Find out how R&D in PropTech could have a multi-fold impact and benefits to the economy
The Introduction of new or any technology to a sector always sparks innovation. Over the last twenty years, the application of technology and platform economics to real estate markets to make the transactions quicker and more efficient gave birth to Property Technology, also widely known as proptech. Proptech was born during the dot com boom, at a time when sales and residential listing were advertised on print media and through real estate agencies. The aim was originally to move listings to a digital platform, but it’s come a long way since then.
The next wave of Proptech involved making physical spaces more fungible- from holiday homes to storage spaces, there was a creativity around utilising space in whatever form. Today, proptech is driven by big data and AI trends, furthermore shaped by social distancing requirements and lockdowns arising out of COVID-19 that have changed the way in which the real estate sector operates.
Despite real estate contributing £94 billion to the UK’s economy, proptech is not a sector without its challenges. Given that the pandemic slowed down the pace of the industry to practically zero, there was a need to create alternative ways of working within the restrictions in order to drive revenue and survive. In addition to the Pandemic, the sector had its own challenges including resistance from stakeholders in the property and construction sector to adopt to different technologies and being slow to utilise new ideas. For an economy recovering from a global pandemic of this scale, whilst innovation was crucial for survival, the cost of developing the technology, especially for SMEs or start-ups can also be particularly challenging.
Proptech is not about developing solutions that will make real estate officials redundant, but about making the process more efficient. For instance, House price data deficiencies hinder UK housing market research. Due to the lack of an open and comprehensive house price database that contains transaction price alongside individual property characteristics, house price research in the UK is significantly limited compared to other countries around the globe. This research, by UCL, outlines an approach which addresses this deficiency in England. The official house price dataset in England for instance is the Land Registry Price Paid Data (PPD). It covers residential transactions in the housing market, and has two main disadvantages: first it is not geo-referenced and second, it lacks accurate information on housing size.
Another example would be challenges caused by data, for instance, the Royal Mail postcode Database is a great, open source but a postcode by itself cannot identify an individual property as Royal Mail can allocate the same postcode to a maximum of 99 house numbers. Therefore, more granularity is required for house numbers and street names information which is created by local authorities (not Royal Mail).
The solution to overcome issues such as this is for local authorities to configure the address look up functions to search on more than just a postcode, which creates additional complexity for users of this data especially since not all local authorities do this. This is an issue that would be faced by every delivery person on a daily basis and working on technology that could improve the last mile delivery could help the parcel reach the destination early, time spent looking up addresses would be reduced which will allow the delivery person to complete a greater number of deliveries in less time. These improvements could also have a positive environmental impact as there will be a reduced need for redeliveries due to missing or erroneous addresses, which would help the courier partners reduce their carbon footprint.
This is just one of the many examples that illustrates the need for R&D in developing proptech and how the benefits could have a multi-fold impact on the economy further than just the real estate sector. It is crucial for the industry to welcome change and invest in innovation of such technology that would change the way in which we perceive the property sector in itself.
Insights from Iliass Ikhanjal, Software Consultant, Leyton UK
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