanies us in everything we do and has increased the possibilities available to us, made productive sectors more competitive, and become an ally in our everyday lives to fulfill needs and desires.
PropTech is also bringing this change to the Real Estate sector, where the application benefits of smart digital technology impact on multiple fronts:
- Facilitation in the delivery of activities related to design and implementation;
- Document simplification and automated procedures for the contracting and sales stages;
- Optimized management of maintenance aspects (and lower costs);
- increased revenue opportunities for space managers (particularly for coworking or co-living models) due to greater availability of deliverable services;
- presentation of real estate through augmented reality, even before a single brick is laid;
- management of ESG (environmental, social and governance) parameters, key indicators of environmental, social, and governance commitment that-now more than ever-play a crucial role in developing sustainable solutions and guiding investors’ choices toward responsible partners;
- the modernization of maps and the use of artificial intelligence makes it possible to assign an accurate value to the property in an automated way (taking into account not only the location but also all the services and elements that affect the value);
- Advanced models of risk analysis and financial forecasting;
- use of big data to better understand consumer needs and desires, thus proposing fully satisfactory solutions;
- Automated and fully remotely manageable access control systems that facilitate the spread of shared living and working spaces;
- BMS (Building Management System): systems for managing the resources and services in a building, such as temperature control, video surveillance, access tracking, fire alarm system.
Technological innovation runs fast, and for real estate operators, PropTech represents a unique opportunity to secure a significant competitive advantage.
From product to service, the digitization of business
By adopting innovative technologies, processes and services can be digitized, which leads to greater efficiency of the entire organization and a simpler and more immediate relationship with employees and users.
It is an epochal change in the way we work (and live), already underway and increasingly entrenched.
The solutions developed by PropTech companies play an enabling function that also enables the real estate sector to adopt business models that make it easier to offer services and respond perfectly to new market demands.
It is based on the concept of “subscription” and best accommodates the needs of a large number of consumers today who seek flexible solutions and need to use a good/service for N times or for a defined period of time, even a very short one. Thus, offices, meeting rooms, and even housing solutions can be booked for only the time they are needed.
Efficiency of Delivery to Service
Having come into the market by storm in recent years, this solution makes it possible to meet consumer demand in a very short time.
It is increasingly in demand by people, who have become accustomed to the ability to buy what they need quickly and easily.
The new generations (and others) live symbiotically with their digital devices, and they have become the gateway for quick access to every need.
Flexibility of Delivery to Service
Flexibility is a key aspect of being able to meet the user’s changing needs and keep them as customers.
Being able to nimbly modify the possibilities offered, meeting new market demands, broadens the chances of success.
Every physical aspect that is digitized (we will see the potential of IoT in detail in a moment), leads to incredible advantages from a structural management point of view, with less need for hardware and manpower for installation, a reduction in consumption costs, and cheaper and more preventive maintenance: it will be the devices themselves that will signal the need for interventions (such as replacing dead batteries) or promptly warn of a malfunction.
A winning real estate model that encapsulates all the benefits of business digitization: coworking
The real estate investment that best encapsulates and expresses all the models seen is definitely Coworking.
Users have the flexibility to choose only the period they need, being able to decide between number of inputs or time frame(subscription model).
The request for spaces is made through a digital platform and there is immediate availability and reservation, even being able to reserve a space today for today and using the smartphone to access it independently(efficiency of supply-to-service).
The available space can be modulated to meet specific requests, such as dividing and reserving an area for a certain number of people. In addition, every other service, such as the meeting room, is easily accessible through the application, and services can be integrated based on specific requests(flexibility of service delivery).
For those who manage these spaces, it is vital to have centralized control of every aspect and to be able to act promptly when needed. With the fundamental contribution of technology, it is possible to maximize buildingoccupancy while maintaining stable business flow even in decidedly volatile environments.
Knowing, for example, that the coworking entrance launch has low batteries allows you to avoid the unfortunate situation of users not being able to access or being locked in(maintenance).
