Main Takeaway: Two new reports highlight the growing need for a more sophisticated property management technology stack. New reports from JLL and Buildium show that property managers are growing their portfolios and revenues but are increasingly relying on sophisticated technology to drive tenant satisfaction and reduce operational costs. This latter point will only become more important as the economy feels recessionary pressures.
Story: JLL recently released its 2023 Global Real Estate Technology Survey, showing that most real estate professionals plan to increase their technology in the coming years. This survey showcases how leading companies have generated significant value by leveraging real estate technology to improve overall business outcomes.
Overall, 80% of survey respondents stated that they plan on increasing their spending in the new year. Further, 91% of tenants also stated they are willing to pay more for tech-enabled spaces. Let’s take a closer look at the main highlights of the survey:
- Technology Adoption: The report highlights that 72% of real estate firms have now adopted some form of PropTech in their operations. This marks a significant increase from just 48% in 2020.
- Technology Investment: Real estate companies are not only adopting but also investing in PropTech. In 2023, the average investment in PropTech by real estate firms reached $1.8 million, up from $1.2 million in 2021.
- Benefits Realized: The top three benefits realized from PropTech adoption are:
- Improved operational efficiency (cited by 63% of firms)
- Enhanced tenant experience (57%)
- Increased asset value (52%)
- Top Tools: The most commonly adopted PropTech tools include:
- IoT-enabled smart building systems (adopted by 46% of firms)
- AI-powered lease management systems (42%)
- Virtual and augmented reality for property viewings (39%)
- Challenges: While adoption and benefits are clear, firms also reported challenges:
- Integration with existing systems (mentioned by 54% of firms)
- High upfront costs (49%)
- Need for staff training (44%)
A second recent report from Buildium resonates with this move toward more technology solutions. Buildium found that the majority of property management firms are growing both in terms of properties under management and revenue.
In fact, one of the top focus revenue growth areas for property managers in 2024 is adopting more technology to improve operational efficiencies.
This healthy growth is fueled by greater technology adoption. Here are some highlights from that report:
- Growth of Managed Properties: The report outlines that in 2023, there was a 7% increase in the number of managed properties, growing the market size to 38 million units.
- Revenue Increase: The property management industry saw a substantial revenue boost, with a growth rate of 9% from 2023, reaching a total of $77 billion in 2024.
- Operational Efficiency: 68% of property management firms reported increased operational efficiency due to adopting new software and tools.
- Tenant Satisfaction: Companies that adopted digital payment solutions and virtual maintenance requests saw a 14% increase in tenant satisfaction scores.
- Challenges Faced: The top challenges for property management firms in 2024 were:
- Maintaining property value in volatile markets (cited by 62% of firms)
- Integrating multiple technology solutions (58%)
- Addressing the increasing demand for sustainable and eco-friendly properties (53%)
PropTech, once a buzzword, is now a staple in the real estate sector. A whopping 72% of firms have adopted some form of PropTech, leaping from 48% just three years ago. But it’s not just about adoption; it’s about investment. Firms are pouring money into this sector, with the average investment soaring to $1.8 million in 2023, up from $1.2 million in 2021.
The Prize? The financial returns and customer experience. Firms are witnessing:
- 63% improved operational efficiency
- A 57% enhanced tenant experience
- And a notable 52% increase in asset value
So, what’s catching everyone’s attention in the PropTech world?
- IoT-enabled and smart building technology (46%)
- AI-powered lease management systems streamlining operations (42%)
- Virtual and augmented reality tools for property viewings (39%)
Yet, every coin has two sides. While the benefits are glaring, there are challenges. Integration with existing systems is a concern for 54% of firms, and the high upfront costs and staff training requirements are not far behind.
Expert Take on Property Management Technology
“This year’s qualitative survey responses point to continued difficulties in finding and retaining high-quality labor, particularly when it comes to maintenance. Companies are frequently operating with a smaller team than they need to manage their workload, and are turning to technology to compensate.” — Buildium