As with other industries, Construction was also affected by the digital revolution. Just as in so many other aspects of our lives, technology can play a huge role in areas such as construction projects, tenders and real estate. This article aims to provide a detailed introduction to property technology, or “PropTech“, to hopefully give readers a better understanding of the influence new technologies are having on the construction and real estate industries.

The aim of many new business ideas is to make existing processes easier and to find new ways to interact with data. PropTech is the use of technologies – most notably digital technologies – in the construction, property and management industries, named in a similar way to other industries like FinTech, MedTech and EdTech, all of which involve the use of new technologies.

While FinTech aims to improve transparency within the financial markets and MedTech’s goal is to improve healthcare, EdTech strives to facilitate learning and improve performance through the use of technology…all valuable fields in which technology plays a pivotal role. However, one can also understand the more conservative mindset – the construction industry is built upon the use of well-established, proven processes. Changes to these can potentially have very negative consequences. We are at a point now, however, where enough progress has been made that certain improvements can be made to industry processes with minimal risk.

PropTech Benefits

Many uses of PropTech provide value, and cost savings, and firms know that increasing efficiency allows costs to be driven down, thereby freeing up resources to further develop their business. For example, efficient data management, the ability to search for information quickly and easy exchange of data between companies and departments may sound trivial but clearly make work considerably easier for employees and other users of software solutions. PropTech solutions generally have a slick, modern design so that users can find data quickly and easily, giving them more time for more important tasks; they can facilitate communication, resulting in fewer emails being sent; PropTech can even enable end users to interact directly with suppliers and report any potential complications immediately. Greater transparency can also be achieved. As a result, all in all, users of PropTech generally have better job satisfaction than others, resulting in lower employee turnaround.

PropTech Users

The construction and real estate industries are extremely varied, with unlimited areas for the implementation of PropTech. This is exciting not only for sales departments but also for agents, project managers, residents and investors. In the example of crowdfunding, classical roles are swapped and even small investors can now make the construction of a building possible without requiring the involvement of a big investor. Other business ideas have equally transformative visionary ambitions. The following section explores a range of possible models.

Technology in Construction

PropTech Overview

Real Estate Management: These technologies aid with the management of properties. They can be particularly 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 different groups. This category also includes visualisation products and project management tools.

Property Management: In property management, PropTech solutions facilitate the work of Building Managers and caretakers and include inventories and consumption indicators, as well as complex management tools with the ability to cover numerous aspects of a property and much more. For larger firms, there are also solutions to facilitate the management of several properties simultaneously.

Portfolio Management: Portfolio management has a certain amount of overlap with the previously mentioned FinTech. Primarily of interest to investors, solutions include tools designed to facilitate market observation and the assess various values within the construction industry. Financing with micro-credits is another concept, among many others, that has reached the market.

Home Services: For B2C businesses, domestic solutions exist to help both owners and tenants to manage their homes and purchase various services, such as renovations and many others, directly.

Long & Short-Term Letting: Aimed at consumers and accommodation providers, these products offer easy contract solutions. Platforms like these offer leasing of property or accommodation on a daily basis, and much more, in a similar manner as an agency and are often available as smartphone applications.

Insurance: In the world of construction and real estate there are countless forms of insurance cover available to home and business owners alike, to protect against various forms of damage, theft etc., and PropTech companies can play a significant role in providing more transparency and a better fit for customers.

Agent Tools: For property agents, a lot of their administrative work can be to automated, allowing them to focus on the most important part of their work – the properties themselves. Examples include CTMs or platforms for property analysis as well as various marketing tools.

Building Surveys: About 10 years ago the global revolution of digital maps began. Fast forward ten years and now, for example, even the interior of shopping centres has been mapped. This ability to view the interior of such structures can be used by various different technologies for all sorts of applications. Examples include 3D rendering and map editing platforms.

Smart Homes: More than ever, tech-savvy residents are realising the value of having a networked home. This relatively new and progressive automation capability is helping more and more people benefit from increased comfort and greater efficiency. Popular topics in this area include safety technology, air conditioning, intelligent lightingand many others.

Contract Management: There is often a considerable administrative barrier among companies who are involved in the construction and furnishing of buildings and, as a result, many are turning to PropTech to find ways to simplify their processes. As well as in areas such as general contract management, companies are finding that their is also great potential in the use of various technology solutions in identifying sales opportunities and closing deals.

PropTech is not just a new trend. Even established real estate portals that have been trading successfully since the mid-2000s, and cover a huge share of the market, are now considered as PropTech. New companies spring up on a daily basis and not all of them fit into the categories described above. However, all of them find a home at the recently founded German PropTech Initiative, founded by industry innovators and functioning as a reservoir of ideas for ways to improve the construction and real estate industries.

The success of this new breed of technology can also be seen in the numbers. According to Blackprintpartners, in June 2016 there were 130 PropTech companies in Germany alone. Globally, $1.7 billion was invested in PropTech in 2015, with the USA leading the pack. It is now up to the rest of the world to place their trust in, and invest in, their local PropTech firms in order to keep up with the United States.

PropTech has the potential to radically and fundamentally transform the construction industry and, in this day and age, any bsiness that fails to recognise this fact and take action could very well eventually find itself in a similar position to those once-successful typewriter manufacturers when the home computer was unleashed upon the world…