A reliable PropTech Partner enables the design of innovative and successful coworking facilities that encapsulate everything you just saw, ensuring a simple and satisfying experience for the end user and easy, comprehensive and efficient management for the property.
Digitization of objects
PropTech’s great success in building management undoubtedly comes through the Internet of Things (IoT).
This term refers to smart objects, which are now prevalent in every sphere of life, such as smartphones, home automation, wireless solutions, and access control.
While in its early stages PropTech was mainly concerned with digital platforms that facilitated the buying and selling of real estate, such as online real estate portals and specialized sites, now that these realities are established and their innovative phase is waning, the focus is shifting to solutions that, through the use of Smart Objects, make the building smart and easily manageable in every aspect, even remotely.
The characteristics of these objects that make them “smart” vary according to context, and the main ones are:
- connection, which is essential for receiving and transmitting information;
- operating status: important for preventing problems and planning maintenance;
- Location: indicates where the object is physically located;
- sensing: measurement of variables such as temperature and pollution;
- metering: measurement of variables such as household consumption (water, gas, electricity);
- interaction: ability to take autonomous action to perform a certain action (e.g., report a malfunction and close the gas valve in case of a leak);
- remote management: with internet connection these objects allow remote control (e.g. in the private sphere activate the air conditioner before arriving home) and centralized management of different elements (e.g. in the management of a shared space, such as a co-living, always have a clear picture of the efficiency of the system and the spaces occupied and available).
Applying the digital technological power present today to objects used in everyday life opens the door to endless possibilities and, in addition to enabling every person to have access to vital possibilities (-literally-, just think of the smartwatch that can contact the emergency service in case of health problems), it crucially affects the competitiveness of businesses and makes services, both private and public, more efficient.
Already, every sphere is pervaded by smart objects that offer a better experience:
- in the car assist the driver with smart maps that in real time can alert the driver to obstacles along the way and facilitate rescue efforts;
- in homes improve comfort and enable remote management, as well as smart, automated solutions that can reduce energy consumption;
- in cities contribute to the efficient management of services such as parking, transportation, and lighting;
- in agriculture make it possible to monitor parameters and manage resources so as to minimize environmental impact;
- in industry enable more effective management of machinery and the entire production process that maximizes productivity while reducing and anticipating problems;
- in real estate facilitate maintenance work, manage access, allow centralized management of shared spaces and additional services, and enable the creation of customized solutions with reduced consumption, for a positive impact on end-consumer spending (especially important today) and on the environment, with less pollution.
In the Real Estate market, digital technology and smart objects have a significant impact especially in the area of access control, where great improvements in operation and control are achieved, with significant cost reductions:
- 75% less hardware installed,
- 80% less labor costs for system installation,
- 70% less energy consumption,
- 50% less maintenance costs,
to find out in detail how these excellent results are possible, you can read our in-depth article:
By 2030, the value of the IoT application market is estimated to grow exponentially, involving the real estate sector in particular:
- in theevolution of workspace, with Smart Office and Coworking solutions;
- in Co-living, Cohousing, Social Housing and Senior Housing residential projects;
- In Personal Care services.
Digitization of processes
Digitizing processes means using digital technologies to optimize various processes so that they are streamlined, easily adaptable, and involve all aspects, including interaction with the end consumer (from whose analysis valuable feedback can be drawn to constantly improve).
Operating from this perspective, in which digital information and data nurture and advance the entire system, leads to fewer errors and consequently fewer “remedial” interventions, thus freeing up time that business figures can direct to higher-value activities.
This also includes all those processes, such as access management or surveillance, that can be digitized and managed remotely, with less expenditure of resources and the cancellation of the constraint of presence.
The digitization of processes has a key impact in the great response that shared residential and business solutions are getting in the real estate market, as they can make the user autonomous in booking, accessing and using flexible spaces through intuitive digital applications.
