Real Estate Tech
An overview of PropTech / ReTech
Two of the world's largest industries are beginning to collide. Real estate technology is taking on a new meaning, shaped by the internet, mobile technology, IoT and cloud computing. It is no longer just about the technology that goes into buildings (construction methodology, security systems, Wi-Fi networks etc), rather it refers to any platform leveraging the internet in relation to the real estate industry.
In the US they call it ReTech (real estate technology) or CRETech (commercial real estate technology). In the UK, it is PropTech (property technology), but it all refers to the same thing. There are thousands of platforms in this space, with more startups launching each week.
Disrupt Property was created as a tool to help people in the real estate industry identify and track these startups. As property developers, our definition of real estate tech is as wide as possible and it's always growing. Blockchain, for example, is its own technology vertical but there are now startups focused purely on applying it to real estate.
The reason we put this together is that property developers, by nature, are futurists. When planning a development which takes a number of years to complete, the question is always what is the future of shopping, or smart homes, or ecommerce? How do we better engage with tenants? How do we improve carparking?' The answer to almost every question relates back to technology.
Real Estate Tech Database
Our approach is to categorise the startups into the way we think: 1. Location 2. Asset Type (residential, commercial, retail or hospitality) 3. Category. It allows us to quickly search a vertical within real estate and we use it regularly as our own research tool. On top of that, for each listing we've included screen shots, a basic description, social media links and investment rounds. We've also included similar startups to help you discover more.
Every category deserves attention, but we've summarised a few below as a taster for those who may not have time to sort through the database:
3D/VR and Floorplans - there is an explosion of startups in this space with US based Matterport being a good place to start. The basic idea is allowing people to explore physical spaces in 3D or virtual reality mode. It isn't a new concept, but increasing bandwidth, cloud-based data and mobiles, is bringing this to the masses. Further innovations are moving us beyond 'walk throughs', allowing us to interact with it in ways such as changing wall colour, re-arranging layouts and pre-ordering furniture etc.
Blockchain - blockchain is the technology behind Bitcoin and works by decentralising data via a peer-to-peer network so that information is stored locally and authenticated between computers without the need for a central server. Information is highly encrypted and easy to search. For real estate, this has the potential to significantly reduce paperwork, fraud and documentation errors. This could lead to significant disruption and dislodgement of third party players such as escrow and title registries that exist to authenticate real estate records. It could also facilitate online shopping for real estate, so that you can buy online without the current rigmarole of lawyers, notaries and identification checks.
Construction - ConTech is a category of its own that many don?t include as part of PropTech or ReTech. It typically includes platforms and apps to make the construction process more efficient such as progress reports, on-site inspections, defect management and paperwork management. Increasingly, some relate to safety through the use of bio-metric data, Wi-Fi geofencing and working tracking.
Drones - Drone technology could be a sub-set of construction given that that's where the current use lies, but we are only at the beginning of things with so much more to come. At the moment, companies focus on construction monitoring and data analysis, but drones could soon expand into property surveillance and security, safety management and facilities management (inspections, cleaning etc).
Environmental Sensors - The Internet of Things (IoT) is powering a new generation in building intelligence. Every part of a building (lights, HVAC, security, transportation etc) and what we do in it (movement, occupancy, comfort, transactions etc) will soon be monitored and analyzed. If you think about what makes Google and Facebook successful, it's the ability to know what we do online and the use that data to target us, primarily to generate advertising revenue. Data on our physical movements has previously been limited to anonymous mobile data, location and demographics. Once this is connected with data collected from the time we wake to the time we sleep, a new world of insights will be unlocked. Real Estate owners will play a big part in this.
Market Research - One of the undeniable trends of real estate tech is growing transparency. Data on pricing, sales volumes, occupancy levels etc, it's all available and smart platforms are increasingly making it available for the average consumer. Want an investment in your town between 800-900k paying a 5% yield? There's a platform to tell you where to buy. Lot's of them. Similarly, at the professional level, market research startups are launching to help developers identify valuable site, understand planning constraints and even perform instant bloc planning.
Property Search - The dominant category and the grandfather of the current PropTech revolution. It all started with taking property classifieds online and giving agents an effective listing service. Property portals are a global industry in their own right. However, they are driving innovation, constantly rolling out features in an effort to stay competitive. Chat bots, 3D tours, micro-suburb analysis, price predictions, agent ratings?. The list goes on and on.
Sales and Marketing - A catch all category for anything helping people selling, broking or marketing real estate. This ranges from instant brochures, to lead generation, open house management, to CRMs. It's a lucrative space and gets lots of attention. In future we may need to further segment, but for now it is a good summary of all the different ways people are trying to sell real estate.
Workplaces - A nascent category, Workplaces includes startups helping to make office environments more comfortable, enjoyable and productive for their inhabitants. If you think about the technology aimed at making a hotel stay better (check in, preferences, local attractions, free drinks), this is coming to an office building near you. Thank WeWork and Millennials for making offices cool.
A Brief History of PropTech
An easy way to think about PropTech is to break it down into phases:
Between 2000-2010, this phase was characterized by the launch of online property search platforms taking newspaper classifieds online (think Trulia, Zoopla and realestate.com.au). These businesses have long been a way of life so it's easy to exclude them from your thinking, but it's where it all started. They fundamentally changed the way consumers look for and owners market property, and they are also driving a range of innovations today (virtual reality tours, automatic valuations, agent rankings etc). We also expect leading platforms to become increasingly active as PropTech investors (Zoopla made numerous investments in 2016).
Tracking startup launch dates, from 2010 onwards we can see the beginning of startups broadening out from residential search. Commercial real estate becomes a target and some of the big names emerge (VTS, Hightower and Compstak), while new categories mature as established sectors being embraced by consumers: virtual reality, online agents, rental search, smart homes, in-building sensors and co-working. This is the growth phase, pre-consolidation and pre-hype.
In 2016 real estate technology hits the mainstream. VTS, Houzz, OpenDoor and Compass are unicorns (valued at more than US$1b). PropTech is a recognized vertical and everyone with a good idea is launching a startup (most doomed to fail). New York, London and San Francisco are the PropTech capitals.
Lots of categories are overpopulated and yet to really gain traction such as crowdfunding, in-building sensors and online mortgages. The traditional real estate sector, while still making money the same old way, is now engaging. Sponsoring events, putting teams together to 'get up to speed' and some even launching investment funds.
For a good place to start, subscribe to Duke Long in the US and James Dearsley in the UK. Get on twitter and you will discover a daily conversation. Also check out our 'Resources' link at the top of the screen.