PropTech – the Next Tech Disruption

Real estate has been, until recently, the last frontier for Big Data. Due to the fragmentation of the real estate sector, with its divergent players and professional resistance, progress has been slow. Nevertheless, the urban analytics realm has been growing steadily in the past decades as a result of improvements to internet bandwidth, cloud computing and finally machine learning and artificial intelligence. Companies such as SpaceQuant, Mashvisor, Endo Score, Zillow and many others have realized the great potential of harnessing the data to disrupt the industry. 

Urban Living is Here to Stay

During the last half of the twentieth century, the majority of Americans pursued the dream of owning a house with a backyard in the suburbs. Cities languished while technological innovations shifted from structural to computer engineering. Twentieth-century industries based on manufacturing and services were superseded by economies of knowledge.As the knowledge-based economy grew, people began returning to the cities, and with them, the interest and investment in data collection. The public sector, once passive and reactive to market forces, have developed a more cooperative attitude with the goal of priming the urban sector to be competitive against other cities and a more attractive and healthy place for people to live in.

An Unoptimized Market

Equity investors are the main partners in real estate development and bear the brunt of the risk. Yet, due to information inefficiencies and industry culture, investors do not have the advantage of data analytics. Urban analytics are often ignored when available and instead, enormous funds are invested in deductive risk assessment analyses. Urban analytics can help provide developers a leg up in the negotiation process.

PropTech is Changing the Industry

A little bit about the actual name PropTech (property tech) as a name for RE innovation and so on, in short, just to make sense. Can also address the connection with the Consrtuction Tech industry, but it’s not a must.

Predictive Analysis is the Future

As a result of a people returning to live in the cities, coupled with a huge increase in global capital investment, real estate tech firms have seen significant momentum. In 2015, 1.5 billion dollars of venture capital was invested in PropTechstartups. Nowadays through cloud-based platforms, the industry players can assess market trends, financial assets, and design decisions and even predict potential future outcomes. The once-shortsighted real estate market can now use forecasting for a wide range of topics: from rent price forecasting to tenant turnover in commercial real estate, and mortgage default rate forecasting. 

The disruptive potential of predictive analytics relies on the growing time span of the predictions and their increasing granularity. The goal is to provide better accuracy in less time in real estate deal-making. 

Urban data collection and its use in PropTech is growing and it is clear the traditional siloing of industry knowledge is coming to an end. Initiatives such as SpaceQuant, Enodo Score, and Zillow are developing new methods of forecasting and prediction at lower costs. With newly available analytic and simulation technologies combined with the opportunity of integrating datasets, the decision-making horizon for players is suddenly expanding. Private and public-sector players are invited to begin considering wider inputs into their decision-making process.

Contact us to learn how you can join Highroad Launchpad’s next cohort, today!