PropTech and Open Innovation
Open Innovation is a strategic approach that releases companies from the exclusive use of internal resources and instead opens them up to the use of solutions and tools that come from outside, particularly from Startups, Research Institutes, Universities, Suppliers and Consultants.
It is a paradigm first defined in 2003 by Henry Chesbrough in his book “Open Innovation: The New Imperative for Creating and Profiting from Technology,” published by Harvard Business School Press.
This book was highlighting how, due to globalization, research and development processes were becoming increasingly risky.
Today they are even more so, because of the enormous speed with which ideas spread and the scarcity of figures with high levels of expertise and talent, which are increasingly coveted globally (and expensive).
On the contrary, taking advantage of Open Innovation to integrate innovations developed by others within one’s own business model allows the company to gain numerous benefits:
- nullify research and development risks that do not lead to results or are immediately copied;
- Reduce research and development costs by adopting reliable solutions already validated by others;
- have a wide range of skills and solutions at their disposal, from which to choose the most suitable and profitable for their business model;
- Identify the latest technological solutions to develop new opportunities.
In this area, too, we are facing a turning point in business management, especially for processes and work figures: in today’s market, being open to collaboration with young technological realities, born from the ideas of individuals who live and know the world as it is today, not only allows one to keep up with the needs of the market, but also to anticipate them: a vital condition for pursuing business continuity and success.
From what we have read so far, it becomes evident how PropTech realities are able to make an outstanding contribution to the development of the real estate sector, especially working alongside large investors and builders and enabling them to make the evolutionary leap necessary to adapt to the users of the real estate market, which today-almost demands-high-tech, flexible, automated and secure solutions.
An exemplary case of the success of a PropTech startup is Sofia Locks: after developing a hi-tech system for access management and control, it was acquired by the multinational ISEO, which thus brought this innovative digital technology in-house and at the same time provides the conditions for new development possibilities and even more impactful deployment in the Real Estate market.
Here is a detailed history of Sofia Locks and its acquisition by ISEO: https://www.proptech360.it/startup/proptech-2021-storia-di-sofia-locks-la-startup-che-ha-fatto-exit-con-il-gruppo-iseo/
PropTech: Investing in the Real Estate of the Future.
Well, we have seen all the aspects of PropTech and its indispensable role in innovating the world of Real Estate.
It is critical to understand that the evolution of the entire real estate industry, initiated and supported by PropTech companies and the enormous technological power developed, is not something that awaits us in the future, but rather a reality already established and present today.
For investors, builders and managers, it represents an opportunity not to be missed, not only because it is the high road to meeting market demand, but mainly because the risk is to suddenly find oneself “obsolete” and cut off – completely – from the market.
The present is a clear indicator of how the integration of digital devices into our lives is already happening and is set to increase: applying digital technology to real estate means improving the user experience of real estate and optimizing the investment, implementation, and management phases.
The future is about flexible spaces and smart building: smart facilities with reduced maintenance costs, which, in addition to fully satisfying the people who live and work in them (thanks to smart consumption management, automated access, remote control, and maximum security), will form the basis of “smart cities”: cities that use digital technology to automate and manage the services they offer, with lower costs and greater efficiency.
Use Open Innovation to find reliable partners, invest in flexible housing models such as Co-living and Senior Housing, meet the needs of workers with CoWorking facilities, and ProWorking, embrace the needs of Millennials with technological solutions applied to facilities such as Studentates, make products that can react to the uncertainty and versatility of the market, adapt spaces to the needs… this is the way to success.
Enabling technology is a goldmine of opportunities for investors and tenants, as it can provide, along with lower costs, centralized and flexible management, all with maximum security and incredible ease of use.
Sofia Locks, through the development of innovative and functional solutions, and the organization of events to share and develop the culture of innovation plays a key role in the Italian and international PropTech market.
It is the ideal partner for those who want to be players in the real estate market and invest in winning projects.To find out to the full extent of what we can do for you, contact us here .