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By: Syeda Gul-e-Khansha
Jun 01, 2021
The COVID-19 pandemic has shown that Property Technology (PropTech) is more than a buzzword in the real estate industry. The pandemic led to an increase in digital transformation in diverse sectors, including real estate. According to PWC’s publication on Emerging Trends in Real Estate 2021, they report that the conversation around PropTech has moved from a trend to a necessity for real estate companies. The adoption of PropTech is unsurprising considering the effects of the COVID 19 pandemic on the United States economy.
As a result of the government's decision to shut down all non-essential business activity and stay-at-home orders during the period, in April 2020, the employment to population ratio was 51.5% . The decline in the gross domestic product (GDP) and jobs in the second quarter of 2020 is historic. It has never occurred since the Great Recession.
Buildings that serve as gathering centers for the public like workspaces and restaurants shut down. Also, over 35% of the workforce began to work from home. Even with the vaccine rollouts, people are still concerned for their safety and rely on digitized experiences to carry out everyday tasks.
McKinsey reports that by one estimate, the enterprise value of real estate assets fell to 25% or more in most sectors. While for lodging, it was as much as 37 percent.
Though real estate is known as a traditional industry, the adoption of PropTech creates a channel for digital transformation in the industry. Real estate stakeholders – VCs, property owners, renters, and homebuyers – increased demand for new and innovative real estate technology to navigate the new normal.
The pandemic has changed the way people live, work and use real estate. To meet customer demands and scale through these uncertain times, real estate leaders are looking towards solutions that will help them thrive, provide positive customer, and tenant experiences and ensure business continuity.
In understanding COVID-19’s impact on the real estate sector by Deloitte, the focus for companies in the real estate sector are these three things; preserving value and liquidity, keeping tenants and visitors safe, and complying with government agency requirements.
Despite the pandemic’s positive effect on adopting property tech to address operational needs and manage costs, companies now focus on what they need to have to improve customer experience rather than trendy tools. As a property manager, here are the PropTech trends to look out for in 2021 that are human-centric and backed by statistics.
Automated Mail Handling Solutions
Touchless Tenant Experiences
Omnichannel Communications Technology
Space And Facility Management Software
Location Safety Technology
Digitized Leasing Processes
Building Information Technology
Today, real estate is primarily a service industry. PropTech is not just about jumping on the latest cutting-edge real estate technology trends. Instead, it focuses more on human needs. Given the increasing debt profiles and poverty levels, it has become more critical than ever to offer tenants distinctive experiences. One of the challenges faced by property managers is mailroom management for facilities. Since people now rely more on eCommerce, more packages come into buildings with a rise in complaints when mishandled.
For example, mail theft reports increased by 600% in the last three years, from roughly 25,000 in 2017 to approximately 177,000 through August 24, 2020, according to Postal Inspection Service data.
Property managers have to invest in mailroom management solutions to manage and reduce the overwhelm faced in mailrooms. An automated mail handling service like Mailroom by PackageX helps you notify recipients about their packages with a press of a button without the worry of following up with recipients.
Mailroom automates all notifications, so you are not stuck calling or sending emails, and you can easily mark all packages through QR codes.
35% of property technology investors said that smart buildings were the most exciting area of Proptech innovation. It does not only meet the modern consumer’s expectation for ease, but it also helps to increase the public’s sense of safety.
The fallout of the pandemic has led to more demand for touchless or contactless experiences. More people are washing their hands and searching for ways to avoid the virus. Property Technologies can aid in touchless experiences like opening elevator doors without touching the buttons, smart lobby doors, self-cleaning handles in conference rooms, and motion sensor taps.
Omnichannel communications have become more prevalent in the finance, insurance, and marketing sectors, to name a few. The increased use of omnichannel communications responds to the modern consumers’ demand for convenience, speed, and ease when interacting with service providers. 66% of first-time homebuyers are millennials, and 99% of those looking for homes do their research online first.
