Original article was published on Artificial Intelligence on Medium
Industry 4.0 — How AI is transforming Real Estate of the future:
Amidst the AI hype, the latest buzzword in the Real Estate Industry is PropTech. The common consensus is that PropTech is coming — just over the horizon and closer than we think. And it is about to disrupt the real estate industry.
But what exactly is PropTech? What promises does it hold? Is the Real Estate industry ready? Who are the leading players, ahead of the pack? Read-on to find out!
What is PropTech?
PropTech is an umbrella term used to collectively describe the next wave of technology innovations about to disrupt the real estate markets. The industry has just started to warm up to PropTech in both residential and commercial sectors, and while the future of technology is difficult to predict with a degree of certainty, PropTech looks exciting, and is here to stay.
2019 saw the funding for PropTech companies total a little over $24.9 billion. That’s a staggering 158% increase from 2018. 2020 will see a heightened collaboration between the PropTech eco-system and conventional real-estate players. With the tipping point already crossed and the global real estate industry crossing the $200 trillion mark, early adopters can extract enormous value — the chance is there for the taking!
Is the Real-Estate industry ready?
Since the crash of 2008, the Real-Estate industry has been climbing leaps and bounds, paving the way for technology to transform the way this sector works. Global real-estate behemoth JLL estimated in a report that the global real-estate transaction volumes would grow to an astonishing $1 trillion by 2020, up from $700 billion in 2016.
An article citation by the Real Estate Magazine states that the funding for PropTech increased by a staggering 170% year-on-year. Out of the total pool, 60% of investment was in the United States, followed by the UK, India and Germany.
Another interesting point of to ponder is the fact that upwards of 20% of property firms admit they do not use any digital technologies in their business, and the number stands substantially high for cognitive technologies.
This implies that the spectrum varies enormously. There is a market which is not only initiated with digital transformation, it also urgently pursues cognitive transformation. On the other hand, there is also a market which is uninitiated with basic PropTech.
From extremely basic PropTech such as intelligent CRMs through to Artificial Intelligence driven systems — there is space for all! The only catch is it’s going to fill up fast, and early bird will catch the prey!
The Leaders of innovation
There are quite a handful leaders of the pack in the real estate industry who have touched the coveted valuation of a billion dollars. Compass was the first one to touch the milestone, and was quickly followed by Opendoor and SMS assist. Lianjia, a Chinese portal is also valued above a billion dollars. The first billion dollar PropTech start-up popped up in 2016, the remaining three followed suit the next year. Also, all the four start-ups are fundamentally diverse in nature, scope and offerings.
Compass — the first ones to envision a tech platform for outdated real estate market, in the simplest of words, is a network of real estate brokers. With a valuation of $4.4 billion, about 7000 agents on ground and a strategy to control 20% of all residential property in the US — Compass is truly a PropTech unicorn!
On the other hand, Lianjia (formerly Homelink) is a portal which operates an online services platform ranging from new property transactions, secondary property transactions and leasing/renting services. SMS assist is a property management tool with a huge network of 20,000 subcontractor affiliates and 186,000+ client locations. In the space of real-estate sales, Opendoor has developed an intelligent algorithm for buying and selling homes online with ease.
Technology helps keep the real-estate industry on its toes. Increasingly, more service providers are jumping in the market, offering tools and solutions for the industry. These PropTech start-ups have an edge because of their ability to innovate each step of the process, or to radically overhaul the existing system itself.
The PropTech start-ups are here to stay — they have come in with a renewed vision and a desire for reform beginning from scratch, they have what it takes to transform how tomorrow’s real-estate industry looks. And in this period of disruption, early adopters of PropTech stand to gain incredible value over others, and potentially lead the industry moving forward.