Can you imagine running your real estate business without the internet or your smart phone? How about no emails, social media or search engines? Many of us also rely on the conveniences of the Internet of Things (IoT) such as Alexa, robotic vacuums or Nest thermostats, which allow us to control things remotely.
Welcome to the world of proptech (property + technology), which is loosely described by some experts as the shift in mentality fuelled by these technological innovations. Others say it refers to the startups and new digital technologies themselves. I think it encompasses both. More importantly, I predict we are at the early stages of a huge proptech wave that will revolutionize the real estate industry. Those who do not plan to retire in the next three to five years better keep reading!
We all know there are concerns that technology might replace the real estate professional. This is a legitimate fear – it’s entirely possible. The million-dollar question: Is it probable? The billion-dollar answer is that it depends entirely on how we respond to the emerging proptech.
Our destiny is in our own hands. I began my real estate career in 1989 and over the years found that our industry has been very slow to embrace change in general. But in recent years I am very encouraged by what I am observing. I was especially pleased to attend OREA’s Reality 2020 Conference in Niagara Falls, Ont. in February. I applaud OREA for hosting an industry event that not only had a phenomenal line up of speakers but was very on-point with the disruptors and the crucial issues our industry is facing. In essence, the best way to prevent proptech from phasing us out of the industry is by studying and finding ways to embrace it and be involved.
While proptech companies emerged in the early 2000s and are nothing new, the substantial venture capital funding in recent years is. Real estate tech startups around the world raised $12.7 billion in 2015, which represented an 821-per-cent increase from 2011! Last year that number rose to an astounding $14 billion. Seeing such substantial funding activity taking place is a strong indicator of things to come.
We already have a lot of interesting proptech that has emerged and I expect we will see it being perfected and woven into every facet of our industry and our daily lives. Some of my favourites are drones, blockchain, artificial intelligence, augmented reality, cloud-based working environments, self-driven cars and even bricks that act as solar panels.
This is all technology that exists but we can also expect to see new innovations on the horizon. All this will give rise to smart communities such as the one by Google’s sister company, Sidewalk Labs, slated for Toronto’s Eastern waterfront. This is a futuristic neighbourhood that is gaining worldwide interest for being people-centric and for its unprecedented innovation, technology and climate-positive impact. Whether existing or new, proptech will drastically change how we do business and revolutionize the construction of homes, buildings and the development of entire communities.
The future is already here and I predict three key areas are on the cusp of transforming in a big way. First, there is the blockchain technology that supports cryptocurrency. We have all heard the recent buzz but my hope is this will soon be applied to real estate transactions safely, with the necessary encryption and built-in legitimacy checks. Dealing with cheques or bank drafts is the current industry norm but it is so inefficient and outdated.
The second is virtual reality home tours. These allow us to immerse ourselves in an interactive, 3D virtual world that simulates a real-life tour. This technology is already here and is poised to be much more commonplace for viewing existing or pre-construction homes. Some developers have started embracing virtual reality and it will be interesting to see how this evolves.
The third is cloud-based office environments or virtual offices. eXp Realty already has an extensive infrastructure in place. There is a full online world with offices, auditoriums and an outdoor space including a few fun components such as a beach with speed boats you can drive. Agents and staff log into “the world” as it is called, and using an avatar, they work remotely from anywhere there is an internet connection and smart phone available. The offices and auditoriums have presentation displays where one can stream anything remotely from a laptop onto the screen. It is changing the way agents meet with consumers. It also allows agents to collaborate and learn together in a very convenient way.
Proptech will be a huge driver of our industry the next while. If our profession wants to keep up with this revolution, it all begins with mindset. Business models will evolve, as will our markets and the consumers who shape them. The change has already begun and will intensify in the next few years. The future will favour those whose offerings and services keep up with these changes. As the Ancient Greek philosopher Socrates once said, “The secret of change is to focus all of your energy, not on fighting the old, but on building the new.”