Historically, property management and real estate overall have been slow to adopt new technology. COVID has not afforded that luxury. So, from industry expertise, research and projections, we’ve put together the 5 proptech trends that property managers and real estate professionals need to know about in 2021:
- Increasing Security with Edge AI
- Data-Driven Decision-Making
- The Growth of Direct Digital Engagement
- Integrating Virtual Interactions into Operations
- Investing in Sustainability
These proptech trends, which we explore in detail below, will ultimately drive property management success and tenant satisfaction derived from the fastest digital turnaround that buildings and facilities have ever seen.
What Is PropTech and Why Are Companies Developing It?
Proptech, at its simplest, means property technology. If that definition seems broad, that’s because it is.
The definition of proptech refers to any technology that uses automation, AI, IT, IoT (we can go on) that is developed for the property industry. That means commercial real estate, multifamily housing, smart homes — you name it.
In essence, the goal of proptech is two-fold.
- It aims to allow property owners, managers, and landlords to manage their assets with more efficiency, ease, and flexibility.
- Proptech solutions work to create a better experience for buildings and tenants. This can take the form of a mobile key card that replaces a physical key card or fob for secure access to the facility. Or a software solution that allows decision-makes to collect data to decrease operational cost and overhead.
All in all, this works toward creating the best possible experience for tenants. Which is why companies are developing it.
With the growth of digitization, the proptech market has so many opportunities to create successful solutions. These are solutions that will make tenants and property managers successful themselves. The spectrum of different tenants and thus property management demands is vast, diverse, and constantly evolving. This leaves plenty of room for innovation for proptech companies.
By that same token, property managers have the opportunity to dig through all of their options to create a custom facility experience that aligns with their tenants.
While it seems that the real estate and subsequently the proptech industry have taken a hit since COVID-19, that is not the case. Proptech companies will remain resilient and thrive thereafter by doing three things:
- Developing products and services that will save people time, money, and promote affordability.
- Creating solutions that capture data and facilitate transparency.
- Prioritizing a hygiene-conscious approach to assist with reopening, operating remotely, and maintaining a healthier indoor environment for the future.
In this proptech industry assessment, we will highlight our predictions for 2021. And, how those trends are affecting the real estate industry and property managers.
Real Estate Market Growth Despite COVID-19
In June 2020, MSCI issued their Real Estate Market Report. In their findings, they noted that the size of the professionally-managed global real estate market is $9.6 trillion in 2019. Which reflects a 4.1% growth rate from 2018.
Size of US Real Estate Market
The relative weight of the United States in the real estate market has continued to grow year over year. In 2019, the US had 41.3%.
The US holds the largest stake in the global real estate market by a large margin. For sake of comparison, the second largest relative weight is held by Japan, at just over 10%.
By 2025, the global real estate market is expected to generate a revenue of $4,263.7 billion.
Now, according to a recent account from December 2020, take into consideration that “81% of real estate organizations plan to use new digital technologies in traditional business processes.”
In regards to COVID-19, Deloitte’s 2021 Commercial Real Estate Outlook found that 82% of CRE companies surveyed agreed in some capacity that COVID-19 had exposed shortcomings in digital capabilities and affected their plans for digital transformation. And, within the coming 12 months, 43% of CRE firms in North America plan to increase their investments in cloud, robotic process automation (RPA), artificial intelligence (AI), and digital channels.
That does not indicate any shortage of demand for new innovation.
The real estate industry has been slow to adapt and adopt technology. But, a significant shift towards digital transformation is underway. The right technological strategy will be critically important in developing an infrastructure that fully embraces the digital culture. Once fully integrated, real estate will be able to completely maximize their ROI and send real estate technology skyrocketing.
5 Proptech Trends In 2021
In their 2019 year-end report, CREtech noted a record-setting global VC investment into proptech companies, clocking in at $31.6 billion. Real estate technology is indeed alive and well, despite the slow adoption.
