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The New Frontier That Could Outrun AI And Blockchain: Real Estate Tech

Forbes Technology Council
POST WRITTEN BY
Eric Trabold

Real estate touches every part of our lives -- our homes, workplaces, where we shop, and even where we try to get away. So it won’t be surprising that real estate was the largest industry in the United States as of 2018. But at a time where technology is at the forefront across all industries, the real estate industry spends less than 1% on information technology. 

Why does our largest industry arguably hold the title for the least innovative? As the CEO of a proptech company, I've seen more and more startups bringing technology to real estate and making selling, buying and managing properties easier than ever. Venture capitalists may be starting to see dollar signs.

What Is Proptech?

First, let’s understand what real estate tech is. You’ve heard of Fintech, but what is Proptech?

We can summarize Proptech, the clever combination of “property” and “technology,” as all technology that helps drive change by simplifying how we buy, sell and manage properties. If you have ever searched for your dream home or booked a home for the weekend online, you have used Proptech.

The Start Of Proptech

The first game changers emerging in the Proptech space made buying and selling of properties a lot easier and quicker.

Companies like Zillow have changed the way we thought about buying or renting our next home, whether for the next 30 years or just 12 months. Airbnb introduced the concept of repurposing homes for shorter duration rentals, while WeWork has completely disrupted the commercial real estate industry with on-demand workspaces.

According to Grand View Research, the real estate industry will reach $4.26 trillion by 2025. These unicorns are not fighting over a piece of the real estate pie: I believe they made the pie grow.

And Money Is Quickly Flowing To Proptech

The buzz continues to circle around Proptech because it hit a record high in global investments -- going from $459 million in 2013 to $2.665 billion in 2016, according to CBInsights (via ThinkRealty). It reached $12.6 billion in 2017 and $9.6 billion in 2018. To put this in perspective, it surpassed investments from highly publicized industries that flood many media outlets. To name a few, blockchain and cryptocurrency startups raised at least $1.3 billion globally in 2018, and artificial intelligence and machine learning companies hit $10.8 billion globally for total investments in 2017.

An industry that has historically remained conservative created a big boom in such a short amount of time. What changed and made venture capitalists want to get their wallets out now?

The Future Of Proptech

Remember: Proptech is technology that makes it easier to buy, sell and manage property. The established poster children focus solely on the buying and selling part of the equation. Right now, there is very little technology that automates how we manage properties. I believe the next frontier is to streamline optimization of operating real estate with the latest technological advancements in the internet of things, sensors, big data and artificial intelligence (AI).

That pie has the potential to transform into a pie shop. With buying and selling, you tap into snapshots of a property’s lifetime. Startups that make it easier to manage them in between create the possibility to make even more revenue at any time. Some, like my company, SMS Assist and HqO are already emerging. I predict that Proptech will continue to expand with technology that drives efficient utility monitoring and potentially even AI-driven maintenance. Automating workflows and gathering data through property management could empower property managers and operations to make better decisions, leading to more revenue and efficiency. 

Just imagine if real estate, the biggest industry in the United States, embraces technology and increases spending on information technology from 0.5% to even just 5%. Proptech will just explode.

How To Benefit From The Rise Of Proptech

As real estate professionals, you have the advantage of learning about this new wave in the industry first and being quick to adapt to reap the benefits. I believe it's important to grow with the industry to ultimately keep customers satisfied. You may have happy customers today, but what about five years from now? Think about how you can use technology in ways that will add value to your business. Stay up-to-date with trends in technology and listen to younger generations, who are the future. Knowledge really is power. Finally, innovate and be open to change so you don't miss out. This is just the beginning.

Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?