As a country with an appetite for all things modern and innovative, the UAE has been embracing the latest technological innovations across almost all sectors and industries. Real estate has been no exception, with Proptech taking over the property landscape and scaling it to unparalleled heights. The UAE has been at the forefront of this step-change in embracing that technological revolution and encouragement of the need to disrupt the sector.
Before delving deep into the concept and its apparent implications, let’s understand what the much-used term means. Proptech is used to describe the wave of technological innovations shaping real estate markets across the world. It is basically a portmanteau used to describe any aspect of technology that is applied in the real estate space. In its first iteration, Proptech 1.0 brought together the existing models of the real estate models and introduced them to emerging tech through the introduction of mass-market adoption of computing, mobile phones and the internet. This changed market dynamics, speed and provided a real disruptive state to the industry. Following the dotcom crash, technology firms re-evaluated their positions, business strategy and quickly adapted and matured into a new, more responsible industry. This allowed Proptech 2.0 to emerge.
The maturity that came into play with Proptech 2.0 was built on key technological advances including a faster, more stable internet and critically, the introduction of widespread online transactions through the likes of Paypal and online stores such as Amazon. In more recent years, the growth of the Internet of Things has paved the way for continued innovation, blurring the lines between all industries.
The future, therefore, is both exciting and challenging to predict. Though proptech has a strong presence and impact across the industry, we are still some steps away from having the same game-changing global impact seen by the discussion around fintech and Bitcoin.
The industry is now entering a new phase - Proptech 3.0. The evolution of the industry has brought together elements of the FinTech environment, traditional Real Estate economy and the bourgeoning operational technology-based, Smart Real Estate world.
The last few years have been consumed by discussions around the role of Blockchain, Artificial Intelligence and 5G in almost every industry. Proptech 3.0 brings many of these elements together.
With the new ability to generate 3D printing models, develop and manage offsite manufacturing protocols, showcase interactive virtual tours of a property, and create architectural designs for the future, Proptech 3.0 is taken a bold step forward for the industry.
Dubai, for example, concepts like 3D printing have already started becoming an industry standard. Investors in the sector are looking at proptech to make well-informed, data-driven decisions. Looking at it from a wider perspective, proptech currently acts as a crucial tool for the real estate sector to exhibit what the city has to offer. As blockchain matures further, the industry will benefit from increased fraud prevention, digital currency management and end to end transparency. At the transactional level, this will facilitate seamless interaction between Estate agents, Conveyancing teams, RERA and the financial community.
With a supportive leadership, upcoming global events like Expo 2020 and the new freehold and visa-related reforms, Dubai has the potential to serve as a launchpad for Proptech 3.0, especially as several tech start-ups have made the Emirate their home, with an aim to tap into this lucrative real estate market.
The global real estate market, on the other hand, is also progressing fast, with companies now investing in real estate technology to an appreciable extent. Reports state that investments in proptech start-ups soared from $20 million in 2008 to a whopping $12 billion in 2018(1). In the first half of 2019, the global investment into real estate tech start-ups had already crossed the mark, reaching $12.9 billion (2). This produced some famous and highly valued start-ups like Airbnb. The proptech sector has lately been attracting a substantial number of venture capitalists as well as talented entrepreneurs, making it one of the most important technological innovations.
Looking at international trends and the potential of proptech, it is high time that businesses start embracing this wave of advancements to keep pace with evolving demands. For real estate investors, and developers specifically, it is important to identify areas that proptech can enhance and make more efficient. In Dubai, firms have emerged as pioneers in the use of this technology. However, the fact that there are still a few players to look up to is a testament to more and more business owners needing to be educated on the impact and use of technology in real estate.
There needs to be more awareness of how to integrate proptech solutions into the very fabric of real estate. It is only after we fully understand the benefits, limitations, and uses of proptech can we be able to derive maximum enumerations from it to develop and further grow the overall real estate sector.