Will PropTech Change The Homebuying Experience in 2022?

If anything, the pandemic highlighted, is how much the real estate industry needed new technologies to make things more flexible.

Property Technology (proptech) is one of the tech trends slowly permeating into real esttae business model. While there were remarkable advances that were already being made in this area, the pandemic induced shutdowns changed the way people interacted and lived leading to some rapid advancements designed to change the consumer’s perspectives and needs.

Going into 2022, it is likely that more investments will be happening around oftware surrounding the construction and how property is managed. I think these are the two sectors that remain unexplored and were actually the areas that stood out for investment within proptech in 2021.

In addition, it is highly likely that we’ll be seeing more consolidation in the industry more companies reach maturity while others are looking for exits and not to forget many of which will be looking to rejuvenate their models to accommodate progressive technologies.

In order for proptech to flourish, there are multiple factors in the macroeconomic environment that must co-exist harmoniously including the shift in institutional investors buying single family homes. One of the trend we are seeing is renting is becoming more common, and with a good reason. Many people cannot afford homes and inflation is on the rise. The more people are renting homes from certain institutions like Blackstone, this makes it possible for investment in different types of technologies.

The fact that interest rates are also so low, this makes real estate investment as an asset class that many investors can get a decent yield on.

“Institutions are interested in real estate, and that means that technology will have to follow,” according to Lauren Weston, an associate at Thomvest Ventures.

CONSTRUCTION INDUSTRY

within the construction industry, tech mainly is embedded in finance, project management tech (software) and home improvement (smart homes etc.) advancements in this area are likely to gain momentum and become potential areas for investment this year. The venturebacked construction tech startups were able to raise more than $3.8 billion in funding last year according to data by Crunchbase.

When looking at these areas of investment individually, you begin to uncover a web of potentiality for the real estate industry. For instance, embedded in finance, the technology that allows ease of payments (online and offline), we see a big theme where fintech is already taking roots within the braod spectrum of Proptech. This year, Fintech will dominate construction tech especially when you begin

looking at the lending industry. And just to highlight, startups like Lendflow are making it simpler for software companies to streamline their lending services into their products.

In project management, technology is looking for ways to replace the ordinary things that we are used to like spreadsheets and emails. Many investors are looking for a way to digitize their operations like the pre-construction, workflows and financial management.

“I think proptech is big and broad and, particularly within residential proptech where I focus, there are so many tailwinds in the space,” Weston said. Basically, when looking at technology and how it will influence the sphere of construction industry, generally, we see a new wave of companies coming up that are looking to combine design, offsite construction and new materials and these are the companies that will be key leading the investment and tech charge during the year.

PROJECT MANAGEMENT

We have to also acknowledge one fact that not so many people are talking about, Gen-Zers are becoming of age and are being absorbed in the renting space. This is a critical factor that we have to consider as an emerging theme that will affect all areas of proptech. One thing you have to remember is that Gen-Z are probably the most tech savvy generation and therefore, they are looking for properties that incorporate smart technology. Basically, this is a generation that wants to control everything from their phone! To that end, the industry will experience a rise in demand to digitize processes and systems from how rent are being paid, how to tour properties virtually to signing agreements which will be done virtually also.

“We re seeing a lot of stuff around digital tours, being able to virtually tour an apartment from online, being able to get a digital key and do a self-guided tour,” Fatima Dicko, founder and CEO of Sugar, a proptech startup that connects members of residential communities.

This is a tech that was induced and accelerated by the pandemic to a point where there is a normalization of virtual tours and signings. This provides a unique opportunity for investors to invest in a technology that appeals to the Gen-Z and younger millennials.

Crunchbase data reveals that there were about 125 venture-backed companies in the real estate industry group were acquired in 2021, the highest amount in the pat five years. This consoldation will last through 2022.

“There s probably going to be more consolidation between these traditional hardware companies and these residential engagement or software companies,” Dicko said.