Thousands of people are building startups around property technology, with billions of dollars in seed-funding: $30bn and $50bn thus far. The industry is attracting a diverse culture of people from across the globe – with a strong percentage of women in the lead. [1]
Due to this diversity, it brings no surprise that the diversity of candidates that want to succeed and standout will have different methods and approaches to disrupting traditional real estate – and are assumed to be 2,000 PropTech startups of serious ambition globally according to research by the University of Oxford.
Despite the transformation embarking on the sector, it has traditionally been known as a conservative industry, rigid to radical change. As the industry joins different generations such as baby boomers, millennials, and soon, Gen Z, startups will have some challenges ahead, as they target mainly millennials who are held back by student debt, while reaching out to baby boomers for both funding and advice.
According to the Said Business School Oxford’s first real estate research report, PropTech’s potential to disrupt the real estate industry can be massive and “change the world” so far in so that it brings a “new explosive wave of innovation, investment and entrepreneurial activity”.
With unconventional technologies such as the Internet of Things, and the increasingly important value of ‘convenience’ for consumers, smart homes are increasing in demand, which begs the question: will smart technology takeover traditional homes, and will the future be the end of the ‘traditional home’?
Why are SMEs focused on a slow-moving industry?
Real estate has long been considered a traditional investment and a slow-moving industry, as it is more conservative and resistant to change, alongside its cousin, the financial sector, which is slowly being disrupted by financial technology services.
SMEs are particularly invested in PropTech because they see its enormous potential. Millennials are mindful about the environment and sustainability, as energy-saving practices and no-plastic initiatives become more popular globally. Hence, many millennials prefer a sustainable lifestyle, and smart homes that are eco-friendly allow homeowners and tenants to save energy and live more conveniently – saving them two very valuable possessions: time and money.
According to GfK, Germany’s largest market research institute, 36% of millennial homeowners have already adopted smart home products (by monitoring products at home through their smartphones, tablets or computers). Almost half of younger millennials who are homeowners maintain a “healthy environment” indoors and lead an environmentally responsible lifestyle. Older millennials, on the other hand, are more attracted to the “cool” factor of owning smart gadgets and living in a smart home. Hence, the younger the generation of homeowners, the more they are drawn to practical motivations such as using resources efficiently. [2]
SMEs are aware of that and are aligning their marketing with global trends. One of the most significant of these is the UN Sustainable Development Goals, which redirect the global focus on protecting the environment, and leading sustainable livelihoods. In fact, countries are racing toward achieving these goals. The Kingdom of Bahrain will ban the import of non-biodegradable plastic bags effective this month, while Canada has announced plans to band single-use plastics by 2021.
Moreover, while the real estate industry is infamous for slow change, the global economy is shifting towards a more environmentally friendly approach to living, which with smart homes and PropTech, is more accessible.
PropTech SMEs have recognized two main game-changers and are catering their services accordingly: shift in trends for the younger consumer base (convenience, smart services, technology, personalization, etc.) and the global focus towards sustainable living.
What this means
All in all, the potential for PropTech to disrupt real estate have been realized by investors and SMEs alike, as 97% of real estate firms in a KPMG survey believe that digital and technological innovation will impact their business. [3]
For future homeowners, this means they can expect more smart homes for sale, while for world leaders, this means a more sustainable future – thanks to PropTech.
Sources:
[1] Said Business School Oxford, University of Oxford, PropTech 3.0: the future of real estate
[2] Growth from Knowledge, Smart Home and the Millennial divide
[3] KPMG, KPMG Global PropTech Survey, The road to opportunity
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