The idea of PropTech is a relatively new one. To some it’s considered a submarket of Fintech, but its scope is much more extensive than that. It represents a broad alignment between tech innovators and their adopters. PropTech is software meant to enhance, automate, or replace previously manual tasks within the CRE industry. And with all of the advancements it has made recently, it's here to stay.
PropTech is the intersection of Property and Technology, specifically in the Commercial Real Estate industry. The idea behind the term is to highlight the importance of leveraging tech. In many ways, it's similar to its big brother Fintech, although because of the narrow shared cross section, they’re more accurately described as cousin industries. Both are driven by the same technological innovations around better access to cloud infrastructure. And also provide the power to automate workflows, and in some cases, innovation in AI and Machine Learning.
Despite sharing some technological values, Proptech has managed to differentiate itself from Fintech; it's not just cloud-based accounting software. It now boasts services that specifically address challenges faced by professionals in the CRE industry, like enabling smart buildings, data transparency, building design, deal pipeline management, and of course, debt management.
KPMG has conducted several surveys of PropTech adoption in the last several years.
As recently as 2019,
Six in 10 real estate firms embraced some form of tech innovation
Six in 10 real estate firm have a senior level manager in charge of digital transformation
For four in 10 firms, adopting tech innovations is not yet a priority
Only one in four firms have a solid data strategy, the remaining firms not having a firm understanding of how to handle their datasets
With remote work becoming the norm in a post-pandemic world, coupled with what some call The Great Resignation, technology innovators have seen a boom in adoption. It’s become more important than ever for many real estate companies that their business processes aren’t interrupted because a spreadsheet owner leaves the firm, or that their data remains in sync and not disrupted by new asynchronous workflows.
In many ways, the PropTech industry is still a bit of a wild west, with only a few entrenched, dominant players. This will create exciting new opportunities for both technological innovators, and adoptees alike, to forge new partnerships and develop better ways of doing business across the industry.
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