In recent years, despite its reputation as a technological laggard, the property industry has undergone significant digital disruption. The older, traditional ways of managing property portfolios have been replaced by digital tools and platforms designed to make the entire process more efficient, transparent, and accessible.
Sitting at the crossroads of real estate and technology, property technology (PropTech) has enjoyed significant growth in recent years. Having reached this convergence point, the industry is now recognizing that this technology is no longer a nice-to-have but rather a necessity. Currently valued at around $18.2 billion, the PropTech market is forecasted to reach a value of around $86.5 billion by 2032.
However, the journey into the digital age has not been as quick or smooth as it has been for many other industries. The growing demand for technology and the convenience it affords in all aspects of life is fueling massive changes in the property industry. At present, the property sector makes up an estimated 60% of the world’s mainstream assets, with a global estimated value of $280 trillion—a more valuable asset class than all worldwide stocks and securitized debt combined. It also represents the largest store of wealth, at three and a half times the total global GDP. Yet it has historically been one of the least tech-savvy industries, still mostly driven by outdated and paper-heavy processes.
However, 2023 will no doubt be a defining year for the industry. Adoption and optimization of technologies by property companies will not just offer those businesses a competitive advantage but will also ultimately separate those who prosper from those who do not.
At the recently held London PropTech event, panelists from various organisations and associations across the industry discussed how technology is changing the property industry and shared their predictions on the leading trends that will shape the industry in the coming years. In today’s post, we will look closely at the four main areas of concern that dominated those predictions.
The majority of property technology solutions are underpinned by their offering of enhanced efficiency, and none more so than automation. Where inefficiencies, repeatable tasks, and extensive manual workflows exist, automation provides a valuable solution.
Automation solutions, such as Robotic Process Automation (RPA), allow real estate businesses to automate multi-click manual tasks and processes that would otherwise take a lot of staff time and attention. RPA has numerous use cases, from generating reports and sending emails through to data entry tasks and bank reconciliations. By reducing human interference, it allows deliverables to be completed faster, more accurately, and more reliably.
The concept of RPA may sound rather futuristic, but the reality is that many of the leading businesses in the industry are already using it. Therefore, the advice from the London PropTech panelists to real estate professionals was this: Adopt the tools that are relevant to your specific niche as soon as possible. Otherwise, you will soon be outperformed by your competition.
Open-source property technology that offers controlled, secure data flow between third-party applications will be pivotal to businesses within the industry in the coming years. These tools allow organisations to create a custom, integrated technology stack that meets their business’ specific needs and aligns with their overall strategy.
Property organisations often utilise a variety of solutions within their digital stack, each addressing specific business needs. For such companies to effectively manage and collaborate between colleagues and teams about their assets, investments, tenants or stakeholders, there needs to be a free exchange of data between these platforms.
Another leading trend in the property industry is big data. Data is pivotal to any business wishing to succeed in the 21st century, yet many in the property industry have been slow to use data effectively to make more informed business decisions. There are numerous tools available to help organisations collect, organise, and analyse previously unimaginable amounts of data—all within seconds. However, not all solutions are created equal.
Many property organisations face challenges that prevent them from effectively using their data in day-to-day operations and decision-making. However, evidence suggests that they do see the value in doing so, particularly when it comes to optimising their portfolios, operations, and workplaces.
While big data has a variety of use cases within the real estate industry, a particular area of focus is property investments. Due to recent technological advancements, the real estate investors of today have access to sophisticated tools that allow them to analyse the investment potential of entire markets and specific properties within minutes.
Traditionally, decisions have been based on professional experience and historic trends. Today, however, big data analysis makes it possible to access and utilise accurate data in real-time. This in turn empowers investors, along with all industry stakeholders, with a clear picture of prime opportunities as well as more accurate risk assessments.
Net Zero Objectives
According to a recent World Economic Forum Report, the real estate sector consumes over 40% of global energy annually. In addition, 20% of total global greenhouse gas emissions originate from buildings, there is a projected 56% increase in building CO2 emissions by 2030, and buildings use 40% of raw materials globally. The property sector is the single largest global consumer of resources and raw materials.
Due to this extraordinary impact on the environment, it will come as no surprise that the net zero agenda is a high priority across the industry. In fact, some 88% of UK investors have affirmed that environmental, social, and governance (ESG) criteria will continue to be adopted in all investment decisions this year, according to the Investor Intentions Survey by CBRE. “ESG criteria continue to be at the forefront of investors’ minds, despite macroeconomic headwinds and a challenging geopolitical landscape,” says Jennet Siebrits, Head of Research at CBRE UK.
The ESG agenda will underpin everything, and this requirement is not coming exclusively from investors. Occupiers, too, will vote with their feet when it comes to the buildings they choose to tenant. This has the potential to affect the valuation of assets hugely if these factors are not addressed. Technology can provide the data that will demonstrate progress when it comes to the net zero agenda.
Implementing Real Estate Technology Effectively
While the property industry is continually evolving, and adoption of new technology is increasing, many business owners and property managers still struggle to know how to implement technology effectively. On average, without the right support, it can take anywhere from 18 to 24 months just to reach the point of signing a contract with a technology provider, let alone implementing it. This in turn has various ramifications from ongoing change management issues, slow user adoption, and delayed ROI.
Technology is disrupting the UK and European property markets in various ways, but the outlook for the property industry in the digital age is promising. New PropTech solutions are being developed constantly to help drive efficiencies and address the key trends affecting the industry.
If you’d like to hear how REdirect can help you in your technology considerations, then please get in touch.