Property managers can use omnichannel communication systems to provide a seamless and integrated customer experience for renters and homebuyers. Also, an intelligent omnichannel communication CRM system provides you with data that can be used to forecast demand and design an easy home buying, selling, or renting experience for customers.
Furthermore, the future of hybrid workspaces requires omnichannel systems to keep employees in the loop, whether working from home or at the office. Facility owners will invest in video-conferencing technologies to enable flexibility.
Digitization in real estate will provide measurable data. Real estate companies who want to stay ahead of consumer behavior, expectations, and considerations will invest in big data analytics. According to Globe News Wire, Predictive Analytics market size and share will reach $10.95 Billion by 2022.
Real estate companies can easily decide where to allocate assets for the most optimal results using data analytics and predictive modeling. However, companies still need to have customer experience at the center of their analytical efforts. Leaders in PropTech who continue to center their efforts on improving the buying and selling experience will motivate buyers and sellers by creating incremental value based on the data and leveraging that information. PropTech leaders who continue to focus on putting the buyer and seller experience at the center of the real estate transaction to understand better how they can do more with available data will create and influence buyer and seller behavior.
By combining historical data, behavioral analytics, and real-time data, predictive analytics tools can set up a profile of the customer's preferences. When adequate data is available, the algorithm can predict customers' future buying patterns, enabling you to provide personalized experiences.
Space management involves the monitoring and tracking of physical space in relation to the demand for space. In 2020, 16% of PropTech investors had an interest in this PropTech trend. Surprising? Not so much. Space management and facility software help property owners track their current space options, allocated budget to each space/facility, available vacancies. Furthermore, it gives them a birds-eye view of their property portfolio.
Beyond the apparent benefit for property managers, it also helps offices structure working spaces to benefit employees. Ideally, space management software will enable businesses to maintain accurate data and use that information to drive financial decisions on their facilities. For example, the social distancing rules because of the pandemic implies that offices need a new office plan that accommodates this requirement. Companies will need space management software to help them navigate this and create a working space where employees can thrive.
There is an increased concern for the environment in recent years with climate change concerns, the current fire outbreaks, and global warming reports. According to the Global Status Report in 2018, the built environment contributes 39% of global carbon emissions.
There is an opportunity for properties to be made more energy-efficient and comfortable through PropTech. In 2020, nearly 40% of global energy and process-related emissions came from the construction sector, making it essential for the industry to adopt more sustainable methods.
Currently, real estate companies are looking out for innovative technologies that can help reduce emissions and encourage green living. Companies like Microsoft have declared their goal to promote sustainable development and low-carbon business practices globally through sustainable business practices and cloud-enabled technologies.
This real estate technology trend is also a great marketing point for businesses as homeowners seek opportunities to reduce energy costs and adhere to Environmental, social, and governance (ESG) standards.
Cyberattacks can take place in modern buildings due to the way they are designed. Besides being an IT issue, this is also a business concern since cybersecurity breaches have a costly impact on Real Estate owners and managers. According to PwC’s 2020 CEO survey, 64 percent of global real estate executives said they were concerned about cyber threats. For all respondents, 73 percent said that they were concerned. In a survey on the Importance of Real Estate Industry Disruptors in 2021, Cybersecurity technologies ranked 3.67 on a scale of 1-5.
As real estate companies introduce new technology, there will be more investment in cybersecurity. The integration of innovative home technologies makes it crucial to keep residents safe and secure from cyber threats.
Location safety technologies ensure that renters can act immediately, prevent the escalation of unsafe situations and increase transparency on safety by monitoring access and movement. 59% of respondents in PWC’s survey on Emerging Trends in Real Estate agree that health and well-being will become more important factors across all real estate sectors.
Property owners are taking steps to make their properties safer and more convenient by implementing contactless experiences and creating an emergency alert system for occupants. For those in the hospitality industry, it has become even more crucial to build trust. Guests want to be sure that they are safe and at no risk from fellow occupants.
