PropTech: The Future of Real Estate

In the recent years the words proptech, blockchain and big data have come up in many occasions to refer to the digitalization of real estate; 2017 seemed to mark a turning point. These new technologies have been building a lot of mass and momentum, but real estate is a slow moving asset class and the real estate industry is specially conservative. Also, it is the largest asset class, which means slow change. How will the world embrace these new technologies and what will their impact be?

Before we get into the future of real estate, let's define some terms that will be important throughout the article:

• PropTech is the combination of real estate and technology changing the way we research, rent and buy properties.
• Blockchain is a technology and a business practice built on peer-to-peer transactions plus a packet of information (a block) with the ability to create an historical and permanent ledger of transaction details with no need of central recordkeeping.
• Big data is extremely large data sets that are normally analysed computationally to reveal patterns, trends, and associations.

Even though the real estate industry has been slow moving and conservative, these new technologies have already had a radical impact, and I am sure they will continue to do so. There is a lot of money backing these companies so we are expecting something big to happen. Some companies are going to lose a lot of money, but some are going to push through and change the future of real estate forever.

Real estate companies like Prontopiso.com are starting to focus more on PropTech, and we have already seen some trends. They are using transparent end-to-end process management software to keep track of costs. New PropTech companies combine drones, augmented reality and virtual reality to get a better user experience for home buyers, and big data, which will have huge advantages if used effectively.

Even though PropTech has improved the experience of selling a house and sped up the information exchange process, it still relies on many intermediaries; these slow down the process significantly. PropTech 2.0, if we can call them so, will use blockchain which will solve this problem, as it can send data to all parties without friction skipping intermediaries. It will also be used to arrange lease transaction between lessor and lessee directly, hold the history of a transaction, a property, a title or an asset, and for the exchange of maintenance records in buildings.

If we think about all the parties involved in the buying and selling process of properties, a lot of names come to mind. Some of these include estate agents, lawyers, local authorities, banks and credit rating agencies. With this many parties, it is a lot of work to create a centralized database and it is also expensive as you have to pay lawyers to collect all the information for you. Blockchain already has a block that creates an historical and permanent ledger of transaction details with no need of central record-keeping. This will be faster, transactions will take less than 10 min, and safer, as blockchain develops a secure identifier for each transaction and offers the ability to transfer funds using encrypted currencies such as Bitcoin, which are robust and secure.

Big Data will also be very important in the advancement of PropTech technology. At the moment, we have small data sets that we try and find patterns from to predict how the real estate market will evolve. Even though these results are not bad estimates of the actual value of, say, a property, they stray considerably from it. Once we have a big database with many transaction, we will be able to develop algorithms and spot trends that will give us very accurate approximations to the actual values.

Fraud prevention, disintermediation and the use of safe digital currency are a few of the major impacts of blockchain. Transparency, more information, lower costs, and faster transactions, are its benefits.

Blockchain will most likely change the future of the way information is exchanged and business conducted in the real estate industry. According to OSCRE: “The increased level of available information and computational data, in conjunction with improved automation, may trigger a second information revolution, going beyond what internet and mobile technologies generated.”