What can AI do for the real estate industry?! What is the difference between DLT and Blockchain?! And how does PropTech help cities to become “Smart”?! PropTech is disrupting the real estate sector and brings with it an array of questions. We put together the ABC of PropTech – going through the most important terms and technological innovations. This time leading you through A like Artificial Intelligence to F like FinTech.

A: Artificial Intelligence

“Artificial intelligence is a collective term for smart technologies that consciously perceive their environment and can learn from it to respond autonomously to signals and make decisions. These are computer programs that are able to learn, understand, plan, think and self-correct.” PwC

What can AI do for the real estate industry?

AI can speed up and improve all digital processes and services delivered by real estate players:

  • Cost savings in real estate transactions
  • Speed up the decision by observing and learning from a customers behavior online
  • Enhance lead generation process by observing and learning from a customers behavior online
Stephen Rose // Investing // 13th Sep 2018

B: BIM (Building Information Modeling)

“BIM is the process of designing and building collaboratively using one coherent system of computer models. Instead of separate sets of drawings that are used by various design professionals, BIM offers a 3-D or 4-D, interactive model of a building’s systems and assemblies.” Watchdog

What can BIM do for the real estate industry?

  • Increase Efficiency through collaboration– BIM enables multiple players of the real estate industry across multiple disciplines to work together on one model. Each player can put their input directly into the model, which increases efficiency and reduces complexity.
  • Simulation and Visualisation– BIM allow users to simulate conditions like sunlight during different times of the day and the year. It also enables users to calculate building energy performance.
  • The Cloud- BIM models will be backed up by a cloud database. As a result information can be easily shared and are available from everywhere and on any device.
Source: BIM World 2016

C: Cities of the future or smart cities

“Smart City is a collective term for holistic development concepts aimed at making cities more efficient, technologically advanced, greener and more socially inclusive. These concepts include technical, economic and social innovations.” Wikipedia

Boyd Cohen, an urban strategist, defined six action areas in which a city can transform itself towards a “smart city”.

  • smart economy
  • smart governance
  • smart environment
  • smart mobility
  • smart population
  • smart living environment
SOURCE: smart-circle.org

How does PropTech help cities to become “Smart”?

A fast growing urban population, pollution and housing shortages pushes the real estate sector to relay more and more on PropTech and its ability to shape the cities of the future in order to meet the expectations of citizens and government. In their “APAC Smart Cities Report 2019” the investment company Jones Lang Lasalle defined the following eight key stages in the urban life cycle, in which PropTech innovations will have the biggest impact:

  1. Enhancing build and construction – e.g. by using cloud based collaboration platforms to share construction plans, track project delivery and determine cost benchmarks.
  2. Managing and optimising spaces – e.g. co-working spaces like wework.
  3. Merging different tools – e.g. drones to conduct building inspections.
  4. Enabling greater investment – e.g. through lowering the threshold for investors by using Blockchain technology.
  5. Improving transparency- e.g. track, collect and analyse data with the help of Blockchain technology.
  6. Driving sustainability – e.g. environmental sensors to track temperature needs based on occupancy, time of day and other variables.
  7. Supporting happy people and intuitive spaces – e.g. sensors in aged care facilities.
  8. Redefining cities- e.g. by creating new live and work models.

D: Distributed Ledger Technologies (DLT)

Have you heard about Blockchain or DLT? And how they are connected to PropTech? There is a lot of confusion when it comes to DLT and Blockchain. The ladder basically just being one type of a distributed ledger.

“Distributed ledgers use independent computers (referred to as nodes) to record, share and synchronize transactions in their respective electronic ledgers (instead of keeping data centralized as in a traditional ledger). Blockchain organizes data into blocks, which are chained together in an append only mode. Blockchain/ DLT are the building block of “internet of value,” and enable recording of interactions and transfer “value” peer-to-peer, without a need for a centrally coordinating entity. “Value” refers to any record of ownership of asset — for example, money, securities, land titles — and also ownership of specific information like identity, health information and other personal data.” The World Bank

How does DLT disrupt the real estate sector?

There are many fields in the real estate sector, which can be simplified, more transparent and secure through DLT. Three examples:

  1. The Property Transaction Process: “DLT essentially allows many parties to remotely access the same digital documents. A distributed ledger is able to ‘cut out the middleman’ who would traditionally have been the conduit that sends the document from one party to another when each stage of a property transaction is completed. With DLT, the network can function without a central administrator. It allows accounts and documents to only be visible to those that need to see specific records, rather than every item held within the ledger.” Unissu
  2. Fractional Real Estate: In the past big parts of the real estate market were only accessible to high-net-worth investors, real estate investment trusts (REITs), opportunity funds, investment vehicles managed by major banks, or institutional investors due to extremely high entering barriers. The DLT has the ability to change that. Thanks to fractional real estate (FRE) opportunities and the tokenization of investment, the market is now open also to smaller investors like you and me. To read more: Cointelegraph
  3. Property Management: Property management is up until today still a paper and pen business with many stakeholders involved – such as tenants, landlords, property managers etc. It is neither efficient nor transparent. “Through the use of a single decentralized application that uses blockchain-backed smart contracts, the entire property management process, from signing lease agreements to managing cash flow to filing maintenance requests, can be conducted in a secure and transparent manner.” To read more: CB insights
To get a better understanding about DLT and Blockchain watch the video above.

E: Energy Crisis

There is no need to give a definition to the energy crisis as it is omnipresent in our life and our world. Many governments world wide have declared “the energy transition” in the coming years. But in contrast to laws and regulations the technology is ready for it. The PropTech sector provides key solutions for a carbon free footprint especially in regards to smart building technologies. According to “The global real estate experts” the real estate sector will benefit from PropTech innovations in regards to energy management especially when it comes to:

  • Decrease energy consumption during construction e.g. minimize stocks and waste, optimize use of manpower and logistics and avoid reprocessing with the help of BIM
  • Decrease energy consumption of buildings e.g. through sensors that can identify energy wastage produced by a single light, a refrigerator etc.
  • Manage Energy demands and peaks with SaaS, e.g. with software that enables companies to access a fully detailed breakdown of energy consumption.

F: FinTech

“Financial Technology, nowadays better known under the term ‘fintech’, describes a business that aims at providing financial services by making use of software and modern technology.” Fintechweekly.com

FinTech is often regarded as the predecessor of PropTech. In terms of investment figures, PropTech still has a long way to go. But when it comes to disruption they both have a similar potential. What is sometimes overlooked in the comparisons, however, is the potential that results by combining these two. Together they are making the real estate market faster, more accessible and more transparent. For example by:

  • using data analysis to drive investment decisions.
  • streamlining processes such as property management.
  • lowering the investment threshold buy using Blockchain technology to tokenize assets

That was part one of four of the PropTech ABC. Follow us on LinkedIn and Facebook, and we let you when part two G-M, part three N-T, and U-Z go online.

Thank you!

Kind regards,

Karolin in behalf of the Prompto.com team.