PropTech, short for “property technology,” is a broad term that encompasses many types of emerging technologies in the real estate sector, such as property management software, smart home devices, and tools enabled by the Internet of Things (IoT). These innovative technologies are also known as Real Estate Tech, Retech, Realtech, and CRE Tech. All of these technologies are designed to increase the efficiency of deal sourcing, transaction processing, property management, and customer services. To summarize, Prop-Tech refers to an effective orientation between real estate and technology.
Prop-Tech has come around as an innovative driver for disruptive technologies, a solution for real estate professionals struggling with piles of paperwork, and a high-yield asset class for investors in search of opportunities. Over the last decade, real estate technology has evolved rapidly with the emergence of technologies such as Artificial Intelligence (AI), Augmented Reality (AR), and Virtual Reality (VR). These advances are designed to meet the requirements of real estate developers, operators, owners, tenants, and investors. Property operators and owners can implement real estate technology to manage their assets more effectively, as it aims to reduce paperwork, simplify transactions, enhance property management services, and maximize operational efficiency.
The PropTech market is anticipated to grow from $18.2 billion in 2022 to $86.5 billion in 2032, with a CAGR of 16.8%.
During the past few years, there has been an increase in the usage of VR by real estate brokers to provide virtual tours of properties to prospective buyers. This provides potential buyers the convenience of viewing properties from the comfort of their homes and allows them to “pre-screen” their options before visiting in person.
Examples of disruptive real estate technologies include investment platforms that connect investors with real estate assets, and property management platforms that manage residential, office and retail properties. Founded in 2008, one of the earliest real-estate technology companies, Airbnb, operates as an online marketplace focused on short-term homestays and experiences and has achieved massive success in the industry, with listings in over 220 regions and countries.
The correlation of PropTech with other industries:
- Shared Economy in the real estate sector is any PropTech platform that offers shared use of a property, such as short-term rentals. Airbnb and WeWork are among the top players driving the sharing economy in the PropTech market.
- Smart Real Estate implements internet-connected devices and appliances, also known as IoT devices, which enable remote monitoring and management of smart homes. Amazon’s Alexa, Siemens‘ smart kitchen appliances, and Philips’ intelligent lighting systems are known examples of solutions in the PropTech sector.
- Fintech incorporates technology into the financial sector to make it easier for customers and businesses to access financial services. On the other hand, real estate fintech focuses on facilitating the financial processes of the real estate industry. US-based home and real estate marketplace, Zillow, is disrupting the Prop-Tech industry as a FinTech provider. The platform aims to simplify home-buying processes, resulting in faster transaction times, lower costs and greater volume.
Construction Technology involves utilizing modern materials and sustainable approaches, such as drones, Building Information Modeling (BIM) software, and 3D printing, in the building process of real estate assets. For instance, OpenSpace is an AI-driven photo documentation tool that automatically creates navigable photo representations of construction sites with the aid of cameras attached to the workers’ helmets.
- Over the last decade, the MENA region has demonstrated high potential for the deployment of AI technologies across the real-estate sector. In 2022, the leading AI-based development startup in the real estate market, Realiste, expanded its operations to the Middle East, transforming the real estate and housing landscape by incorporating cutting-edge technologies across all its operations. The company’s mission is to digitize every major city’s real estate market while providing free appraisals and customized services.
Moreover, in 2021, the leading PropTech platform, Property Finder, introduced MENA’s first AI-driven rating system, “SuperAgent,” which is supported by Agent Data Assistant (ADA). ADA is an internal data platform that analyzes data points to assist buyers in locating relevant brokers by fusing agent response, property listing quality, and agent reports.
Though the MENA region has been slow in adopting and investing in PropTech solutions compared to leading markets in the US, China, and Europe, there are numerous opportunities for growth, and it has witnessed a spike in investor and entrepreneur activities since 2018.
The UAE and Saudi Arabia have taken the lead among MENA countries when it comes to PropTech activities. The UAE is recognized as the region’s PropTech innovation hub.
In 2021, Dubai announced the launch of a national program to train one hundred thousand coders and establish one thousand digital companies over a five-year period and aims at increasing startup investment from Dhs1.5 billion to Dhs4 billion. With such initiatives being introduced, government assistance for digital transformation is likely to be the primary contributor to the growth of Proptech in the country.
Eltizam Group’s technology division, EAST-O Holdings, has recently launched a cloud-based software-as-a-service (SAAS) platform, “PropEzy,” for managing customer experience and optimizing operations in the MENA region’s real estate management sector. The UAE-based app combines various technology platforms used to manage the built environment into a single integrated product and works on effectively reducing costs and increasing the ROI for asset owners and operators.
Furthermore, metaverse technology and NFTs are expanding in the MENA region. In 2022, Dubai-based Union Square House (USH) announced its plans to launch the MENA region’s first metaverse mansions. The firm will sell luxury properties as NFTs, with or without physical counterparts. Then, a digital version of the properties will be available for download through the metaverse. The replica virtual grounds will act as a place to relax, entertain guests, or just decorate using this metaverse application. This is in addition to the opportunities in Dubai’s Metaverse Strategy, which aims to add 40,000 jobs, making the metaverse an increasingly important element for real estate developers in MENA’s PropTech environment.
Moreover, the applications of AI are increasing every day in MENA’s real estate market, acting as an accelerator for growth and innovation in the region’s PropTech industry. This includes solutions that enhance property management processes and assist real estate transactions and valuation procedures. One example is Dubai’s Land Department’s (DLD) adoption of AI in its valuation processes for real estate assets. Through its smart channels, DLD website and Dubai REST app, the Dubai Land Department is revolutionizing the real estate industry. By expanding their digital services, DLD will play a vital role in fostering digitization and bringing more efficiency and transparency to their real estate operations. In 2021, DLD launched electronic no-objection certificates (e-NOC) to minimise costs and fasten the process. Similarly, big data analytics is also on the rise with its advantages in the architectural field for initial design concepts and iterations.
The MENA region is known for its enthusiasm when it comes to smart buildings and smart cities. These projects are often surrounded by some aspects of PropTech technologies. Smart buildings gather and analyze data for the futureproofing of buildings and structures within cities, often with the aid of IoT devices and appliances, which play a crucial role in the automation, regulation, and provision of essential utilities. Saudi Arabia’s NEOM is the perfect example, as it displays the extensive usage and implementation of AI in the PropTech sector. NEOM’s development is utilizing AI to operate machine-executable legislation, conduct inspections, and provide projections and insights for data-driven decision-making.
Dubai’s Expo City is another project in the MENA region that puts the use of PropTech in perspective. Within its internet-of-things ecosystem, Expo City implements a wide variety of sensors, systems, gateways, and building management applications, which gather data from sensors throughout the project. Following an automated analysis of the data, the system makes vital decisions on its own, such as preserving ideal conditions for the city’s water use, air conditioning, lighting, and energy usage.
Though the industry has witnessed rapid adaptation and displays a positive future outlook, PropTech is still in its infancy stage when compared to other technology-related markets, such as FinTech. However, with a focus on smart, virtual, and contactless technologies, PropTech trends are anticipated to pace up in the coming years. This presents a chance for PropTech companies in the MENA region to take advantage and capitalize early on by identifying and resolving market gaps and developing relevant solutions to penetrate regional markets.