The digital revolution did not leave out of the construction industry. As in many other areas of our daily lives, technology can be an asset for construction projects, tenders, and real estate. In this article, we would like to give you a detailed introduction to PropTech – the property technology. An overview of PropTech is supposed to contribute to a better understanding of how the new technologies are influencing the construction and real estate industry. Many new business ideas aim to make already implemented processes easier and integrate new possibilities to interact with data. At the core is the user who is offered comfortable access to the subject matter – just as PropTech company Building Radar is offering an easy way to find all contacts within the construction industry.
PropTech is the implementation of technologies – especially digital technologies – in industrial construction, property, and management. Its name takes its cue from other industries such as FinTech, MedTech or EdTech – all of which have a strong resistance to the new technologies in common. While FinTech aims to ensure better transparency of the financial markets, MedTech aims to contribute to better healthcare. EdTech supports the acquisition of knowledge with the help of technology. All cover interesting fields in which technology in itself makes a lot of sense. On the other hand, the conservative mindset is easily understandable as well. The construction industry is characterized by well-established and sensible processes. Interventions result in extensive and potentially negative consequences. By now, however, the progress is great enough for certain improvements to the processes of the industry. The Building Radar solution, for example, has earned the trust of big names such as Vitra, Viessmann or Hill-Rom.
1. The benefits of PropTech
Many applications of PropTech provide value and cost savings for their users. Companies will soon learn that higher efficiency can save costs as well. This way, resources can be freed up to further develop the company. Considering this, a proper data management practice, a quick search of information and easy data exchange between departments and companies may even sound like trivialities. The user of software solutions – mostly the employee – will notice how much easier his work suddenly becomes. Most of the time, PropTech solutions will come with modern design. Building Radar, for example, offers a sleek interface that is easy to navigate. It helps employees to find data much quicker. This, in turn, leaves the user with more time for the essential tasks of his profession. Here, the platform offers possibilities for easier communication. Fewer emails can be the result of this. Even the end user can benefit from PropTech who is now able to directly interact with suppliers and immediately report possible complications. Better transparency is also greatly appreciated. As the customers of PropTech users are therefore more satisfied than others, there is a higher probability that they will stay loyal to your company.
2. The users of PropTech
The construction and real estate industry are as versatile as they are interesting. This also accounts for almost unlimited areas of implementation. In practice, several models have already been implemented. The changes are not only exciting for the sales department as with Building Radar but also for agents, project managers, residents, and investors. The crowdfunding model as one of many changes even swaps the classical roles. Especially small investors now have the opportunity to make the construction of a building possible even without involving a big investor. Other business ideas have similar visionary ambitions. In the following section, we will explain the range of models.
3. PropTech Overview
- Real Estate Management: These technologies help with the management of properties. They can be especially beneficial for the management of leased properties. Examples are tenant management, management of lease payments or communication tools.
- New Construction Management: Solutions in this category are ready to be implemented at the construction site. There, they aim to improve communication among the different groups. This category also is for visualization products and project management tools.
- Property Management: In property management, they facilitate the work of the janitor. The solutions include inventories, consumption indications, complex management tools that cover several aspects of a property and much more. For larger companies, there are also solutions for the simultaneous management of several properties.
- Portfolio Management: Portfolio Management coincides with the previously mentioned FinTech. The ideas are mainly interesting for investors and for example, include tools for market observation or the assessment of values within the construction industry. Other concepts such as financing with micro-credits have reached the market.
- Home Services: A special service for the B2C business are domestic solutions. With these solutions, tenants and owners can manage their homes and directly purchase services. Often, these services are renovations but there are other models as well.
- Long- and short-term Letting: These products for end consumers and accommodation providers offer easy contract solutions. Platforms in this category offer agent-esque leasing of property or the leasing of accommodation on a daily basis and much more. These solutions even comprise smartphone applications.
- Insurances: There are several policies concluded in the context of construction and real estate. Amongst others, companies advertise homeowners’ and building insurances and even insurances for weather damages. Here, PropTech companies can ensure better transparency as well as a better insurance fit.
- Agent Tools: For the work of agents, technologies can automate several administrative steps to help them focus on the properties. Examples are CTMs or platforms for property analysis as well as marketing tools.
- Building Surveys: Approximately ten years ago, the global revolution of digital maps started. By now, even the interior e.g. of shopping centres has been mapped. This interior view can be used by different technologies for various applications. Examples are 3D rendering and platforms for map editing.
- Smart Home: Especially technology-savvy residents and end users recognise the value of a networked home. This newly progressive automation is promising improved comfort and more efficiency. Popular topics in this area are safety technology, air conditioning, and intelligent lighting.
- Contract Management: Among companies involved in the construction and furnishing of buildings, there often is a huge administrative barrier. In addition to Building Radar, many other companies are concerned with the simplification of processes. Besides classic contract management, finding sales opportunities and contract conclusions are areas with great potential.
PropTech is not just the latest trend. Even well-known real estate portals that have been successful since the mid-2000s and cover a huge share of the market are now considered as PropTech. This rather artificial classification ensures that more and more entrepreneurs are more creative than the creators of patterns; with this one being an exception of course. New companies that do not fit into the above-mentioned categories are founded every day but they all find a home at the newly founded German PropTech Initiative. The initiative was founded by innovators in the industry and functions as a reservoir of ideas for improvements in the construction and real estate industry.
The success of the new genre can be witnessed in the numbers as well. According to Blackprintpartners, there are 130 PropTech companies in Germany alone (as of June 2016). Globally, as much as $1.7 billion US dollars have been invested in PropTech as early as 2015. The year before, investments have comprised nearly $300 billion US dollar less. The frontrunner is, of course, the US. It is now up to the German market to invest trust in the local PopTech companies to not be outpaced by the United States.
PropTech has the potential to fundamentally change the construction industry. If you ignore it for too long, you could end up like the once successful typewriter manufacturers when the home computer was released to the market.