PropTech's influence on the Real Estate sector
PropTech (short for property technology) aims to utilise technology to allow property service providers to offer more refined and efficient solutions and services. The drivers behind the PropTech movement are accessibility, mobility, flexibility and speed.
PropTech isn't restricted to one area of Real Estate or one service provider. Any property service provider from live-in landlords to lawyers can benefit from PropTech. For example, landlords can use technology to better market their property, organise viewings and apportion bills; lawyers can use PropTech to assist with data reviews and document production to increase consistency and decrease transaction times.
How is PropTech being used in different areas of Real Estate?
Residential sales and lettings have been quicker on the uptake of PropTech, probably because of the high level of consumer interaction. Veteran property sites such as Rightmove and Zoopla are widely used and have transformed the way we now search for new homes. Online agents, Purplebricks, spotted a gap in the market and have seen a significant increase in popularity by offering a fixed fee online platform for marketing and selling houses.
Unsurprisingly, given the upheaval and stress involved in buying a house, investors have started backing apps and online providers that make the process simpler. Nested is a start-up that offers sellers a cash deal on their house and then takes over the selling process. If the property remains unsold for 90 days, Nested will lend the seller the money it offered initially (interest free) to enable them to buy a house. Another residential property app, View My Chain, offers buyers, sellers and property professionals the ability to track the key 'milestones' in their property transaction. Not only does this provide transparency, View My Chain claim the app leads to lower fall through rates and faster completions.
With it becoming increasingly difficult to get on the property ladder, the residential lettings market is strong. Movebubble is an app that allows users to view property listings in real time so as to avoid seeing properties that have already been rented. It remembers user-preferences to produce better suited results and allows bookings and offers to be made via the app. For those in house shares, Split the Bills will set up your utilities services, split the bills equally between all flatmates, take payment directly from each, and set up one monthly payment for the bills.
JLL recently announced that they do not see PropTech as a threat, but as an 'opportunity to transform their business'. Indeed, many property professionals may soon see their roles change and will have to find new ways to add value to their clients. This is particularly true of transactional professionals, where processes are likely to become standardised and so selling experience will become more valuable.
The trend in Commercial Property, a less consumer facing area of Real Estate, seems to have been to invest in larger, more disruptive technologies. That being said, software that helps commercial landlords and agents manage buildings is proving popular. Liberate Case Management Software has been developed to help automate certain procedures, compile reports on key lease terms, and pre-populate key property documents. Michelmores have invested in this software to add value to our clients, who have live access to a user-friendly platform hosting their data, allowing them to review the report and identify trends and risks. Pooling data in this way allows commercial landlords to manipulate and analyse data in line with its needs. For lawyers, it results in increased accuracy and consistency when drafting documents and has the potential to reduce transaction times.
Smart buildings are a more radical form of PropTech. Smart buildings use sensors and devices to collect data relating to a building's operation (such as heating, lighting, water usage etc.). This data help owners and investors increase energy efficiency and maximise returns. In the corporate occupier sector this could mean anything from recognising lighting and heating preferences for certain tenants, to assessing how often each desk space is used. In the retail sphere, footfall and consumer behaviour data could help clients plan more effectively in relation to advertising and the use of space.
Drones could become more readily available in construction and development. They could map development sites, record the condition and layout of a site and identify any potential problem areas. For large projects, the mapping and land surveying capability could save time and costs, which can be particularly helpful at site planning stages. In America, Skycatch uses drones to undertake surveys and create 3D models of the construction site, producing interactive maps usable by the professionals working on the project as well as the client. This helps iron out issues earlier, which, given the frequency of projects that run over in terms of time and costs, is said to increase the likelihood of projects being delivered on time and within budget.
The popularity of Virtual Reality will continue to grow as a marketing tool. Given the time and cost saving elements linked to the products mobility, it may be particularly appealing for developers who wish to attract foreign investment. It also allows prospective purchasers/ tenants/ investors a more accurate view of a property that does not yet exist and gives them the ability to identify any modifications or changes that may be needed or desired.
Although the Real Estate sector has been slower to invest in technology than other sectors (such as financial services), PropTech is now starting to take off. Given the increase in investment, property professionals will need to start adapting to ensure they are making the most out of the technology available to better service their clients.
For further information please contact Stephen Newson, Partner in our Real Estate Team.