Good things come to those who wait…and those who have methodically laid a digital infrastructure. Laying a foundation for AI, IoT, VR, and other solutions makes all the difference. Those who prepare will reap the benefits of a truly transformative movement in real estate and property management.
Below are the proptech trends that we predict will have a significant impact in 2021.
1. Increasing Security With Edge AI
Physical security will always play a role in real estate. Facilities, regardless of size or function, are rightfully concerned about who is occupying them, when, and why.
Previously, edge computing was almost exclusively the only means of facility security. Security cameras and surveillance systems operated on-site, and the data collected lived there, as well. These systems required a lot of manual operation. Identifying security patterns and reporting was slim to none. And there was no way to automate data collection.
Now, edge and AI are teaming up to form a comprehensive proptech solution for physical security. This involves utilizing security hardware, but using the data in a much more productive and efficient way.
The primary difference in this shift is it’s proactive nature. Physical security systems were previously used as a reactive measure to threats. By integrating AI, this new age of real estate technology is working towards prevention.
Take, for example, access control systems – one of the oldest forms of security. Metal keys and even key card technology cannot withstand physical security threats such as tailgating, stolen or lost cards, or key copiers. Modern access solutions are using methods like face recognition and mobile credentials to combat risk of lost, stolen, or copied cards. Face recognition proptech solutions go one step further to incorporate anti-tailgate technology to prevent unauthorized access.
2. Data-Driven Decision-Making
With the slow adoption of technology in real estate, it should come as no surprise that data is not great. Or at least as great as it could be. For an industry that uses data to drive much of the decision-making, this is a problem.
According to Globe St., “45% of CRE teams are spending at least 15% to 25% of their time managing and organizing data.” Additionally, the majority of CRE firms (8 out of 10) have an executive position dedicated to data strategy and governance.
This tells us two things: data is critically important. But the means by which it’s being collected, analyzed, and used is far from effective and efficient.
No one said collecting data was easy. Fragmented data sources lack communication with one another. And, data management is complex overall. But, no one said that it had to be impossible either. This is where we will see a major advance in proptech – with the syndication, tracking, and analysis of real-time data.
There will be more and more demand for proptech solutions that incorporate real-time data for property evaluation or can integrate with existing solutions to streamline data collection. Once properties evaluate what data is important to meet business goals, they can start to invest in the appropriate proptech solutions. With this data, decisions can be monetized and made with confidence.
Addressing Data Privacy Issues
Naturally, with the increase of data automation and augmentation, the need to address data privacy issues and cybersecurity will follow.
Data privacy, while not a proptech solution, will play a big role in the rise of real estate technology. Technology solutions will need to double down on addressing privacy concerns within their own products. Plus, the need for increased cybersecurity will shape product development and direction.
3. The Growth Of Direct Digital Engagement
Direct digital engagement refers to the interaction with technology that would otherwise have to be with a person or non-digital system. Some of the most prominent real estate technology solutions driving direct digital engagement include:
- Touchless access control systems
- Contactless visitor management and digital registration/sign in
- Cloud-based security systems with remote management
The scalability and uniformity of direct digital engagement solutions is a major opportunity to drive revenue and lower costs. Adoption of digitized and remote systems eliminates unnecessary and tedious overhead costs. It also gives property managers and landlords complete control over their properties from anywhere.
Remote management is also solving a number of issues, including the rise of ecommerce. As we saw ecommerce and online shopping reach a record high in 2020, we also saw increased rates of package theft. This has overwhelmed delivery management in many facilities. With remote visitor management capabilities, however, deliveries can be handled safely and securely, 24/7. Additionally, it has eliminated the need to interact face to face. With the COVID-19 pandemic still strongly dictating our everyday lives, being able to perform a job or a function remotely is critical.
For this reason and many others, the growth of direct digital engagement will continue to play a bigger role in property management.
