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Why the PropTech Sector is Growing Fast

As the sector continues to further grow and mature, investment into property technology or PropTech reached record levels last year and has more than quadrupled since 2020. There was a huge £1.6bn poured into PropTech in 2021, a huge 360 percent rise from the year before.


PropTech investment is seeing some significant growth each year, with the real estate sector becoming more and more aware of operational performance gaps and the changes that are required to reach increasingly closer net-zero targets. Property developers, investors, landlords, and occupiers are all coming to realise that technological adaption is key to future-proofing property assets and ensuring that sustainability promises are upheld in the coming years.


What are PropTech Startups Focused On?

There are several areas for startups to focus on when it comes to PropTech 2022, giving the sector lots of opportunities to grow as the PropTech industry becomes more important in the real estate industry as a whole.


Property developers face a range of inefficiencies on a daily basis that PropTech business model types may be able to help with, including a lack of ability to move quickly, information asymmetry throughout the business, intensive and often cumbersome legal agreements, the need for multiple intermediaries throughout all transactions, and inefficient building programming and systems.


PropTech 2022 has a lot of interesting opportunities for startups.

With this in mind, it is no surprise that PropTech platforms can vary as widely as the entire property industry. There have been disruptions by major players in several different areas including insurance, rental and hotel, property management and facilities, legal, mortgage and lending, construction, PropTech automation, and many more.


Proptech Types

There are two main types of PropTech that are being heavily invested in and growing at a rapid rate, say Upperkey. These are:


CRETech

Commercial Real Estate Technology (CRETech) is basically PropTech for commercial or business properties. This is a sector of the wider PropTech industry that refers to all the programs, tools and solutions that companies and individual professionals use in regard to commercial buildings such as warehouses, offices, industrial buildings, retail stores, restaurants, and more.


It covers a wide range of tools that are used for the searching of, development, purchasing, selling, and letting of these properties. CRETech covers a wide range of sectors within commercial property, including commercial property management, asset utilisation, financing and evaluation, property listing and selling platforms, construction planning and management, and much more.


Residential PropTech

Residential PropTech or property technology refers to any products, solutions, tools, and software that are designed to be used with residential homes. These tools have been developed to better facilitate the way that we buy, sell, rent, or even develop residential properties.


This sector covers a wide range of different sectors within the property industry, from tools that are designed to be used with large-scale housing estate developments to platforms like Airbnb where homeowners can make some extra money by listing a spare room in their house for short-term rent. Residential PropTech tools include property management tools, mortgage lender software, short- and long-term rental search platforms, closing tools, loan and financing management systems, and more.


Benefits of Proptech

One major reason why the PropTech sector is growing so rapidly today is that there are numerous benefits for investors. There are also benefits from using PropTech for homeowners and landlords, and even PropTech benefits for tenants.


For investors, PropTech tools have led to more accurate construction planning that has helped to reduce, or in some cases, completely eliminate major errors or holdups throughout the process. Eliminating missed deadlines or serious mistakes that need to be rectified before a development can go further, for example, significantly reduces the risk to investors of losing large amounts of money. Along with this, there are various PropTech tools now available that developers and investors can make use of to conduct market research more thoroughly, track investments, track development, find buying, selling, and rental opportunities in certain areas, and much more.

PropTech is also beneficial to investors.

Many PropTech tools today are designed to make the property investment easier and smoother, which has benefitted investors who can now use these tools to quickly and easily secure contracts without the need for as many intermediaries.


Proptech and Net Zero

One area where PropTech is growing significantly is that of smart buildings, which is being utilised to help property developers and investors reach net zero pledges. Sustainability strategies are now more important than ever for new property developments, and this often also means ensuring that the right PropTech solutions are chosen and put in place.


The main ways in which PropTech solutions are expected to help with delivering the net zero promise is by helping to optimise workflows, processes, and resource management in various property sectors, along with optimisation across sectors with solutions such as collaboration software and cross-sector data management. Net zero is only going to be possible with the collaboration of people across the entire development process from the concept to final design, finding the location to constructing the development, and engaging with tenants or buyers.


Proptech and Property Management

Companies like Upperkey are already starting to utilize various PropTech tools in the property management services that they offer. Property search sites where entire homes or single rooms can be advertised for sale or for rent on a short- or long-term basis are one of the first and simplest PropTech tools that have become popular in the industry today and are regularly used on behalf of clients by property management firms.


Along with this, property management providers are also increasingly making use of more sophisticated PropTech solutions for maintenance and upkeep of properties, including sensor networks that can be fitted to both new and existing properties to provide regular updates regarding the property that can help homeowners, landlords, and tenants be better aware of the property condition and be notified of issues at an earlier stage, which would not have been possible before.


How Proptech is Benefiting the Industry

PropTech can be referred to as a range of different, often disruptive solutions and innovative technologies designed to make investment, buying, selling, developing, and other processes related to property easier.


There are several ways that PropTech is and will continue to benefit the real estate industry as a whole. PropTech tools are now not only being more widely adopted by developers and investors, but there are also tools that benefit regular homeowners, sellers, and even landlords and tenants on both long-term and short-term basis, say Upperkey.

Landlords and homeowners can both benefit from PropTech.

Some of the main advantage of PropTech that are causing this new and emerging industry to grow at such a rapid rate include:


Furthering Innovation

PropTech is making unprecedented changes to the property industry and modernising a lot of processes that were long overdue bringing up to date. However, there is more to PropTech than simply the tools that are available and the ways in which property professionals and homeowners are beginning to take advantage of them.


With big data becoming more and more important in the real estate and property industry, it is PropTech tools that are concerned with data collection and analysis that supply the knowledge and information necessary for developers and other professionals in the property industry to make more informed decisions, determine the best practices for profitable PropTech, and enable further innovation in the real estate industry as a whole.


Increased Property Value

Developments or properties that utilise PropTech tools are more likely to be associated with higher quality, and are often viewed as more valuable compared to properties that are not equipped with PropTech solutions or tools. As a result, investment in PropTech is often funded by or at least supported by property investors and developers who know that they are more likely to attract new buyers or tenants to properties that utilize these solutions.


For example, homebuyers may be willing to pay more for homes that use PropTech solutions for energy efficiency and achieving net zero in the future, while landlords may be willing to invest more in buy to let properties that use a network of sensors to report issues before they are visible to tenants.


Improved Transparency

Big data is key in many PropTech solutions, and this has been able to bring about vast improvements to the property industry as a whole when it comes to increasing transparency. With various PropTech tools that use data collection and analysis, it’s easier for anybody to get their hands on information about property transactions, records, and more, making the industry more transparent than it has ever been.


More Automation

For a long time, the property industry has been plagued by piles of paperwork and lengthy, mundane processes that are involved with any transaction or investment including new property development, property purchases, lending, and even renting.


PropTech tools are set to change all this, bringing about refreshing differences for professionals working in the property industry thanks to more, improved automation. Back office processes are now becoming more automated thanks to several machine learning and AI PropTech solutions, freeing up real estate professionals' time.


Covering a wide range of solutions and tools, PropTech is growing massively, with huge investments being made in every aspect of this innovative new sector of the property industry.