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PropTech: the digital real estate revolution

The rapidly developing digital technologies, steadily penetrating into all spheres of our life, have not bypassed the real estate market, where the term PropTech is increasingly mentioned.

PropTech (from the English. Property Technologies technologies in real estate) is a multifaceted phenomenon. It combines all modern innovative technologies and applied solutions in the field of real estate creation and management (real estate transactions, investment analysis, construction and design, development, real estate maintenance, etc.).

Startups in the field of PropTech are developing in two main directions: they offer tools that can help real estate professionals improve their services or increase productivity, or they are trying to replace professionals.

So what does PropTech carry with it and what effect can it have on one of the most seemingly stable markets?

PropTech – a new trend in the real estate market
PropTech – a new trend in the real estate market SergeyNivens /
How do PropTech meet on the real estate market?
Let us turn to numbers. The results of a KPMG survey conducted in the summer of 2018 among the leading real estate players showed the following: 97% of respondents believe that digital and technological innovations will affect their business in any case, while 60% are convinced that this will have a significant impact. 78% of respondents noted that such influence has already increased in the past 12 months.

The majority of survey participants (73%) evaluate PropTech positively, considering this trend as a new opportunity for the development of their business, but 25% see it as a kind of threat. Recognizing the inevitability of innovation and their overall positive direction, 56% of respondents admit that they cannot yet speak of the “digital maturity” of their companies. Only 7% of respondents are convinced that in this area are at the forefront.

30% of survey participants indicated that they are already investing or planning to invest in PropTech start-ups, while 66% indicated that they still have no clear idea about the prospects for using digital and technological innovations or the corresponding strategies.

It is interesting how the perception of the survey participants about what exactly PropTech’s achievements will influence the activities of their companies and the real estate market as a whole has changed over the year. So, the majority of survey participants of KPMG 2017 (53%) suggested that in the next three years their companies would most likely use PropTech innovations in the field of “big data” (from English Big Data – structured and unstructured data, differing in outstanding volumes and diversity, processed by certain software tools) and analytics.

Speaking about which trends PropTech in the next five years will have the greatest impact on the real estate market as a whole, 44% of respondents also identified big data, 16% noted the possibilities of the Internet of things (from the Internet of Things, IoT) among themselves through the Internet, capable of collecting data and sharing them. Such objects may include household appliances, cars, etc.), and 15% – the development of artificial intelligence.

Many participants in the real estate market still have no clear idea about the prospects for the use of digital and technological innovations, nor the corresponding strategies
Many participants in the real estate market do not yet have a clear idea about the prospects for the use of digital and technological innovations, nor the corresponding strategies of ra2studio / Depositphotos
The 2018 survey showed that in the short term, respondents expect automation to have a greater impact on the real estate market as a whole and on their own companies (30 and 31%, respectively). In second place (in 27% in both cases) were “big data”. Third place was shared by artificial intelligence and the Internet of things. In the long term, the greatest impact is expected from artificial intelligence technologies (32 and 28%).

We note that real estate market players do not yet see the really serious potential of such innovations as blockchain, autonomous vehicles (including drones or self-driving machines), 3D printing technology, virtual or augmented reality, 5G.

Are investors ready to support PropTech?
Statistics show that in solving the problem of investing PropTech projects, 2017 was a turning point. Starting in 2016, start-ups in this area began to receive tangible support from venture capital funds. For example, in the United States alone, the volume of relevant investments increased from 44.7 million dollars in 2012 to 6.5 billion dollars in 2017.

Market research conducted by RE: Tech showed that in 2017 funds invested about $ 12.6 billion in PropTech, thus supporting 347 transactions. The global investment in this area of ​​the market increased by 92%. In 2018, this trend continued.

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