The leasing process has changed. A well-designed virtual tour can make the difference between buying and selling real estate in today's competitive market. There is a 130% increase in bookings for 18 to 34-year-olds when there are virtual tours available.
According to Matterport, 92% of prospective home buyers research the internet before reaching an agent. Instead of the standard search and buy, several apps are available for renters and buyers to view properties before making a purchase. With all the information they need present on virtual platforms, customers can complete transactions from anywhere.
Real estate is infamous for the amount of paperwork required to purchase or rent a property. Most of this information can now be submitted online and streamlined across different channels through digitized documentation.
22% of investors consider PropTech innovations in architecture, building, and engineering as areas of interest. The COVID-19 pandemic had a crippling effect on the construction industry and had development grind to a halt. On the upside, it strengthened the urgency to adopt digital solutions in an otherwise traditional sector. Construction has moved from creating physical buildings to designing experiences.
Through building information modeling (BIM), construction supervisors can predict and track the lifecycle of a building project up to the end user. According to McKinsey, investors spent $25 billion on engineering and construction (E&C) technology from 2014 through 2019, a 23% increase over the previous five years.
As a result of BIM technology, construction projects are safer because it can be carried out through remote conferencing tools. Furthermore, any potential hazards can be logged into the model and anticipated by better planning various activities throughout the project stages of the construction process.
Also, project collaborators can make more informed decisions from the data/information contained in the BIM model. BIM goes beyond 3D visualization to show:
● Who constructed a building
● What makes up the building
● Cost of the project
● Timeline for when the construction is expected to be completed
● Finally, the steps required to bring a construction project to life.
These are all essential information a homeowner or property buyer would need to know before a financial commitment. Additionally, before construction begins, property managers can plan and visualize projects. Making it easier to implement changes and avoid costly errors during a construction project.
PropTech, also called Property Technology or Real Estate Technology, can be defined as a merger of real estate and technology. It is the fusion of information technology (IT) in the analog real estate system to help individuals and companies research, buy, sell and manage real estate. A few examples of Property Tech are websites, mobile applications, digitized interactive experiences, and IoT (Internet of Things).
In The Case for Digital Reinvention, published by McKinsey, the research revealed that companies that digitize their supply chains could boost annual growth of earnings before interest and taxes by 3.2 % and annual revenue growth by 2.3 %. PropTech provides digital transformation and innovation in almost every facet of the real estate market today. Tech-enabled real estate companies will not only save money but will also increase revenue.
In Bespoke for Billions , Hans Neubert, the Principal and global practice leader of Digital Experience Design at Gensler, says real estate is just at the beginning of its digital transformation. Real estate's analog nature has been an obstacle to its technological progression, but the pandemic has propelled its digitization. PropTech will usher digital transformation in the sector, which will impact revenue growth and value propositions. Also, it will change real estate’s approach to buying, selling, and managing properties.
The real estate industry has become a service-oriented industry and must match consumer behavior, which has changed significantly. According to a report on the Future of CX by McKinsey, nearly 80% of American consumers count speed, convenience, knowledgeable help, and friendly service as the most essential elements of a positive customer experience.
PropTech facilitates profitable growth by forecasting customer demand, leveraging data, and positioning the company as a solution provider.
As reported by Statista , global PropTech deals were valued at about 7.3 billion U.S. dollars in 2020. More than half of the PropTech investments in 2020 took place in the second quarter of the year, indicating the increased demand. The appeal of the PropTech market is that the current industry players are early movers. It is not yet a saturated market despite the increase in demand.
The process of buying a piece of real estate goes much deeper than just a financial transaction. It is often complicated and time-consuming. PropTech provides a digitized means to simplify the process for real estate owners, buyers, and tenants. More VCs are deploying capital into technology and business innovation because that is the roadmap to ensuring business continuity in the real estate sector.
Real estate is a competitive market, and to keep your customers happy, you need to provide a great experience that meets their needs and ensures you can keep your business above water as we navigate the new normal.