Why Proptech is One of the Hottest Investment Opportunities Right Now

Limited advances in real estate technologies over the years have left a sizable opportunity in the market for companies that can propel the sector into the modern world. ‘PropTech allows for smoother and more efficient use of both time and capital that are beneficial for landlords, tenants, investors and brokers alike,’ says Zain Jaffer, an active real estate investor and CEO of Zain Ventures, an investment firm with projects across the US. ‘As a result, the PropTech industry has quickly accelerated to become one of the hottest venture capital investment opportunities of 2022.’

Although digitizing this sizable industry has not been an entirely new pursuit, the last two years of the COVID-19 pandemic have forced companies to rapidly integrate new technology and prioritize digital solutions. With these systems now adopted by the majority of the industry, PropTech businesses will continue to shape and revolutionize how real estate operates.

According to the 2021 Real Estate Tech Venture Funding Report, there has been a 28% increase in PropTech investment globally from 2020 alone, with the industry hitting $32 Billion in 2021. The majority of these new ventures focused on residential tech, which attracted 49% of investments, while 7.6% focused on tech for commercial owners and tenants.

PropTech creates smoother and more convenient processes that benefit every aspect of the sector. Technologies such as virtual home inspections, electronic doco signs, data collection and AI-driven marketing, to name a few, are cost-effective and time-efficient alternatives that are paving the way for the industry’s bright future. ‘With the rapid advancement of these new digitized solutions,’ says Jaffer, ‘it seems certain that a rift will form between the companies that are slow to adopt the new technologies and the forward-thinking teams who have already moved quickly in their digital strategies.’

Commercial Real Estate Re-Establishes Itself with CRE Technologies

Since the pandemic, commercial real estate has seen a dramatic shift in how businesses operate. Remote work has taken center stage in the new business landscape, and many offices have continued to keep remote or hybrid options for their staff post-pandemic. This has changed traditional office spaces as firms adapt to meet the new working requirements.

Although remote work has soared in popularity around the globe, it does not mean the end of in-person office spaces altogether, with many companies continuing to value traditional working environments and catering to those workers who cannot perform their jobs from home. This ‘new normal’ work culture has caused a dramatic shift in the commercial real estate landscape as smaller or shared office environments become the new desired commodity for business. Digitization of the workplace has become the focus of industry leaders, and companies are trying to determine how to best suit the needs of their workers.

Commercial Real Estate Technology (CRE) offers a variety of services designed to assist commercial landlords in increasing tenant experience. A Deloitte survey published prior to the pandemic showed that 56% of commercial real estate executives had planned to increase their investments to benefit tenant experience, and with the rapid adoption of new digital solutions, this has become a much easier task.

New companies such as SmartRent specialize in designing custom device packages for clients’ individual needs after gathering information via on premise inspections of properties. They create an easy-to-use, one-app solution where landlords can directly facilitate lease management, work orders, move-ins and move-outs without the need for in-person visits. Other companies such as Density are beginning to measure the movement and density of workers in an office space through the use of computer vision technology, allowing employers and building owners data-built insights that enable them to strategize their return to work solutions. Start-ups like HqO allow buildings to operate through a digital app where clients can set up office buildings to operate virtually as tenants are given the ability to access the building, find nearby fitness classes and even order meals through the use of a single app.

According to the IBISWorld report, there is high demand for CRE services and ample opportunities for newcomers to enter the growing industry. ‘The numbers demonstrate that PropTech software for the commercial sector is a profitable business initiative for 2022 and an excellent investment for venture capital investors,’ says Jaffer.

 Cost-effective and Targeted Marketing in Real Estate

 Data is the currency of the future, and it provides a plethora of opportunities when it comes to business. ‘In the real estate industry, data has been a massive advantage to every avenue of the sector,’ Jaffer says, ‘allowing for more concrete insights by determining where, what, why, and how consumers are searching.’ Housing evaluations, suburb popularity, and prospective figure projections are becoming more refined, with PropTech start-ups being able to forecast the rise or fall of property prices at an accuracy of over 90%.

Companies such as AI-powered commerce real estate database Reonomy allow those in the business to make faster decisions with data collection analyzed from a library of 49 million listings that is continuously expanding. This data allows for better marketing and improved sales insights for real estate agents and consumers alike. ‘There is no doubt that the next wave of PropTech companies offering digitized solutions will allow insights that elevate transparency for every stakeholder creating more educated solutions at a fraction of the cost,’ Jaffer says. ‘With such a sizable gap in the PropTech market due to the slow adoption of new technologies in the past, there is ample opportunity for new companies to flourish in the ever-expanding market, providing a lucrative opportunity for venture capital investors to tackle the sector in new ways.’