Real estate is a Goliath, the largest asset class in the world. Yet for a very long time it failed to measure up to other industries in one very significant way — an embrace of technology.
That has begun to change, with one of the more recent signs of that the decision in November 2018 by five major multifamily real estate investment trusts to put $108 million into a venture capital fund, Real Estate Technology Ventures I, that promises to invest in “disruptive real estate technology companies” in the multifamily space.
In all, some $4 billion was invested in 2018 in PropTech, the broad term applied to fledgling companies offering technologically innovative products or new business models to real estate. A decade earlier, just $20 million was invested in that realm.
Tech cuts across every facet of real estate in general and multifamily real estate in particular, from investment to marketing to building design to property management.
Here’s a look at each:
Investment: One report identified the pain points facing various aspects of the real estate process, all of which affect investors to some degree. Examples include the amount of time it takes a buyer to settle on a property, a tenant’s inability to afford a place, cost and time overruns by contractors and an inability on the part of the investor to glean enough information throughout the process. There are Proptech solutions for each of those headaches, not the least of which are tools like LoopNet (a listing of 800,000 commercial properties), RedIQ (offering the ability to evaluate investment decisions courtesy of data analytics) and Rentlytics (which analyzes the performance of a property).
Marketing: The days of simply listing a property on a website (much less a poster or newspaper circular) are long gone. While such listings still have their place, social media is all the rage in the era of the short-attention span — getting concise, accurate information out there quickly. Analysts see Instagram — particularly its “Stories” feature — as a trending platform, though that is apt to change in an instant. For now, at least, users find it appealing that they can upload content during any given 24-hour period, something one-third of the users of Instagram do daily. Besides offering convenience to potential clients, it allows an owner to collect information about those interested in their property.
Building Design: Artificial intelligence has made inroads here, though there are miles to go. Recent studies show that only 21 percent of property owners always include smart features — features that impact security, lighting and the like — while 57 percent do so sometimes. Still, there are ample signs of progress, like the energy startup that installed solar panels and sold the energy to tenants. Another area is package delivery — a huge concern in this day and age — which has been addressed with the installation of expensive locker systems by Amazon and various delivery outlets.
Property Management: Chatbots or virtual assistants allow residents of multifamily properties to conveniently pay the rent or make service calls. Key fobs equipped with Radio Frequency Identification (RFID) afford them easy access to the property, while also allowing the owner to track how often amenities like the pool, fitness center or business center are used. In addition, sensors reveal whether a resident is home or not, which can allow a smart thermostat to operate more efficiently. Everyone saves in the long run.