Smartphones? Check. Smart TVs? Check. Smart Homes? Check. Smart Cities? Check.
In an increasingly crowded and intricate urban landscape, the demand for inventive and effective problem-solving has reached new heights. The concept of smart cities which once seemed a distant and imaginative idea, is now taking shape as a solution that utilises cutting-edge technology to enhance infrastructure, services, resource management and property development.
The difference between a city and a smart city, apart from the adjective, is the convergence of artificial intelligence (AI) and the Internet of Things (IoT). This dynamic pairing of advanced technologies is revolutionising our lifestyle and the manner in which we engage with our urban environment. While AI and IoT are making their permanent mark in the fields of property development and construction, there is a new champion that is making noise and it goes by the name of ‘PropTech’.
Getting to know proptech
Proptech (the counterpart of contech: construction technology and fintech: financial technology), an abbreviation for property technology, encompasses a broad spectrum of digital solutions used by professionals in the real estate field to simplify and improve processes such as property transactions, development and investments.
Proptech holds significant importance for the real estate sector due to its ability to connect the physical and digital realms seamlessly. In today’s context, it’s become commonplace to turn to the internet to organise property viewings. Proptech platforms enable real estate firms to provide virtual property tours, conduct property management tasks online, and even employ drones for property surveys. This integration of technology is contributing to enhancing accessibility, transparency, and efficiency within the real estate industry.
For example, these solutions can include customer relationship management (CRM) systems tailored for real estate brokerages, tools designed for efficient property management, devices for home automation, and platforms that aid in investment management.
These innovative technologies may also be referred to as Real Estate Tech, Realtech, or Commercial Real Estate (CRE) Tech, depending on the perspective. However, at its essence, proptech represents a powerful fusion of real estate practices and technological advancements.
Noteworthy instances of transformative technology within real estate include investment platforms that connect retail or commercial real estate investors with suitable properties. Additionally, there are property management systems developed to oversee various types of real estate assets, such as single-family homes, apartment complexes, offices, and retail spaces. However, if this seems like just a jargon dump for someone owing to the fact that the idea of proptech may be perceived as distant from the everyday consumer, think about your most recent vacation experience. Perhaps the one where you stayed in a charming Airbnb apartment or a boutique hotel. Try to recall how you selected that particular lodging from a multitude of appealing options presented on the platform, often at more budget-friendly rates compared to nearby hotels. If you can relate to this scenario, you have directly observed the profound influence of technology on the real estate and property development landscape.
Proptech redefining smart city living
On a global scale, the Proptech market is anticipated to maintain its upward growth pattern, with an estimated compound annual growth rate (CAGR) of nearly 17% by the year 2031. This growth is primarily propelled by the rising need for cost-effective housing solutions in urban regions.
The traction that proptech has gained is all thanks to the disruption that it has caused which introduced innovation into the operational processes of every participant within the real estate market. This includes individuals and entities such as brokers, landlords, tenants, letting agents, and investors. Property technology is recognised as the primary driving force behind the transformation of business practices and organisational cultures.
Solutions rooted in proptech, such as property and facility management systems, indoor mapping technologies, automation of leasing procedures, the integration of the Internet of Things in both residential and commercial spaces, real-time data utilisation, Building Information Modeling (BIM) technologies, data analytic tools, and the development of smart buildings, hold the potential to bring substantial advantages to the real estate sector. These technologies foster an ecosystem approach that optimises processes for improved quality, flexibility, and efficient management of information.
One of the most recent and best examples of how proptech has been the driving force behind the transformation of cities into smart cities and urban living is that of MENA (Middle East/North Africa).
In the Middle East, the idea of establishing smart and sustainable cities has been actively advocated as a means to swiftly tackle the persistent challenges of urban living while crafting city layouts that prioritise both residents and sustainability. Notable instances of this approach can be seen in projects like Lusail City in Qatar and The Line in Neom, Saudi Arabia.
According to the Smart City Index 2021, Abu Dhabi and Dubai stand out as the smartest cities in the MENA (Middle East and North Africa) region, securing the 28th and 29th positions globally, respectively. Ongoing endeavours are aimed at enhancing their rankings by incorporating sustainable energy practices, intelligent architectural designs, and high-efficiency appliances, as evidenced by initiatives like Masdar City.
The rise of smart cities in the MENA region has opened doors for local PropTech firms to introduce groundbreaking solutions tailored to urban living. This could involve collaborating with FinTech (financial technology) companies to offer financing options for real estate transactions or partnering with conventional real estate enterprises to provide them with digital tools and solutions. These opportunities highlight the symbiotic relationship between technology and real estate, contributing to the advancement of urban environments in the region.
The latest proptech trends
In nearly every major city with its bustling urban environment, a housing crisis tends to arise. Take Melbourne as an example: the city experiences an inflow of students, immigrants, and urban residents. When there’s a high demand for apartments in a concentrated area, a crisis situation arises. While individuals can’t inhabit virtual spaces just yet, proptech offers solutions that address these challenges, and its lasting impact is undeniable.
One of the best assets of proptech is ‘Big Data’. This is a major trend in both technology and real estate. It allows real estate companies to gain insights into customers, enhance services, and make smarter choices. Big data analysis covers property prices, consumer actions, and more, making it crucial for real estate. A key advantage is spotting new market trends and opportunities. By scrutinising data from various sources, companies can identify high-demand areas and adapt strategies accordingly.
Following big data on its heels is green building tech. This trend is reshaping real estate, altering how we construct and use buildings. This emerging proptech trend produces eco-friendly spaces that cut energy use and environmental impact.
Imagine buildings that generate power, manage resources efficiently, and offer healthy spaces. Thanks to renewable energy, smart grids, and efficient materials, this is becoming a reality. Green building tech employs solar panels, advanced insulation, rainwater collection, and smart thermostats for energy-efficient designs. These solutions trim costs and aid the planet. They also enhance indoor air quality, optimise water, and promote sustainability like recycling. Adopting green tech helps owners attract eco-minded tenants and safeguard their investments.
Evidently, smart cities capitalise on technology. This merging of technologies empowers cities to manage and oversee technology systems via remote cyber operations. In this context, there is a seamless integration of individuals, procedures, and locations through a combination of information technology systems that focus on data-driven computing and operational technology systems designed to monitor events, processes, and devices, while also enabling the adjustment of city operations. The direction in which urban living is travelling makes one thing very clear and that is that smart cities are rapidly erasing any demarcations between the physical and cyber world, for better or for worse.
(Sandunlekha Ekanayake)