PropTech has reached ‘buzzword’ status in the property industry, as technology companies strive either to support, enhance or disrupt long-established business models.
Here we explain what it is, and take a look at the timeline of how the concept has developed over the past two decades. We also address some of the challenges and opportunities that technological advancement may pose for the property sector.
What is PropTech?
Put simply, PropTech refers to a piece of technology that is designed for use in any part of the property industry. But while the definition may be simple enough, its place in the business ecosystem has shifted continuously since the late 1990s, as has its relationship with property agents.
PropTech 1.0 – The birth of PropTech
In the early years, property agents and tech start-ups enjoyed, in the main, a mutually beneficial relationship. With the agent as their customer, tech companies rushed to create software that would make the selling and letting process more efficient, from back-office automation to marketing.
Most notably, Rightmove launched in 2000. It was the product of a collaboration between four market-leading estate agents: Countrywide, Connells, Halifax and Royal and Sun Alliance. Initially offering agents free property listings, they shifted to a fee-charging model in 2004. This wasn’t enough to hinder the rapid growth of their member list, and by 2012, they ranked as the sixth most popular UK website.
PropTech 2.0 – Market disruption
As the first decade of the 21st century came to an end, so did the golden age of symbiosis between the established property sector and PropTech start-ups. According to Forbes, PropTech’s second wave could be best described as ‘The Challenger Phase’. Innovators began more aggressively targeting the end consumer, looking beyond the traditional buy-sell-let business model and reimagining how we use and acquire space.
2008 saw the launch of Airbnb. The site, which appeals not only to holidaymakers, but also to weekly commuters and short-to-medium-term lodgers, has one foot in the tourism space and the other in the property space. Meanwhile, WeWork has shaken up the commercial property sector using a similar model. Founded in 2010, WeWork offers businesses a way to lease ready-to-use shared workspaces on a flexible basis. Their approach was a huge success, and the company is now worth an impressive $47bn.
This period has also seen incumbents facing aggressive price competition. In 2012, along came online estate agency Purplebricks. Digital customer service, and the use of self-employed local property experts in lieu of branch staff, enabled them to swoop in with hugely competitive prices, leading to rapid growth in the first four years of their existence.
PropTech 3.0 – Looking to the future
The pace and nature of change in PropTech 2.0 has, along with uncertainty in the UK housing market, led to significant challenges in some parts of the sector. Nevertheless, high-street agents can capitalise on emerging technologies to help future-proof their businesses. Automation can be used to streamline business processes, data analysis tools can provide valuable market insights, and nine-to-five businesses can cater to our always-on culture with platforms like Viewber, which offers out-of-hours viewing services.
When assessing which platforms or tools are the right ones for our businesses, it’s not only a case of working out how much time and money it’ll save. It’s also about assessing whether the tools will improve customer experience. What the new tech giants like Uber, Netflix, Amazon and Airbnb have in common is that they have leveraged emerging technologies to serve unmet customer needs. They have also made smart use of captured data to understand their customers’ needs and behaviour.
Forbes predicts that the third phase of the PropTech story will look more like the first. That is, tech companies and incumbents will work in synergy, as opposed to in competition, to leverage big data, improve efficiency and enrich the customer experience.
Virtual reality and the internet of things will change how we use space. Aggregated data will enable agents to base business decisions on previously unstudied consumer behaviour. And automation will improve how we deliver service. This may require us to shift our perspective, invest, take risks and embrace change, but the changes to come bring a wealth of opportunities with them.
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