Property technology or Proptech is a recent technological innovation within the real estate industry. New information and communications technology aids in the optimization of workflow processes and implementation of innovative business ideas. Proptech does not only aid business relationships between two or more partners. In addition to Business-To-Business relationships, Proptech also affects end users due to its effectiveness in Business-To-Customer relationships.
There has been a recent digital trend in both the finance and healthcare industry. Fintech and Healthtech are equivalent technologies to Proptech.
Fintech enables mobile payment methods and private loan applications with the help of credit platforms. Similar technologies were developed in other industries. What all of them have in common is the shift from standard operative processes to the digital platform. The increasing digitalization of society and technicization of the business world enables a world of possibilities for innovative information and communication systems.
AREAS OF APPLICATION OF PROPTECH
There are several possible areas for technological development in real estate. While experts are continuously discussing possible developments of technological operational processes, several have already been implemented.
Real Estate Crowdfunding is one of the technological developments that has already been successfully introduced. It is an alternative investment option that is also attractive for small investors. Crowdfunding enables investor to start investing in attractive real estate projects with relatively small amounts of capital, such as portfolio properties and new constructions. A crowdfunding platform will show the accumulated investment capital to project developers. While it used to be impossible for small investors to invest in investment properties, IT developments of a Prop Tech startup enable an efficient and profitable completion of a real estate project. A specifically designed platform enables the transfer of relevant information as well as the interaction without compromising any sensitive data, thus complying with financial regulations of the governing bodies. The efficient workflow lowers costs that would otherwise apply with traditional investments in real estate funds. An attractive interest rate of up to 7% p.a. can be offered to investor due to these lowered costs.
Apart from Crowdfunding, additional potential projects can be possible as well. A startup that offers an individualized real estate agent search engine or property management optimisation benefits both tenants and landlords. Other possible projects could very well enable users to take on tasks of either the real estate agents or the building manager.
THE BENEFITS OF PROPTECH
Both companies and users can profit from a new Prop Tech innovation. Electronic processes and an increase in efficiency promote a rapid operation of workflow tasks.
A smartphone application could very well replace the customer support telephone line of a building management. The application could instantly redirect all requests to the responsible agent. This would decrease management costs due to optimized processes and thus increase the profitability of the company. This in turn could result in lower and better renting conditions. The tenant also benefits from 24/7 customer service that he can access any time.
Both examples show that the digitalization of Proptech developments can be beneficial for both parties. Experts forecasted Prop Tech to be one of the trends to follow in 2017. One can assume that Prop Tech innovations will bring forth exciting changes for tenants, landlords, real estate agents, investors and companies.