The real estate industry is in the midst of the "proptech revolution".
Proptech, short for property technology, refers to the integration of cutting-edge technologies into the real estate sector. Even though the proptech industry has experienced exponential growth in recent years, real estate companies have been hesitant to embrace these innovations. Nonetheless, the industry has witnessed a shift in recent times, and it is evident by the $31.6 billion in annual revenue generated by the proptech sector in 2019. This impressive revenue has continued to increase in the aftermath of the Covid-19 pandemic, and the proptech industry continues to expand at an unprecedented rate.
However, due to concerns about the current economy conditions nearly half of real estate companies plan to decrease their investment in new technologies in 2023, according to the Deloitte's research. This raises the question of whether the real estate industry is on the verge of a technological takeover or will continue to lag behind. To understand why real estate companies have been hesitant to invest in new technologies, we must address and debunk some of the underlying concerns.
Cost and return on investment (ROI) is one of the main reasons why real estate companies have been slow to adopt proptech. The hardware and software required for proptech come with substantial start-up costs and ongoing maintenance costs in the form of updates, subscriptions, and specialized support. To companies that have been using traditional methods the investment in proptech might seem too high. However, the return on investment can be substantial. In 2021, over half of homebuyers reported using the Internet to purchase their property, and most renters prefer to pay rent digitally. The market increasingly expects to be able to conduct business online, and real estate companies must adapt to stay competitive.
Another concern is the integration of new technology into current systems. Employees may struggle to adapt their workflow to accommodate new technology, and some may not want to use it. However, incorporating automation and artificial intelligence can save time and increase accuracy, freeing up employees to focus on strategic assignments. The initial headaches of transforming a business to be tech-forward can be mitigated through training sessions and hiring consultants to assist with integrations. By choosing a product or solution that can be tailored to fit existing workflows, companies can ease the transition.
Data security is also a concern for real estate companies. The stricter regulations in the era of big data and GDPR have increased pressure on firms to ensure that the data they collect and use is secure. Firms worry that the software they choose will lead to data breaches and legal consequences. However, paper-based storage systems can also fall into non-compliance easily, and investing in proptech with built-in data security mechanisms can safeguard the business from these risks. Additionally, technologies help to reduce the risk of human errors.
In conclusion, the proptech revolution is still in its early stages, and many real estate companies are hesitant to adopt new technologies. However, a cost-benefit analysis shows that investing in proptech yields a positive return on investment, prepare companies for the future, and ensure that they stay ahead of the curve.