PropTech is booming across the globe. According to Crunchbase, this technology sector has raised over $10.6 billion in 2021 alone – which is almost 50% more than in pre-pandemic times.
With climate changes and global agreements on the table, there’s an increasing demand for green solutions that lower CO2 emissions and thus lower the rate of global warming. But why PropTech? What do investors see in it? Is it just a new tech fad for Silicon Valley VCs… Or is PropTech going to make a huge ripple in our daily lives?
Read on and find out how this growing vertical protects our future.
What is PropTech exactly
PropTech (property + technology) is a term for startups and software that disrupt traditional property management systems and business models. As it’s a term we use in the real-estate vertical, many call it Real Estate Tech, too.
Solutions in this sector fall into 4 big categories:
1. Smart Real Estate solutions
Smart Real Estate technology is about combining space with tech. These solutions simplify managing and operating real estate assets.
They provide information about the performance of buildings or whole cities and/or directly monitor and control services, sensors, and devices in smart buildings.
It’s one of the fastest growing sectors due to the importance of energy/water consumption and CO2 monitoring.
2. Shared Economy technology
Platforms and startups in this sector strive to optimize the usage of shared spaces – offices, shops, storages… They connect owners and potential tenants, while optimizing usage and meeting the ever-growing demand for more space.
Perhaps one the most famous SE-PropTech platforms is AirBnB.
3. Real-Estate FinTech
FinTech solutions in Real Estate make transactions and online identification easier (and a lot cheaper). They connect buyers and sellers, provide advisory services, transparent market information and oftentimes, cut out the middleman in the process.
Although many industry leaders don’t regard ConTech (construction + technology) as a part of PropTech but rather as a separate sector, we believe that the line is blurred. Construction tech solutions tend to disrupt current business models in such a way that we get greener and more sustainable construction processe.
As a result, we get greener buildings and cities, while diminishing negative effects on Earth.
From PropTech 1.0 to 3.0
In 1982, the Property Market Analysis (PMA) was founded in London. It used computing to research properties and sell information. This marked the beginning of PropTech 1.0.
Established companies used computing power and the internet to power their analytics and produce tools for better (and faster) decision making.
E.g. AutoDesk, the industry standard in ConTech, was launched during the PropTech 1.0 wave.
The dawn of PropTech 2.0 came with wide adoption of the internet (Dot-com bubble), creation of platforms and systems for fast exchange of information. Startups, entrepreneurs and funds came to the scene. Platforms made communication easier and transactions cheaper. Spread of information was unstoppable.
With higher computing power came Proptech 3.0.
PropTech (3.0) – why do we need it
PropTech 3.0 is the future thanks to two things – IoT and huge amounts of data.
General connectivity allows us to track many things in real-time through sensors and other tracking and sensing devices.
Influx of data no human could analyze in reasonable time has pushed us to develop sophisticated machine learning algorithms and AI.
This has resulted in:
- Profits through space, water and energy consumption optimization…
- Efficiency thanks to time saved for analysis and management
- Overall increase in life quality
We need PropTech 3.0 for obvious reasons – bigger profits and more time for better things in life, sure.
But there’s one big reason we’ve been becoming aware of in the past few years – and that’s ecological sustainability.
Ecological challenges are perhaps the biggest driver of advancement in the PropTech
Without this planet, we won’t be able to spend our increased profit and time, right? Let’s just talk about the facts.
- Construction industry wastes 40% of the world’s raw materials and accounts for 25-40% of carbon emissions.
- Commercial buildings in the US waste 30% of energy and account for 11% of the nation’s greenhouse gas emissions
- The Green Alliance Report shows that companies in the UK waste more than £60 billion in avoidable energy bills
In 2015 in Paris, the world entered into an international, legally-binding treaty on climate change. The goal is to introduce national policies that will limit the rate of global warming below 2 degree Celsius and achieve net-zero emissions by 2050.
Aside from inevitable future green policies, we should keep in mind that many countries now have so-called Carbon taxes that incentivize switching to emission-limiting technologies.
With construction and real estate industry having such great effects on a global scale, it’s no wonder that we need technological solutions that minimize them.
If we don’t follow through, we risk our planet, our health, and our overall quality of life.
Companies like Smart Cat develop PropTech solutions
that protect the Earth
Having developed a PropTech project in Smart Real Estate vertical, Optimus Power, we’ve seen a lot of opportunities to make huge savings.
From our point of view, companies in the PropTech should focus on:
- Increasing building efficiency by optimizing large-scale HVAC systems. They account for up to 50% of total energy consumption.
- Reducing maintenance costs by monitoring AHUs and its replaceable parts
- Optimizing energy usage by monitoring and controlling energy sources and needs – lighting, heating, cooling, temperature…
- Optimizing space and location usage and reducing overall costs and energy consumption by developing movement tracking and AI analytics.
Investing in smart real estate tech will increase the overall quality of life of tenants, while decreasing the costs of operating a real estate and carbon footprints.
To check out our case studies, visit the section Our work.
To secure our future, we have to be smart. But being smart isn’t just about doing the thinking part. Being smart is also about taking action. Technology, scientists, engineers – they are all here to help us. Companies all over the world develop thousands of new solutions.
It’s also not always about inventing something new. There’s a lot of room for optimization of existing systems. PropTech disrupts, but at the same time optimizes, the traditional way of managing real estate assets.
In the end, it’s not about a new tech fad. It’s about our planet and we’re running out of time. Stay smart.