PropTech 3.0 in Real Estate: How Premier Startups Are Changing the Game

It’s the newest buzzwords popping up in our daily real estate reviews, the concept that real estate moguls are itching to understand, the movement that, according to Forbes, is coming to disrupt the real estate industry as we know it.

It’s PropTech, and apparently, it’s here to shake things up and turn the real estate world on its head — in a good way (mostly).

Up until about two years ago, the term PropTech wasn’t necessarily a word that was peppered throughout the property market or the real estate industry, but now, it seems we can’t get away from it.

That being said, even though the word wasn’t being used, many real estate startups were already working on their own technology transformations and forging the trend without knowing it.

But what exactly is PropTech, and how are the most progressive real estate startups incorporating and implementing it into their own business practices, effectively changing the industry as we know it forever?

That’s precisely what we’re here to answer.

First things first, let’s dive into what PropTech is — then we’ll take a look at the ways organizations like Metaprop and CREtech are shaking up the industry one technological technique at a time and shaping the trend known as PropTech 3.0.

What is PropTech 3.0?

Defining PropTech isn’t an easy task — in fact, there are plenty of unique ways to define PropTech. That being said, one of the most widely shared views of PropTech is that it’s a smaller part of a wider digital transformation that’s taking place in the property industry.

Typically, people think of PropTech as a loose term that defines the startups in the real estate industry that are offering technologically innovative products and business models for the property market.

PropTech is transforming the way technology and mentality affect the real estate industry and its consumers when it comes to property transactions.

Though PropTech is a bit of a vague, sweeping concept that’s hard to define and pin down, what can be said about PropTech is that it’s affecting a huge part of the real estate sector — and not just the commercial side.

At its simplistic core, PropTech represents the companies that are spurring on the trend to make real estate better while navigating the transformation of a digital landscape and ever-changing consumption patterns.

The PropTech 3.0 trend has been called the future of real estate by Andrew Baum, Visiting Professor of Management Practice at the University of Oxford.

The first wave of PropTech is said to have occurred in 2008 when nearly $20 million was invested into real estate technology — this was represented in the growth online listing sites (think Zillow, for example).

The second wave followed 10 years later in 2018 when that number multiplied, adding up to about $4 billion, when the use of data analytics and virtual reality was incorporated to offer more specialized services for consumers.

Now, we find the industry in the third wave of PropTech (otherwise known as PropTech 3.0), where we are focusing on experimentation with emerging technology like drones, IoTs, blockchains, and virtual reality tools.

About $6 billion venture capital has been invested in PropTech since 2011, with about 70 percent happening in just the last two years — and the volume of PropTech financing has been on the rise globally, increasing by about 36% every year.

How Premium Real Estate Startups Are Changing the Game

But how is this new wave of PropTech being used by progressive startups to evolve the real estate industry and property market as we know it?

There’s no short answer, but if we had to sum it up in a nice, neat package, we can expect PropTech 3.0 to uncover trends such as connected properties in infrastructure like airports, train stations, and retail properties (think about WeWork as a prime example) and specialized customer experience specific to navigating the digital economy.

Over the past decade, startups and companies within the real estate and property markets have been quietly investing in PropTech, however, there are a few key examples of progressive real estate businesses that are heavily incorporating PropTech into their business models.

One of those startups is CREtech.

Described as a company that’s sole purpose is to create global real estate innovation solutions, CREtech’s primary function is to enable clients to effectively adopt technology by providing owners, managers, brokers, construction companies, occupiers, and startups with the capability to implement tech development solutions, training, and workshops.

CREtech believes that, if 2019 was any tell, 2020 will be a promising year for PropTech 3.0, and they recognize 5 emerging trends that they’ve begun incorporating into their business practices. CREtech expects a pragmatic tech strategy to be at the top of mind for investors and users of technology.

Further, CREtech anticipates technology helping to create a series of mega-rounds for 2020, or rather, deals over $100 million as well as increased global engagement, and diversified sources of finance (real estate FinTech).

MetaProp is another company with a focus on PropTech 3.0 and a prime example of a startup that functions by spurring ahead with the PropTech 3.0 trend.

This company is considered an accelerator, focusing on working with entrepreneurs, technologists, investors, and partners to fund and help build up to 25 of the real estate tech industry’s best ideas every year. Other companies like it — such as Moderne, Plug and Play, DreamIt, and others — are all focused on incubating and accelerating companies that focus on PropTech.

Undeniably, the PropTech trend is changing the real estate game as we know it.

But what does that look like? Though the first two phases of PropTech altered the market substantially, it’s safe to assume that, though we have an idea of what PropTech 3.0 might look like, we can’t fully know its impact until it happens.

Until then, we look to the major players in the PropTech game, watching how they incorporate this new age of technology into a market and industry that’s ready for change.