This article was originally published in January 2021.
The year 2019 was the record-peaking year for Proptech with a record of $16 billion in investments. While we progress into 2021, there is positive energy around Proptech, along with explosive growth in the real estate industry. Some may ask “will 2021 be the year to finally establish this growth?” However, I believe 2021 will be greater than 2019. Here are my forecast predictions including 10 big ideas that will shape Proptech in 2021.
For instance, one would have to oversee adjoining businesses (hospitality/travel, retail, etc.) to see how players who grasped tech fared compared to their peers who did not. For example, the retail industry where some players vanished (Circuit City), and others became the shadow of their previous beings (Sears). There are a few individuals that developed greater and more grounded like Best Buy.
The question comes to “Why”? These individuals grasped tech wholeheartedly to not break absent from their competition and dodge from tech monsters like Amazon. Luckily, other businesses took note of this and received advanced digital technology generating $2.3 trillion dollar commerce globally. Similarly, the real estate industry is no different. 2021 is the year where players who wholeheartedly support tech, like Proptech will begin to break absent from their competitions, jump in 2022-2023, and inevitably annihilate competitors by 2025.
While PropTech’s early victory came from the center on user space, its development will progressively depend on its capacity to distribute financial returns to managers of physical space including operators and property managers. This makes me question, “How does PropTech increment revenue? Decrease operational costs? Increase operational productivity? Increment renewals?”
These are the type of questions PropTech will progressively confront and will need to reply to in an ROI-positive manner in 2021. To illustrate, PropTech elevates the computerized engagement of inhabitants. Does this engagement really cause inhabitants to remain longer in their leases? In the event that so, how much extra income does this bring and spare in costs? And is the net impact of extra income and fetched sparing numerous of the PropTech costs, subsequently ROI?
From data on properties performance with residents interacting with physical space to millions of data points is created by smart gadgets like smart locks and digital home assistants. It is no mystery the industry is within the middle of a data tidal bore.
According to Vik from GlobeSt.com “collecting data for data’s sake is futile [...] the real power of data lies more in the insights that can be derived from it and the resulting actions that such insights help trigger. And I expect 2021 to be the year where PropTech starts doing exactly that. Expect data to be your friend for making such decisions in 2020 and acting on them.” I believe this quotation resonates with the year 2021 Proptech is unstoppable and sky-rocketing in the market.
Having experienced first is an inspiration for Bay Area consumer technology companies like Uber, DoorDash, and Facebook. In 2012, Facebook began to talk about the significance of moving from a center on the desktop experience to a versatile mobile device - because that’s what their clients preferred. This craving for experiences that are on request, ubiquitous, convenient, dependable, and reasonable will require PropTech to take an experience-first approach to shape its identity and proposition into 2021.
Real estate and property management companies have been embracing PropTech at a hot pace during the past few years. We can see that the last few years of VC investments showcases a steady rise from 2017: $12.6 billion; 2018: $9.6 billion, and mid-2019: $16 billion. Judging by these patterns, this number is anticipated to rise due to plateauing property costs, and a crave to supply more prominent benefit levels and drive operational efficiency. With higher VC investments into 2021, it will likely include the Bay Area to reminisce and repeat it's history.
One of the suggestions of higher VC investment is that more and more new players will proceed to enter the PropTech space. As a result, apps are a prevalent strategy for PropTech players to convey their services, and a deluge of new players will also result in advanced proliferation of apps.
To sum up, Vig from GlobeSt.com states: “One downside to this could be app fatigue, where consumers do not want to download any more apps [...] I don’t think we are there for PropTech yet. However, towards the latter part of 2020, I would not be surprised if app fatigue starts to kick in. It will be important for apartment operations to consider app consolidation or how to work with PropTech partners to streamline the number of apps needed.”
Freeing people from tedious, low-value errands has long been the guarantee of automation. The only contrast presently for Proptech is the promise is at last falling into place. Impressions of automation are currently apparent with self-guided tours, chatbots, and digital work orders. That being said, the day where the leasing office incorporates a digital assistant is not far away into 2021.
A digital assistant will oversee a list with all conceivable assignments requiring activity but more vitally will have insights (intelligence) to coordinate staff time and consideration to those requiring urgent assistance.
As real estate companies embrace and adopt more of PropTech, they will progressively depend on PropTech suppliers for solutions and arrangements, counting on those related to security. Since numerous PropTech supplies are digital geniuses with applications in the cloud rather than the data centers, they will gain exposure to cybersecurity risks that will likely go beyond IT departments. Particularly, encryption, identify/access administration, and better occurrence following and reaction will progressively be talked about in corporate boardrooms.
It is challenging to attract the correct digital talent. Sometimes competition from Silicon Valley offers lucrative compensation and advertises profitable stipends such as Facebook, Amazon, Netflix, Google, etc. Savvy real estate players will begin recognizing internal talent and can be re-trained to satisfy the demands of digital commerce and workforces in areas such as IT, digital marketing, automation, and many more.
Even though these ideas and advancements are promising, they signify a change from the status quo. This change will never be simple, particularly for this asset class that is not required to change within the long-term. But this change will be vital.
There is plentiful proof from other businesses that need this change. For each Best Buy that transformed, there was a Circuit City that did not. For every Netflix that changed, there was a Blockbuster that did not. Finally, for every iPhone camera sold, there was a Kodak that did not.
Vig from GlobeSt.com states, “And it’s not because they did not try or want to change. They did [...] but that is the thing about change. It is never easy. Where some succeed, others fail. In 2020, for every real estate company that will grab the opportunity that change presents, there will be one that will not.”
Proptech is one of North America's fastest growing industries. Here are 10 of the big ideas that will propel it forward in 2021.