Proptech and future of the real estate industry

We’re living amidst the Fourth Industrial Revolution, where the digital blends with the analogue. Mobile devices, apps for this-and-that, tablets, widespread entertainment, the Cloud, privacy and data security issues, virtual reality, augmented reality, e-Sports, the Singularity … Changes that needed at least a decade in the past now seem to blitz through in only a year or two.

These groundbreaking changes affect every niche and industry—and the real estate industry is no exception. Venture investors have been putting their money into real estate technology (proptech) left and right—according to Forbes, they infused as much as $5 billion in proptech for 2017 alone. That’s 150+ times more than the meagre $33 million in 2010. 

All in all, the old hustle is gone, the new is already here. As they say, the future is now. Let’s see what it holds for us in the real estate industry.


More digital, less analogue

There’s no way out of it: the future of business is digital. Of course, we still have to move, eat, and breathe in the analogue world, and we still have to live and sleep in brick-and-mortar homes. For now, at least. But much of the auxiliary stuff is happening in the sphere of electrons.

For example, rarely do we see people browsing the newspaper for their next place to rent or buy anymore— 44% of home buyers were looking up properties online even back in 2018. Picking furniture from IKEA can now be done using augmented reality. Designing new homes as well. Property maintenance can be automated using cloud-based systems. Heck, cloud-based property management software has upturned the whole landlord-manager-tenant axis and is becoming one of the most essential tools of the trade.

How does the real estate industry benefit from technology?

Going digital clearly has some great pros. For starters, it is way more efficient: no printed invoices (which means we’re doing something good for the Amazon trees, finally) and no unnecessary gas expenditures (and saving the ozone layer, at least a bit). Not to mention you can be reached from everywhere, at any time.

And while the fact that the world is going digital raises a whole host of new dilemmas, it’s clear that technology is here to stay. 

More outsourced, less on-spot

Competition is increasing in the real estate industry (see below in Cutthroat competition). This means that margins are coming down, and property managers are struggling to retain commissions on the properties they manage. 

Going digital increases the productivity of workers, which is always great for companies (but not so much for the replaced workforce). However, the widespread availability of internet-based tools made outsourcing a viable approach to cutting down expenses. 

For example, in the context of the real estate industry, on-site maintenance and similarly tedious tasks such as data entry, research, and basic bookkeeping now all get commonly outsourced. Another business aspect that traditionally gets outsourced to professionals in other countries and territories is marketing—from content production to PPC campaigns, email campaigns, and social media.  

This enables companies to go lean: keep their core employees engaged with the substance of the business instead of spreading themselves too thin performing mundane tasks. 

Outsourcing a position, however, means not keeping that position in-house anymore, or even releasing that employee away. Whether widespread outsourcing turns out to be a cumulative benefit or burden on society at large remains to be seen. But just like going digital (and precisely because of it), outsourcing will keep playing a major part in how real estate agencies operate their employees.

AI, automation, and big data

The digital revolution is catalysing change in every corner of every market – with the biggest players being artificial intelligence (AI), automation, and big data. What real estate professionals need to keep their eye on most, however, are these three trends: blockchain, analytics and statistics, and automated property tracking.


It’s safe to say that in 2020 blockchain is no longer something new and esoteric. There are a gazillion platforms, products and services out there based on (some kind of) blockchain, and all promise to take you to the next level.

So, why is blockchain so important for the real estate industry? Well, for starters, blockchain is designed to be immutable. This means that any changes (i.e. additions, deletions, modifications) in the system are always recorded and saved, theoretically indefinitely. This attribute of blockchain is perfect for cadastre-style property tracking. Imagine being able to track, with few if any errors, the whole history of a particular property from start to end.

Of course, here we’re painting a far rosier picture than what’s happening in reality. Firstly, whether public cadastres will be transferred to blockchain-based systems remains to be seen. What kinds of blockchains these would be is also still an unknown (some so-called ‘blockchains’ are not immutable, or have automated deletion of data after some time). 

Finally, systems break down, data gets recorded erroneously, and some people might still prefer to have their data private instead of being available to anyone with access to the system.

Big data (analytics and statistics)

We are collecting ever-larger troves of digital information—just about anything we can get our hands on. Since the information we can collect is so much and so varied, businesses and analytics companies asked themselves at one point: why shouldn’t we

So now we can find out who’s visiting our website, what page draws most of their attention, what led them to rent a particular apartment, or what caused them to leave. 

Some other deep databases allow analytics companies to establish intriguing connections between seemingly unrelated phenomena. That can help real estate industry professionals cut down on investment risk or discover peculiarities about certain neighbourhoods and even buildings. In terms of marketing, it can also help you find out if that colour change to green on your website or your new CTA button are effective at all.

Automated property tracking

Finally, maintenance tickets, invoicing, rent payments and arrears, expenses and a huge plethora of real estate management tasks can all be tracked digitally—just like you can do with our own Console Cloud. What’s more, the tracking can be automated since much of the information comes from sensors and user input (and this is where artificial intelligence comes to the rescue).

