Tech trends are not merely trends – they have catalyzed a whole paradigm shift in modern society. As no field or niche or market is left unaffected, there’s definitely something to be said about real estate technology and the tech trends that affect the real estate market.
Another important question is how do tech trends affect property management? Are there any takeaways from recent developments in real estate technology? Since its development and deployment is poised to significantly alter the market in this decade, we’re here to give you the rundown of the top 6 proptech trends to watch out for in 2020.
Proptech is on the rise
Proptech (property technology, also known as real estate technology) is set to continue rising throughout 2020. In Europe, we’re seeing a 550% increase in proptech funding in 5 years, whereas Oxford’s Saïd Business School is estimating that growth in real estate funding from venture firms might be taking off and turning exponential.
In practice, this has led to the proliferation of property management software, and the introduction of cloud-based services – we’re starting to see their widespread use with agencies. And no wonder, as this approach can improve efficiency, flexibility, and cost outcomes.
The advantages of using real estate management software
We can confidently say that there are quite a few advantages to using real estate technology:
- Automation: automation improves productivity by a large margin, at times up to 30%. When automation takes care of tedious and repetitive tasks, employees can tackle more meaningful and engaging work, and even work faster too. Digital and cloud platforms, such as Console Cloud, allow property managers to streamline all their processes. This typically includes issuing and managing statements, issuing invoices and tracking payments, tracking maintenance issues, and giving employees new and more effective ways to complete their day-to-day management tasks.
- Lower operating costs: when everything is done in the Cloud we save on energy, material, and space. A study done by Rackspace, the Manchester Business School, and Vanson Bourne found that as many as 88% of the users of cloud-based services pointed out cost savings and 56% reported improved profits. This, of course, translates similarly to real estate, where proptech adopters can sometimes see savings of up to 55 cents per foot.
- Improved occupancy: with real estate technology the capacity of managed properties can be utilised a lot more efficiently. You always know which room is free to rent now or will be free next month. You also have much more insight into how much gains you can make on each particular property.
And, the caveats?
There are some caveats with adopting proptech and technology in general, but luckily they can be wisely mitigated.
- In-person communication: with all these digital communication tools available it’s easy to forget that you’re talking to real persons on the other side. Of course, as we’re increasingly becoming aware amidst the outbreak of the COVID-19 pandemic, the fact that cloud-based tools render in-person communication unnecessary can be invaluable in times when agencies are setting up their personnel to work remotely.
- Reskilling workers: the automation of certain kinds of tasks means that workers will have to reshape their skillsets, or face layoffs. And with the speed of the introduction of new technology, employees have to be engaged with continuous learning initiatives. Luckily, PwC found that 42% of global CEOs are implementing such initiatives in their own companies. Even though employees might question the introduction of new approaches in their workflows, they usually need to sit down and try the software first-hand, after which it practically sells itself.
- Privacy and data security issues: when surveyed, the majority of companies had no or only partial security systems in place, and almost two-thirds of all security breaches on international organisations happened because of mobile devices. The facts are that digital technologies in general can be subject to privacy and data security issues, but companies can mitigate these risks by using software as intended, hiring local developers, by following procedures, and by making it a priority to educate themselves about the methods of encryption a particular software uses and making security an important parameter when adopting new technologies.
Ah—the Cloud. In the neighbourhood of most misused terms alongside AI, blockchain, and smart contracts. Alright, so, what’s this ‘Cloud’ everyone’s talking about?
The Cloud, originally a graphical symbol for the Internet, nowadays means online solutions that are based on the Internet, can be accessed from everywhere, and keep all or most of the data online. Cloud-based solutions, such as Console Cloud, are becoming more common in real estate technology as well.
You are away from the office, but you really need to check whether that invoice has been paid? Just connect and see. What are your landlord’s emergencies today? You’ve already been pinged by the app. Is your employee on his way to fix it? Open your phone, and no—they are still on their lunch break. It’s best to let them know that 2.5 hour-long lunch breaks are not how you do things around your office, right?
All the above comes from, is uploaded and kept in the Cloud solution you implemented. This approach also facilitates working from home for those agencies that want to embrace it.
Fractional property investment platforms
Don’t exactly have the money to buy a whole house? What about a single room, then? Or even half of it? That’s right real estate technology now allows us to invest in fractions of properties. The cost of the property is split and then sold as shares. When investors receive a return, it is suitably partitioned according to the shares. While fractional investment is not real estate technology per se, the platforms that facilitate it are (see below).
This way of investing is ideal for situations when you don’t have enough money, or prefer to diversify in order to increase the security of your investment. Fractional investment simply has a lower barrier to entry and thus might speed up the return, as you can start investing in real estate earlier than what you normally would.
Of course, dealing with difficult co-shareholders is always a potential situation, but this is true in any endeavour that takes more than yourself—and you probably already know how to act and protect yourself in such situations.
When we’re talking about automation, we don’t solely have in mind robots or production lines. Using automated invoicing systems is also automation by definition, although it’s not nearly as grandiose. Another example are automated chat-bots. Since the fact that property managers are not available after-hours is a common complaint of both landlords and tenants, or that they charge too much for such a service, automated chatbots can be a viable and cost-effective solution for providing clients with after-hours assistance. There’s also the crisis management software that makes the task of informing and calling upon responsible persons in cases of emergencies. And there are helper robots that can help people fix issues at home, communicate remotely, or just to keep them company.
And finally: smart homes. Smart homes employ specific kinds of autonomous systems that help manage repetitive or useful tasks on a property. Think automatic door unlock when you approach with your token in the pocket, rolling the roller blinds during the strong sun, automatic heat control in separate rooms that activates only when there are people inside them, and much more. In the US the number of smart homes is estimated to surpass 300 million by 2023. There are so many parts automation can play in real estate technology developments, and it is a trend to watch out for.
While the so-called ‘smart contracts’ are sometimes called ‘dumb smart contracts’ (probably because they really don’t care about anything besides executing their embedded ‘contract’ code), we will be seeing an ever-larger introduction of them in the real estate technology market.
Some property purchases, fractional investment (see above), and even repetitive management would be transferred to ‘smart contracts.’ Of course, this is all facilitated by the migration to big data and cloud-based services. While we’re at it, check the next section for a very similar trend.
Blockchain and real estate
Even since its first inception, people have been scratching their heads in disarray about what to do with blockchain. Alright, so, the blockchain is immutable, and if there are enough servers it could theoretically go on forever. So what can we use it for besides cryptocurrencies? And someone got it right—apply it to property tracking.
Think about it: a cadastre is (well, at least should be) immutable. It should track the creation and ownership of property across a country or the globe. Smart people figured out that blockchain-based systems are ideal for this kind of bookkeeping. Plus you get to see all transactions, hopefully from the last two centuries or more (if it lasts that long and integrates historical information.) And finally, you won’t be needing to go to the cadastre to check status or even potentially execute ownership registration (i.e. by using smart contracts; see above,) which is an advantage in and of itself.
So what does this mean for real estate professionals?
As real estate technology is only going to continue changing the field, here’s a rundown on the most important takeaways that are highly relevant for property managers and real estate professionals:
- embrace cloud-based tools for property management;
- expand in fractional investment platforms
- invest in automating everything that can be automated (i.e. everything dull and repetitive)
- look into smart contracts and how to apply them in your business, if possible,
- explore how you can profit from the introduction of blockchain in real estate
By all indications, exciting times lay ahead.