A few weeks ago in the news, you may have heard about a story about the HS2 line in the UK. This train line has been fraught with delays and problems as it struggles to get going. The original plan was met with lofty ambitions and promises of getting someone from London to Birmingham & Manchester in record times. The original budget for the project was estimated at £56bn. As it stands, the budget could get bumped up by another £30bn, and that’s before one piece of rail has even been laid.
The project is a prime example of multiple government agencies, private companies and the public coming together to overcome a multitude of problems; everything from the design of the track, to the buying of private land to drones needed to survey every single inch of the proposed line.
All of these elements lend themselves to an area where technology meets real estate, in a term rather obtusely known as Proptech. When someone hears it for the first time, it can be hard to break down and define succinctly. If you’re new to the terminology and haven’t got a clue what Proptech is, how it works and what anyone from a homeowner to a lawyer needs to know about it, I’m going to break down everything you need to know about Proptech and why it matters for everyone in the real estate sphere.
What is Proptech?
Proptech is a portmanteau of property and tech. It is a very broad term that can be used loosely to describe any facet of technology used in the property sector. For ease, it is best to think of it as a catch-all definition of any IT-based application carried out on any property work.
Who specialises in Proptech?
Because it is the meeting of two worlds, no sector can say they exclusively provide Proptech for businesses. In fact, it is something that usually requires a third party to work correctly.
As an example, Goodwin Law provides Proptech investment analysis for venture capitalists. As they put it: “The realisation of technology’s profound impact on real estate breeds innovative ideas and opportunities”.
When technology improves, there needs to be people out there using it to the advantage of those in the property sphere. While a surveyor may know the ins and outs of every inch of space a potential build to justify a budget, someone specialising in Augmented reality can map out a project to put a face (or rather bricks and mortar) to an idea investors can visualise and back.
You’ll find that many new tech start-ups may label themselves as being a Proptech company if their services fit within this unique cross-section of industries. Remember though that this is a catch-all term and not a specific service.
What are some real-life examples of Proptech in action?
Because the term is incredibly broad and can be used for many different applications, examples of Proptech in the real world include:
- IA bots used for chat services on social profiles and websites of real estate agents (Askporter is a prime example of this in the UK)
- Peer to peer lending for mortgages to bypass the traditional bank route
- Software like Hipla which helps buyers see how they compare to other buyers in their area, in turn helping to make house bids less risky
- Software developers for construction companies – a BPF report in 2018 noted that less than 20% of Proptech is used exclusively on construction works over sales and capital.
- 3D printing – This doesn’t just mean making scale models by applying real-time changes to build houses and office buildings.
Proptech can also cover property investment, valuation, predictive analysis and urban design.
Is Proptech a fad?
No. It may seem like a buzzword just now, but as with everything from shopping to daily routines, we are leaning a lot on AI and IT to create easier paths in our lives. Any breakthrough in real estate in recent years has come from some new area of Proptech.
And while the HS2 may still be a pipedream for those involved, as Proptech progresses, we may just see a train on the tracks this side of the 2020s.