Property technology (‘PropTech’) refers to the innovative use of technology in the Property industry to enhance and streamline various aspects of property management, renting, buying and selling. Advances in artificial intelligence and virtual reality have been incorporated into the Property industry to streamline and assist with transactions.
It first emerged in the early 2000s and has expanded rapidly over the years, particularly during the Covid-19 pandemic. The PropTech market was valued at $18.4 billion in 2022 and is predicted to grow to a value of $47.8 billion by 2033. North America has consistently been the leader in the number of PropTech companies founded, holding a share of 56% of PropTech initiatives. The UK is also one of the top contributors, with 771 PropTech companies in 2019. Our commercial property team explores PropTech further
Leading Trends within PropTech
Within the property industry, automation has been used to develop Automated Valuation Models ('AVMs'), which use algorithms and statistics to combine information such as a property’s age, location and amenities to calculate its value. By using AVMs, the process of valuation takes a few seconds, therefore minimising the delay between ordering the valuation to receiving the report. It also lowers the cost of valuing a property and so is especially beneficial in assessing the value of an entire portfolio. The risks of bias and deliberate mispricing are also removed from the equation.
There is also Robotic Process Automation ('RPA') which is a software robotic that automates and mimics repetitive business tasks that humans usually do on computers, for example filling in forms. Within Property, it can be used to handle portfolios to automate and update information on sold or rented properties. Advantages of RPA include higher productivity and efficiency as the tasks can be done in the fraction of the time, therefore allowing professionals to allocate resources more strategically. RPA also increases accuracy and consistency by reducing the risk of human error.
Virtual and augmented reality
The use of virtual and augmented reality in the industry includes virtual property showings and 3D tours. 3D planning tools can create a detailed virtual plan of the property to be used alongside 3D virtual tours, therefore saving the time and costs of in-person viewings and allows people to view properties from all over the world. This became extremely popular due to the Covid-19 pandemic.
We have also seen how architectural visualisation has evolved with the use of CGI, which can create images of finished proposed constructions whilst still in development. This can enable properties to be marketed at an earlier stage and sold at a quicker pace, rather than waiting for the development to be finalised.
Property staging is something used in the sale of real estate and involves strategically arranging furniture/décor in a property to showcase its potential to prospective buyers. PropTech has introduced virtual staging, which uses CGI to transform images and videos of empty property into fully fitted property. This can help prospective buyers and tenants understand the potential of the space and how best to utilise it. Staging tends to be used for residential property but can also be used for commercial premises. An advantage of virtual staging over traditional staging is that it is quicker and more cost-effective than using physical furniture, and there is also the freedom to experiment with different layouts and styles. Virtual staging can also work the other way around – if a space is cluttered and untidy then virtual staging can remove items from the imagery, which can be useful for spaces that are still occupied.
Internet of Things
Internet of Things is a network of devices that communicate, collect and exchange data through the internet. This includes sensors, appliances and physical devices. Common examples of Internet of Things applications include smart watches and smart home security devices that link to smart phones.
Within PropTech there are apps that allow users to check the air quality in an area that they are thinking of buying or renting in, as well as apps that can measure mobile signal quality surrounding a property. Property owners/tenants can monitor a building’s temperature and security through various devices, and indoor air quality can also be monitored with smart sensors that assess levels of humidity and carbon dioxide. These applications can help prospective buyers or tenants make more informed decisions.
Internet of Things devices can also be used to monitor energy consumption within buildings. This can help reduce energy consumption and improve efficiency by monitoring real-time and historic usage of lighting and utilities, therefore making buildings more sustainable and also resulting in lower operating costs. With the aim of achieving net zero by 2050, this is going to become increasingly important.
How do we use PropTech?
At Boyes Turner, we are seeing a growing offering of AI tools to help streamline more administrative or process driven tasks. Although they are still in their infancy, we expect to see this develop quickly over the next few years. As a firm, we aim to evolve alongside technology so that we can continue to provide an efficient, accurate and cost-effective service for our clients. We encourage readers to find out more on our expertise in property law, and contact us for legal matters on [email protected].
Overall, PropTech is taking the property industry by storm and will continue to evolve and grow over the coming years. It has huge potential and so should be embraced by the industry as it brings many benefits to all stages of transactions as well as to the various parties involved.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.