Building a foundation for a smarter property sector - an introduction to ‘proptech’

The value of the UK’s proptech sector was recently placed at over £14 billion, a figure that will rocket to an estimated £71 billion by 2032. It’s a sector grounded in physical assets yet built on data and, increasingly, artificial intelligence. It spans the entire square-footage of the real estate sector, with proptech impacting and enhancing the buying, selling, letting, researching, marketing and managing of property.

It’s helping to make processes quicker and easier and create buildings which are greener and smarter. Those healthy valuation figures are also a reflection of how the adoption and development of proptech is making real estate companies, investors and stakeholders more intelligent and more profitable.

It’s a space that the team at Appdrawn have been involved in for a number of years, supporting clients like host solution provider Airlinen and estate and lettings agent, Imagine Property Group. And it’s one we’ll be focussing more attention and resources on this coming year.

But what exactly is proptech? What kind of solutions and technologies does it involve and who uses them? Where can we see proptech in action and – more importantly – how can we realise its benefits? In the first in a new series of monthly blogs, we’re taking an introductory look at an exciting new sector.

What is proptech?

Proptech is a catch-all phrase encompassing various hardware, software and applications aimed at and adopted by the real estate sector. These are in use not only in the offices of estate agents, but in design and architecture studios and embedded in devices and sensors within buildings themselves. Many of us regularly use proptech solutions without even thinking about it: we browse AirBnb when we’re looking for holidays, and Zoopla when we’re considering a house move.

Playing catch-up

In recent years, much attention has been paid to the digitalisation of major markets. These include spaces like finance (think of the impact of PSD2 and challenger banks), retail (e-commerce, drone deliveries, automation in warehouses), and healthcare (augmented reality for treatment and training and virtual consultations).

However, we’ve heard comparatively little noise in the property world. Despite a volatile market and economic uncertainty, we continue to invest money in real estate. Buying, selling, letting and managing buildings can therefore be a profitable business, and it’s little surprise that there was a reported 10.6% increase in estate agency numbers across the UK in the year to April 2023.

Really good for real estate agents

If you are among these professionals you may already be using technologies and applications that make you work more efficiently and provide a better service to your clients. This could be something as simple as a database solution tailored to the needs of your market and customer base.

We worked with Imagine Property Group, for instance, to create a bespoke platform that is used to simplify and streamline the work of its team. Underwriting tools that are supported by AI are another example of how proptech is aiding companies. High volumes of data from mortgage applicants can be examined and analysed quickly, and risks (such as fraud) reduced and avoided.

Customers make a move on the property market

Investment by estate agents and the like is critical if they want to remain competitive. This competition comes not only from other agents, but from customers – landlords, tenants, buyers, sellers – themselves.

Proptech includes platforms that allow users to search for properties, more easily compare and obtain finance, research neighbourhood data (on things like crime and average house prices), and communicate directly with other stakeholders. All tasks which traditionally have been conducted by (and fiercely protected by) established companies.

Mergers and acquisitions could be one way to overcome this. Property platform Zoopla, for instance, has spent years enhancing its offering and competitiveness by acquiring a number of proptech companies, including online mortgage advisor, Trussle, and peer-to-peer mortgage provider, Landbay; FixFlo, a portal for requesting repairs to rented buildings; Yourkeys, a software solution for housebuilders; and Hometrack, a property data firm.

We’ll be keeping a close eye on the property and protech sectors this year, as we expect others in the market to make similar moves.

Hardware making things easy

Proptech’s not just platforms. You can also get your hands on hardware that promises to solve problems that crop up across the scope of real estate, from building to buying and much in between. 3D printing, for example, can be used in construction to minimise waste and reduce costs. This is happening on a site in Lancashire, which will reportedly become Europe’s biggest 3D-printed housing development. The project will create 46 homes and is the result of a partnership between a not-for-profit developer and a 3D printer supplier.

Legacy tech is also being paired with dedicated software to create new proptech solutions, such as drones being deployed on construction sites for monitoring and collecting data on buildings and geography. On the homebuying side, virtual viewings – either viewed on a device screen or via a VR headset – have been available for a number of years now in an attempt to replicate the in-person viewing experience. What’s more recent is the accessibility of such tools. 

Marketplace platforms allow the general internet user to accomplish many of the tasks traditionally locked into the real estate role, and we’re seeing this in an increasing number of other areas of proptech. Spatial data company Matterport, for instance, is enabling its customers – be it an established real estate company or simply someone looking to market property or a hospitality venue – to create 3D virtual tours which can be overlaid with information about the space.

Proptech is clearly enhancing, easing and making more cost-effective the construction, marketing, selling, browsing and buying experiences. One final benefit of proptech it’s worth mentioning here is its impact on the environment and sustainability.

Turning buildings green

PWC’s Emerging Trends in Real Estate Europe 2023 report notes that ‘Environment and sustainability strategies are key priorities for most industry leaders for 2023 — as they have been for some time — and climate risk is widely acknowledged as the biggest challenge facing real estate over the next 20 years.’ Technology is high on the agenda, with the report quoting an industry figure: ‘Technology embedded within smart buildings will control how they interact with the environment, playing a crucial role in supporting the sector’s journey toward sustainability.’

IoT sensors can track, analyse and report data on things like temperature, humidity, energy usage and maintenance in real time, and make adjustments without the need for human intervention. There are a lot of exciting case studies in this field.

If you work in the property sector and are interested in learning what tech can do for you, why not get in touch with one of our team?