Proptech disrupting property industry – agents remain vital
MAIN IMAGE: Bruce Swain, CEO of Leapfrog Property Group; Sander Grunewald, Global Real Estate Advisory leader at KPMG International
Disruption is something that we’ve come to understand as a positive thing, particularly in the tech space. One only must look at often-cited examples such as Uber, Airbnb and Netflix, among countless others, for substantiation. The property industry too has been impacted by disruptive tech innovations, and for an industry that’s often criticised for being too “analogue”, the strategic incorporation of technology into our systems and processes are exactly what we need to create new opportunities, ensure the industry remains professional and that we are able to render world-class service.
For the sake of clarification, proptech is simply “one small part of a wider digital transformation [that] consider both the technological and mentality change of the real estate industry”, as per the definition offered by Unissu, the largest, most accurate directory of Proptech businesses in the world”.
What’s useful about this definition is that it considers the “mentality” change that underpins the widespread adoption of disruptive technologies. This is no different for the property sector,” says Bruce Swain, CEO Leapfrog Property Group
“South Africans are increasingly comfortable with using online tools for doing everything from shopping for groceries to buying or selling property, and this is a great thing. Proptech has great potential to help make our industry more effective, more agile and allows us – importantly – to stay up to date with consumer preferences and needs.
“Buyers these days are really savvy and well-informed about market conditions, property prices and the like, thanks to information freely available on various property portals. This makes for a far more dynamic property transaction, which ultimately makes the market more robust and competitive, which is a very good thing,” Swain emphasises.
Digital technology in the property space allows for a level of transparency that places the power in the hands of the consumer. Not only does this make it more convenient for buyers and sellers but it also enhances the quality of the decision-making process.
“A key feature of proptech is its ability to make data more widely available. Data – simply information about clients and markets – is one of the most valuable assets in business today. Data takes the guesswork out of decision-making by offering relevant insights and analysis that work to inform strategy. In property particularly, this can help to predict market fluctuation which in turn can help role players plan how to best take advantage of associated opportunities.
“Proptech is there to help estate agents offer a better, faster and more dynamic service to customers, but does not replace the estate agent. The role estate agents play in property transactions remains vital. While the digital tools help to make information more readily available to the client, the agent offers advice and expertise that are invaluable in the home-buying process,” he said.
“When it comes to selling a property, the goal is almost always to move it as quickly as possible. This is what agents do every day, which means they can work faster and more efficiently because they know the systems, the processes and the industry. People forget that selling a property is about more than listing it online and waiting for potential buyers to flock to you. It requires active marketing, not to mention the documentation, viewing appointments, negotiations and reams of paperwork.”
Proptech has the potential to make the property industry in South Africa more efficient, more resilient and to help drive value for clients at every turn. The latter point being the most significant.
Jonathan Yach of mRICS said the proptech economy is the confluence of two great bastions of investment and enterprise: technology and the real estate industries. It touches everything in society, from how we work, live, and play to our investment decisions. Even before the onset of the Covid-19 Crisis, real estate practitioners were enthusiastically engaging with and applying the broader principles of technology to benefit their built environment assets.
“What the Covid19 crisis has done is to accelerate the adoption PropTech elements, ‘contactless and touchless’ designs and technologies.
“Most traditional property managers don’t yet understand the value of the data and are still oriented towards the gadgets that provide the data Traditionally, it is easier to negotiate the purchase of a shopping mall footfall system than to describe to the vendors what needs to be measured. This shortcoming means that too much capital is wasted in the procurement and installation of devices and gadgets that age and thus become obsolescent. The new proptech real estate practitioner appreciates that device-types are agnostic so long as the data answers the operational questions being asked.
“Proptech applications exposes valuable insights where utility savings and reduced carbon footprint considerations can be applied by tracking the data, with valuable insights gained about building performance, cost reduction and income optimisation and overall reduction in utilities.”
Sander Grünewald, Global Real Estate Advisory Leader of KPMG International believes technology is now more than ever integrated into everyday lives, and it’s only a matter of time until every product, service, process, and business model has been disrupted.
“Digital innovation continues to change economies and markets, reinventing the way business is done regardless of industry. Some sectors, such as media and telecoms, were impacted immediately, while others, such as real estate, are only now benefitting from the profound effects of digital transformation.
“While the real estate industry has generally been slower than most to transition to digital, it’s now at the point where it’s benefitting from innovations that are propelling business forward. Pilot technology programmes and software aided by change-driven institutional investors are demonstrating the benefits of making faster and better decisions. These include:
- It has become one of the main reasons real estate companies choose to invest in technology
- Property technologies (proptech) help professionals gather and interpret data, which they can use to determine the value of real estate instantly, and in real time.
- Digital platforms not only allow users to interact with the market, but also allow for faster and easier transactions, impacting the growth of the property sector.
- The real estate industry is, quite a traditional industry, faces several challenges. As the sector is quite data-rich and open to exploring digital opportunities, this makes it particularly well-suited for leveraging digital and innovative property technologies as a means to address their myriad challenges such as using space more efficiently, improving tenant experience and satisfaction, and managing the carbon footprint of their assets.
“As the industry continues to build its awareness of the value of proptech over the next year, investment will likely grow considerably in both investment in innovative solutions, but also in required new competencies and capabilities within the teams,” Grünewald said.