4. Integrating Virtual Interactions Into Operations
Virtual interaction is similar to remote functionality. It allows someone to be somewhere they are not. So, in a world where we are very much restricted to where we can go, this is a big deal, particularly for property managers.
Real estate, in all its forms, requires some type of interaction with the environment, with little exception. Virtual tours, virtual home inspections, virtual front desks, and even digital twins are just some of the proptech solutions that are effectively promoting business continuity and successful facility operations at a safe social distance.
Along with virtual reality-like interactions, virtual interface with other people will also become more and more common. Being able to easily access virtual communication is now being built into a building’s larger infrastructure. To replace in-person, face-to-face interactions, two-way video intercom and video conferencing, for example, will play a much larger role in property management.
Two-way video intercom with remote unlock is easily one of the most popular ways this proptech solution is being used today. With the sharp rise of e-commerce, package delivery and security is a top concern in any facility. Troubleshooting delivery management can be done easily through a visitor management system that utilizes video intercom. Tenants, regardless of if they are in the facility, can visually verify deliveries and grant access. The same is true of front desk or lobby staff. Couriers can also be issued temporary pin codes through this visitor management interface. The system works with the building to create a seamless facility experience.
5. Investing In Sustainability
ESG (Environmental, Social and Governance) refers to a set of investment standards, also known as “sustainable investing.” The goal of ESG is to set an operating parameter that is conscious of both sustainable and social impact. As a guiding principle, ESG also speaks to a larger social movement to drive down consumption and adopt more environmentally-friendly practices. Examples of this include smart lighting that shut off after a certain period of inactivity, or smart thermostats that can be programmed into a schedule. These solutions are environmentally conscious and use automation to conserve energy.
Proptech solutions that advance the ESG movement help property managers stay accountable and improve overall facility operation and quality. It also caters to a generation that cares deeply about this issue, which makes facilities much more attractive and improves reputation.
Why Proptech Trends Matter For Property Management
So now I’m sure some are asking, but will this proptech boom last beyond COVID-19? Surely this is just a phase, and we will all go back to Excel spreadsheets and in-person tours once the dust has settled. And the answer to that is…yes and no.
To use virtual touring as an example, property managers have already done the leg work. They have created the virtual touring experience. More importantly, they have successfully rented apartments throughout the COVID-19 pandemic without having to step foot into a single unit. It saves time and money, and the result is the same.
Property managers and owners will keep this model because, frankly, prospective tenants like it. It eliminates touring around apartment building after apartment building. Anyone can make a well-informed decision without having to leave their home. Consider, also, out-of-state movers. The pool of tentative renters gets exponentially bigger if they can make a decision on a rental just by the high-quality virtual interaction they had.
With that being said, in-person tours will not disappear completely. Some tenants want to see places in person, that’s just how it will always be. But, if those in-person tours can be significantly narrowed down to serious prospects, it’s still worth it.
To use a more definitive example of the future of proptech post-COVID, we can take a look at access control systems. There is a rapid demand for touchless access solutions. These are systems that use smartphones and face recognition credentials for access as opposed to a key card or fob. While it’s critical to eliminate physical interaction with high use surfaces to mitigate the risk of spreading COVID-19 (or any disease for that matter), this is the direction that facility security is taking regardless.
As younger generations begin to take over the largest percentage of renters, multifamily buildings will need to keep up with their demands to stay competitive. This includes tech-savvy amenities such as using smartphones for access. This new approach to access control technologies also makes it easier to meet other important needs. This includes amenities like secure package delivery that has become a necessity with the rise in ecommerce.
While real estate has historically been slow to transform to a digital culture, COVID-19 has sent that acceleration from 0 to 100. The industry was forced to reassess their old and outdated ways. Ultimately, it will be to their success. As we see proptech take off, it’s important for property managers to remain open minded to change and proactive to tenant behavior. Embracing new tools will make their lives easier and the lives of their residents better.
Proptech Solutions for Your Building
Find out more about what proptech solutions will be beneficial for your building.