The real estate industry has been a slow mover in adopting digital products - but PropTech is changing the game. Spurred on by FinTech and InsureTech, PropTech is forging a path for a larger digital presence in the industry to tackle some of its biggest challenges.
We’re answering all your PropTech questions and taking a look at some of the emerging tech that’s leading Australian innovation.
Find out what PropTech is, and how the technology is helping improve the property experience for buyers, sellers, investors, tenants and industry professionals across the market.
What is PropTech?
PropTech, (Property Technology), is the broad term used to describe tech and digital innovations in the real estate industry. While this might sound simple enough, it holds a vast arena of tech-based solutions that are designed to streamline and improve the way the real estate industry operates.
First emerging in the early 2000s, it took a while for businesses and customers to start utilising its potential, but the industry is now flourishing. From property listing platforms to experiencing the convenience of smart home automation systems and virtual property tours, the technology has already made a definitive mark on the way we engage with real estate.
“PropTech has grown significantly in Australia over recent years and it’s been enabling the creation of more positive, efficient, and transparent experiences with the power of technology.”
With one of the strongest property markets across the Asia-Pacific region, Australia’s PropTech companies are pegged to pave the way for greater efficiency and improved experiences for all players.
What emerging technologies are we seeing in real estate?
Between 2013 and 2019, Unissu reported a staggering 428% increase in Australian PropTech companies, revealing a thriving industry despite a low base. With 381 PropTech companies across the country as of 2021, these startups are already helping reshape Australia’s $7.8 trillion real estate market with tech-driven innovations aimed at solving the industry’s biggest pain points.
Let’s take a quick look at some of the technology behind these innovations and how it’s being used:
Artificial Intelligence (AI) and Machine Learning (ML): With breakthroughs in advanced GPT’s (Generative Pre-Trained Transformers), real estate has found uses for this tech to assist in everything from driving efficiency to informing decision-making. AI-powered chatbots and virtual assistants are revolutionising customer service while ML algorithms are helping predict property prices and identify investment opportunities.
Virtual Reality (VR) and Augmented Reality (AR): VR and AR technologies have gained significant traction in the real estate industry since Covid, and are now transforming the way properties are showcased and experienced. These immersive technologies enable you to virtually walk through properties, visualise interior designs, and even customize spaces.
Internet of Things (IoT): Smart devices and sensors equipped with IoT allow real-time tracking of energy consumption, security, and even maintenance. This level of connectivity and automation is streamlining property management, reducing costs and improving the overall living and working experience for occupants.
Blockchain Technology: Blockchain technology provides a decentralised and transparent platform that holds a lot of potential for the real estate industry to create securer transactions and simpler processes. This tech is also enabling the use of alternate finance options like cryptocurrency, opening the door to non-traditional investors.
Drone Technology: Drones offer a cost-effective and efficient way to gather data and monitor property conditions, especially for large-scale developments or remote areas. High-resolution, detailed aerial imagery has proved an invaluable tool in allowing for more accurate site assessments, property appraisals, and effective marketing materials.
Energy Efficiency and Sustainability Solutions: Energy efficient technology is not only contributing to a more sustainable future, but it also boosts property value, attracts environmentally conscious tenants, and reduces operating costs. Smart home management systems, energy monitoring devices, renewable energy integration and eco-friendly building materials are all helping reduce carbon footprints and meet sustainability goals.
What is PropTech innovation doing for property management?
Recent years have seen a slew of PropTech innovations that are addressing specific challenges faced by agency principals and property management teams. As technology advances, so do customer expectations and the pressure to keep up with ever-increasing levels of connectivity and efficiency.
“Traditionally, property management has heavily relied on manual processes and paperwork - but what PropTech has done is to automate everyday tasks that are usually at the core of many issues in the industry.”
Here's a look at just some of the solutions that PropTech had already developed:
Streamlining Maintenance and Repairs: Using a single platform, property managers can locate an available contractor, assign a maintenance request and track the entire process from beginning to end. This means property managers can easily ensure a job is done properly and on time, and even submit a report to the property owner seamlessly.
Improved Tenant Screening and Onboarding: PropTech is transforming tenant onboarding services and screening processes. Property managers can quickly and easily verify a tenant's identity, credit history, and financial background. It also provides access to tenant reviews from previous landlords, helping property managers get a better understanding of a potential tenant and reducing the risk of late payments or property damage.
