Valued at over $228 trillion globally, according to Business Telegraph, real estate makes up the largest asset class in the world. Nevertheless, its structural characteristics and high barriers to entry have constituted an obstacle to innovation and technological adaptation by industry incumbents. But change is underway. Statistics by CREtech suggests that in the last decade, the amount of investment into the proptech sector has grown from $20 million in 2010 to $12.9 billion in the early months of 2019.
Proptech acts as an enabler to unlock greater value from existing and future assets. It has also given rise to a host of new business models from those focused on increasing asset utilization – co-working and co-living – to creating automated valuation models by utilizing data throughout an asset’s life cycle.
Most real estate portfolios are heterogeneous in nature, where discovering common features and being able to find patterns is key to understanding assets and identifying value-add opportunities. This can be facilitated through data analytics, an approach compressing raw data into comprehensible insights. Data analytics software has the power not only to improve the quality, accuracy and transparency of information, but also to predict future outcomes such as rental forecasts, occupancy rates and energy usage.
In the UK, REalyse is a platform that collects over 550 residential datasets allowing real estate professionals to quickly compare, analyze and understand six billion data points covering 99 percent of the UK market, all in one centralized platform. And Portuguese company Casafari uses machine learning and big data operations to increase the transparency and efficiency of the real estate industry. The start-up is building the cleanest and most complete database in its markets, allowing clients to access downloadable historical and descriptive data sets for all property classes. Its analytics dashboard can be used by managers to set data-driven rental prices and optimize when to sell assets and for how much.
Automating processes, optimizing space
Paper-based processes, evident in many areas of the real estate industry, are a key factor slowing down efficiency. While smart technologies have a clear application in digitizing day-to-day operations, such as an agent’s entire lettings process, asset managers can benefit from better tenant retention and enhanced returns through automating product offerings across the real estate value chain.
As an example, Plentific is a revolutionary property management solution that seamlessly connects landlords and contractors, delivering a better service to tenants and landlords but also driving more efficient operations and profit to owners.
Asset managers can also leverage technology to respond to changing user housing needs, which feature the need for on-demand services and a culture of convenience. Wunderflats is a housing-as-a-service solution connecting short-term renters to fully furnished apartments, giving owners an opportunity to earn extra revenue from unoccupied assets, and monetizing underutilized space.
Driving efficiencies and increasing the returns of a client’s portfolio is a core task of asset management. Technological innovation is redefining how business is conducted in a sector typically latent to change. Proptech is reshaping the built world in a plethora of ways – facilitating processes, improving internal building management and driving asset revenue growth. Collaboration between the traditional real estate players and the new start-ups is vital if the industry is to keep up the pace in a new, technology-powered world.