The 8 key PropTech trends

1. Increased interest in Fractional Real Estate Investments
2. Smart Contracts
3. E-signatures
4. Property Management Software Solutions & Automation
5. Dynamic Pricing Engines and predictive analytics software
6. Generative AI and digital personalisation
7. Smart Homes
8. Increase in I-Buyers

Increased interest in Fractional Real Estate Investments

Investing in real estate traditionally requires a significant amount of capital to get started in acquiring properties – capital which is tied up and illiquid. We are now seeing a growth in PropTech companies that are starting to focus on crowdfunding and fractional property investment opportunities.

The global crowdfunding real estate market is expected to grow from $13 billion in 2018 to nearly $870 billion in 2027 at a 58% compound annual growth rate.

Fractional real estate investments offer investors opportunities to invest in real estate with lower entry barriers in terms of capital required. KAPITL goes further than this by opening the doors to investors who otherwise could not afford to invest in real estate. KAPITL has also taken the barrier down from property being an illiquid asset with investors capital tied up for significant periods of time. Investors can realise their investment at any time by selling it on KAPITL’s secondary market whilst still receiving a return on investment until their investment is sold on.

Fractional real estate investments also allow investors to diversify their property portfolios and spread the risk more effectively be that diversification across commercial/residential real estate, geographically or both.

Smart Contracts

Smart contracts are digital contracts which are encoded and stored on blockchain. They are seen as “self-executing” agreements because they are automatically, immediately executed when predetermined terms and conditions are met.

Smart contracts enable buyers and sellers to exchange property in a transparent and conflict-free manner without the need for any third party. They increase the speed in which transactions can take place along with the efficiency and accuracy of property transactions; there is no paperwork to process and there are no agreements which need to be negotiated.

There are no third parties involved with smart contracts. What does this mean for the parties to the transaction? Firstly it saves costs as there is no intermediary or lawyers handling transactions and therefore there are no “middle man” fees to be paid (let alone the delays!) Smart contracts also enhance trust between all parties to the transaction as the records of the transactions are all encrypted and sent to each party to the agreement. Each party can rest assured that no amendments have been made to the documentation to seek a personal gain or advantage.

Smart contracts can also automate a workflow so that the next action is taken when predetermined conditions are met. KAPITL makes use of smart contracts across its platform to enhance the efficiency of transactions, allowing KAPITL to keep fees to a minimum whilst also gaining trust from parties to the transactions.

E-signatures

These are exactly what they say – an electronic signature. Previously with property transactions the signatures were expected to be “wet ink” to be considered validly executed. The adoption of e-signatures is growing and the global digital signature market is projected to grow on average at 26.3% annually from 2021 through to 2027. This allows property transactions to be streamlined as there is no requirement on waiting for the original “wet ink” document to arrive in the post or individuals having to take extensive journey’s to physically sign documents. This allows for a much faster turnaround time to conclude transactions.

KAPITL has adopted e-signatures for every document that is permitted by law to be executed in this way.

Property Management Software Solutions & Automation

These software solutions provide comprehensive tools to improve efficiency, accuracy and overall business performance. Key features of these types of software are as follows:

  • Real time updates on rental payments and AI-powered email systems to ensure timely collections and reduce overdue payments;
  • Maintenance management – enabling tenants to report issues through the platform to streamline communication and allow issues to be resolved in a more timely manner; and
  • Automated documentation – the creation of tenancy agreements, leases and confirmation of payments which all save time on repetitive tasks and eliminate human error.

Automation is a real disruptor within real estate management and the market is expected to reach over $37 billion by 2029. The above examples of property management software solutions and automation shows how this technological advancement allows real estate companies to operate much more efficiently whilst also increasing landlord and tenant satisfaction.

These software solutions are built into KAPITL’s platform for the property management arm of the business.

Dynamic Pricing Engines and predictive analytics software

This PropTech trend is closely related to AI. Dynamic pricing engines are continuously analysing market data and thereby dynamically adjusting prices which significantly increases revenue by ensuring that properties are optimally priced at all times. This, of course, in turn increases the efficiency of property transactions as external valuers are not required to physically book an appointment to see and value the property. It also allows sellers and buyers to make the most of the optimal pricing knowing that they are not paying more for or selling the property at less than the present market value.

With dynamic pricing engines continually adjusting prices it allows property managers and landlord’s to obtain the highest possible rental price whilst also allowing sellers to tap into enjoying the highest possible selling price. Such systems allow property transactions to be tracked so that investors, buyers and sellers can respond quickly to market fluctuations.

KAPITL will be using such dynamic pricing engines on their secondary market in respect of property share prices and will also use such pricing engines and analytical software when setting the rental prices for each property which is under KAPITL’s management. These statistics will also be available to certain registered users on KAPITL’s platform so that they are able to track their investments and buy, sell or trade on the back of such statistics.

According to recent data the market for predictive analytics software is expected to grow to $35.45 billion by 2027.

Generative AI and digital personalisation

Generative AI is poised to revolutionise the way in which home touring content is created. We expect to see more sophisticated uses of virtual staging where AI generates customisable images of interiors, allowing potential buyers to see different design options to suit their tastes or even their furniture preferences.

The generative AI can also be expanded to create virtual tours of a property so that buyers can actually do a full “walk through” without having to even leave their homes. This is particularly useful if buyers are relocating from different areas or countries to allow them to have a more “real life” feel for the property.

There is also an increase in use of digital personalisation just as we know it for e-commerce. This is also now applicable across real estate platforms by using AI to analyse users search history, interactions and preferences which allows the platform to recommend properties which are suitable for the users requirements. In time KAPITL will be implementing this onto their platform so that users can easily see properties that may be more attractive investment opportunities and options for them based on their previous searches or investments on the platform. KAPITL will also be able to send out personalised communications based on user profiles and their previous searches and investments across the platform.

The global market for AI in real estate is expected to grow at a 35% CAGR and reach $1335.89 billion by 2029. There is also evidence that companies which offer personalisation generate 40% more revenue than the average players.

Smart Homes

Smart features, new builds and sustainable materials are the top and main interests of the Gen-Z buyers according to the Future of Real Estate report. Transforming properties into smart homes is a new way of attracting the younger generation of buyers/investors and also increasing the property value at the same time. KAPITL work very closely with a vast number of property developers and we see more and more smart features and smart homes coming to the market.

A recent study showed that 62% of the Gen-Z renters consider smart home technology to be more important than traditional amenities such as a gym or convenient parking. With KAPITL working closely with property developers it allows us to bring new builds to the market for investors that are in demand by Gen-Z; thereby generating a higher rental yield, reducing the time of vacant investment properties whilst also reducing the capital outlay through fractional investment and transforming that fractional investment into a liquid investment.

Increase in I-Buyers

I-Buyers are transforming the real estate market by leveraging technology to streamline the buying and selling process. I-Buyers are tech-enabled companies that buy homes directly from sellers relying heavily on data and automated valuation models to make fast purchasing decisions. These tech-driven approaches allow such companies to buy the homes without even seeing them in person. This allows I-Buyers to purchase properties from sellers at a reduced price due to the efficient nature of the transaction and the convenience of I-Buyers are attractive to homeowners due to the efficiency and speed of obtaining sale proceeds. This is particularly attractive to seller’s should they be in financial difficulties or they have agreed an offer for a new home but are struggling to sell their existing home.

I-Buyers provide a certainty and convenience that traditional real estate acquisition and disposals methods do not. The CEO of Knock CRM believes that half of all home sales will be bought by I-Buyers within the next 10 years.