The Persistent Growth of Real Estate Technology
Real estate technology startups had a record year in 2016, with these startups having received $2.6 billion in funding across 235 deals throughout this time period, representing a 40% increase over the previous year. This marks the 4th consecutive year in which real estate tech startups have broken their own funding records, a pattern that has been repeating since 2012.
The composition of this funding leans mostly towards seed and Series A rounds of funding, which represent the early stages of financing. But the balance has shifted in recent years – deals in this early-stage funding composed 66% of real estate in 2016, the lowest proportion it has seized in five years. Meanwhile, mid-stage funding has in turn achieved a record high of 15%.
With these trends in place, it seems easy to assume that 2017 will continue the upward slope of real estate funding. As early as now, we have solid indicators that this may very well be the case. In January, CBRE, the world’s largest commercial real estate company, acquired 3D imaging company Floored, a move that would allow CBRE to possibly deploy realistic virtual tours of properties that they’re selling. This acquisition may well be a harbinger of more mergers and acquisitions in the real estate industry this year.
Real Estate and Property Technology
What makes real estate technology (also called property technology) such an attractive topic for investors? The increasing pervasiveness of the field, as well as its tremendous potential for improving efficiency, quality of life, and connectivity are the keys to this.
Real estate technology consists of various innovations that improve the way business is carried out in the real estate industry. One of the most prominent examples is smart home technology, which comprises automated and remotely controllable devices such as thermostats, locks, and lighting. Smart home technology has been around for much longer than it sounds – indeed, the concept of a “home of the future” has existed at World’s Fairs for decades – but only recently have they become affordable and easily set-up enough to make them viable for consumer use. Smart home technology improves not only quality of life for homeowners, but also makes it easier for homes to be resold on the real estate market!
Another important example is the use of virtual reality, a technology that has recently taken the video gaming and multimedia world by storm thanks to its potential for immersive experiences. As mentioned above, CBRE may possibly use Floored’s technology to create virtual reality tours of properties for sale. Many other companies have already been doing this – for example, the Matthew Hood Real Estate Group uses VR to sell luxury homes in the US.
Incredibly important to the business aspect of real estate is big data. By aggregating information from a wealth of sources including financial information, demographics, and sensors at homes and properties, companies are able to get a better picture of the potential value of various locations, as well as the viability of prospective sellers and owners. Big data may also facilitate the formation of relationships between companies and customers, as feedback from customers can be better analyzed and put to good use, on a larger scale than ever before.
Accessibility of Property Technology
These innovations aren’t just future fantasies, but are in use right now by agents, buyers, and sellers. Even without advanced equipment or powerful software infrastructure, the real estate industry is already benefiting from real estate technology in various important ways.
SimpliSafe is a security company that provides home security devices that can be remotely controlled and viewed, as well as automated. Homeowners have been using their services to selectively allow realtors and property managers access to their homes so that they can present it to prospective buyers. SimpliSafe’s systems can provide different access codes that only work at certain times, as well as tracking of movement within homes, both of which can allow homeowners to restrict access to different parts of their homes, as well as the times at which realtors are allowed to present.
Virtual reality, yet again a very important part of real estate technology, isn’t limited to big names or luxury homes. Zipmatch offers virtual tours of over 300 properties in the Philippines through the use of their own photo database, and a pair of virtual reality goggles in conjunction with a smartphone. Unreal Engine 4, a graphics engine used primarily to make video games, has been used to make photorealistic virtual tours of properties that are as interactive as they are attractive.
These examples of property technology can be carried out with off-the-shelf components and software, making it far more accessible than ever before.
Hong Kong and Property Technology
Where does Hong Kong fit into the property technology picture? It seems that the HK property market has fallen in recent times, with home sales and prices both dropping to record lows. By leveraging the power of real estate technology, the industry may well regain their footing and offer more value to consumers.
Already we have examples like PowerMew and Spacious, who use real estate technology to provide the benefits of data and communication to the real estate industry that otherwise would have been very difficult to achieve. These and other innovators are leading the charge to what may very well be a revitalized Hong Kong real estate market. With property technology being grounded in the present, rather than a futuristic dream that is yet to be realized, it is absolutely something that can have an impact on the market right now.