Imagine the time you can save just not thinking about those invoices and arrears every single month.

Cutthroat competition

As we already hinted at above, competition in the real estate industry is expected to increase. Even though the barriers for entry remain the same, there are some revolutionary venture capital approaches appearing, in the form of start-ups and SMEs. These new fellows are going head to head with established players, and having nothing to lose, they hustle hard. 

The established players in the real estate industry have to adjust to what’s going on or risk being sidelined. That means investing in proptech (property tech), analytics, online marketing, building reputation, and much more. New players have to be at their best as well, for obvious reasons.

This all leads to one conclusion: competition can and will only increase. And when competition increases, quality also increases, but margins decrease. Businesses that start offering multi-tiered, diversified, and novel options to their clients (i.e. landlords, renters, and others) can hope to grab and retain a bigger piece of the market than others.

Multi-tiered and diversified approaches

The old contract-your-landlord-and-find-your-tenant-family-out-there hustle is, well, getting old. Things are a-changing, and what has worked for a pretty long time is being replaced with new options, requirements, and trends.

Tiny housing and capsules

We already covered this in detail in our Tiny house movement article, so for now, let just say that there is a largely quiet trend appearing in the real estate industry, and that is downsizing. You see, besides seeing real estate only getting more expensive on average throughout the years, Australians and others are getting themselves in more and more debt. How can anyone afford their own home when they are riddled with debt, all the while creating their own families less often (see below)? 

The answer is: they can’t. So they try other approaches, and downsizing is one of them. People are attracted by tiny houses and apartments because they offer them the opportunity to cut down on total expenses while retaining some of the perks of premium housing (mainly proximity to lively urban centres and freedom).

Capsule hotels and property for rent are also popular for similar reasons, and so is Airbnb. Today’s international hustle often requires people to frequently travel. Hotels, motels, and the rest tend to be really expensive, so capsules on or close to airports and other transport hubs offer some rest and privacy for a reasonable price.

Fractional investment

Fractional investment platforms also seem poised to take on a larger (though not huge) slice of the market in the near future. The reasons are mainly the lower threshold for entry, split risk, and the opportunity for diversification. Of course, there are plenty of drawbacks to fractional investment, but the promises are enough to attract a steady part of the market.

Fewer families, more friends, and singles

People are not getting married as much as they used to, which means there are fewer families around. People are having fewer and fewer kids. Although Australians divorce a bit less than before, this might be caused by having far fewer marriages cumulatively. All in all, since the introduction of no-fault divorce in 1975, the number of divorces has significantly increased. 

Similarly, people are choosing to cohabitate instead of marrying. In 2016, 80.8% of couples cohabitated (compare that with 16% in 1976). Plus, the average age of marriage has significantly increased, from the age of 21 to 30.1 for women, and 23 to 32 for men (1976 to 2016). 

What all this means is that the property investment and renting population, and the real estate industry at large are changing fundamentally. Young people opt to share apartments and houses with their friends and partners. Also, having fewer children means they don’t feel as large a pressure to rent or buy a bigger property with more rooms. There are also many singles out there, who are far more interested in tiny housing. 

Flat-rate fees

Traditional real estate agencies will face increased competition from fixed-fee agencies. Companies such as Upside Real Estate, Sello, and of course, PurpleBricks, are hitting the market in a traditional spot: margins. While it is (or rather: was) common expectancy for real estate agencies to charge a percentage of the sale, these new guys are charging a fixed amount—and they throw in a few additional goodies in the package as well.

It has been estimated that Australians can save $5.75 billion (if not more) on commissions this way, and the appeal is clear. But whether this is a sustainable approach for agencies remains to be seen. What is most likely to happen is that a few fixed-fee players will make the most of this kind-of-niche market in the years to come, steadily increasing their slice.

The flood of small enterprises, the gig economy, and co-working

Finally, the gig economy has also had an impact on the real estate industry – co-working spaces are growing like mushrooms after rain. And it’s no wonder—freelancers and contractors want to have a professional working environment for their ‘gigs’, as more and more people work remotely part-time or full-time 

Sometimes these (usually young) professionals team up into a small company or a start-up, in order to get to the bigger gigs. With this in mind, we can also expect a slight surge in SMEs (small and medium enterprises) that are out there to challenge the big guys.

What does this mean for property managers?

These novel habits and ways of working will increase the demand for real estate that supports them. This is a great opportunity for property managers to advertise that their property fits what these people are looking for, and wait for them to come knocking on your door. 

For example, many will be on the lookout for apartments that can be converted into co-working spaces. There, each room or even desk may be occupied with professionals that work in a different industry e.g. software engineering, video production, YouTube streaming, and whatnot. Lumping flat-rate utility expenses in the price also helps attract more people to the property you manage.

Final words

To wrap up, we can expect a number of significant developments during the upcoming decades. They all seem to be accommodated or at least significantly influenced by the significant shift towards the digital. As everything is becoming digital, it will no doubt have a deep effect on the future of the real estate industry as well. So, let’s keep our eyes open for new opportunities in the years to come.

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