Efficient Lease Management: Digital lease signing platforms enable quick and secure online lease agreements, eliminating the need for paper documents and time-consuming manual processes. This saves property managers valuable time, prevents errors and allows faster tenant onboarding. Digital lease signing platforms also provide visibility into the entire lease process, making tracking and managing lease agreements easier.
Enhanced Tenant Communication: PropTech has made it easier than ever for tenants to receive answers to their questions and for property managers to deliver better customer service. While chatbots and virtual assistants tackle simple inquiries, property managers can resolve more complex matters and build solid client relationships. Mobile apps and online portals have also made document sharing and updates faster, more efficient and more secure.
Financial Management and Reporting: FinTech and PropTech tools are interconnected when it comes to financial management and reporting. The combination of these two technologies has enabled property agencies to save time and money by automating rent collection, managing expenses, and providing data-driven insights into a rent roll's performance.
What has been the impact of technology in real estate?
PropTech has revolutionised various aspects of the industry, transforming how properties are bought, sold, managed, and experienced.
- It’s improved convenience and accessibility through virtual property viewings and remote communication with agents and property managers.
- Data-driven decision-making has increased transparency and empowered buyers, sellers, and renters to make informed choices.
- The leasing process has been expedited, leading to faster sales and smoother transactions.
- The integration of smart technology is attracting sustainability-conscious tenants and optimizing returns, while AI and smart tech provide real-time updates to all parties involved, ensuring a seamless experience.
While these changes are undoubtedly positive, it’s important to acknowledge some of the negative impacts and considerations that come along with it. Here's a closer look at a few of them:
Privacy and Data Security: With the increased reliance on technology, concerns about privacy and data security have skyrocketed. We must ensure that personal information, financial data, and property details are adequately protected against potential breaches or unauthorized access. Safeguarding data should be a top priority, and industry participants must take cybersecurity seriously.
Digital Divide: Technology can sometimes create a digital divide within the real estate world. Not everyone has equal access to technology or possesses the necessary digital literacy skills to navigate online platforms effectively. This disparity can disadvantage certain individuals or groups, limiting their ability to fully participate in the digital real estate landscape.
Market Manipulation and Misinformation: With an abundance of data and online platforms, there's a risk of market manipulation and misinformation. False listings, inaccurate property valuations, or misleading information can harm buyers, sellers, and investors. To combat these issues, transparency, authenticity, and reliable data sources are paramount.
Overreliance on Technology: While technology can boost efficiency, we must guard against overreliance on automated systems and algorithms. It's crucial to strike a balance between technology-driven processes and human judgment. Real estate professionals should use technology as a tool to support decision-making, rather than completely relying on automated outputs.
Lack of Personalized Experience: Technology can sometimes make real estate transactions feel impersonal and transactional. The absence of face-to-face interactions and personalized guidance can diminish the level of customer service and relationship-building. It's important to find ways to maintain a balance, leveraging technology for convenience while still providing a personalized experience.
PropTech's global growth and the transformative potential in Australia
The PropTech industry is rapidly expanding worldwide, attracting substantial funding and investment. With the PropTech market expected to grow from US$ 18.2 billion in 2022 to US$ 86.5 billion in 2032, there are promising opportunities for startups and technological advancements.
Surpassing FinTech, PropTech has become a prominent investment sector, with the US market alone receiving $8 billion in funding and transactions in the first half of 2022.
While Australia is still in the early stages of PropTech adoption, other countries have already witnessed remarkable growth. According to Statista, Spain leads the way in Europe with $2,500 million investments in PropTech. Spanish companies like Glovo and Idealista successfully attracted $649 million and $304 million of investment funds in 2021.
The United States dominates the global PropTech market with 59.7% of the world’s total companies in the industry. PropTech giants such as OpenDoor, Airbnb, and WeWork have secured significant funding, to allow users to have greater control over their property choices.
Other US companies like Landis and Verge Sense leverage PropTech for data automation, assessing customers' readiness to buy and optimizing space utilization through AI technology.
As PropTech continues to grow in Australia, it addresses the needs and challenges of the real estate industry. Key trends to watch out for in Australia are:
- Augmented reality for an enhanced property buying process
- AI neighbourhood analysis for updated statistics and exploring new suburbs
- The rise of Internet of Things (IoT) devices for efficient real estate management regardless of location
With Australians pushing for more homeownership opportunities and the pandemic accelerating digitalization in real estate, PropTech companies are creating an ecosystem of transformative solutions that are changing the face of property investors in Australia and beyond.
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