14 Mar 2023John Macdonald

Proptech – Closing the Education Gap

As digital transformation has taken place across multiple industries and enterprise solutions for business, finance, and healthcare over the last decade, only recently have we seen the advent of technology and digitization finding its way across the built environment, namely, the real estate industry.

The rapid digitization and development of technologies is proof that the industry is on the cusp of a wider scale adoption of new paradigm changing innovation in order to future-proof business and preserve capital management processes in the transition to a modern world. 

The goal of all technology, broadly speaking, is to provide better connectivity between disparate systems while providing seamless data management for all stakeholders. 

In real estate, for example, there is an inordinate amount of data required to arrive at an accurate valuation for properties, determining liquidity, and optimizing investment portfolios. This data includes non-static subjective factors as well as objective factual information and numbers harvested across a broad swath of public and private sources. In the constantly changing environment, property management firms and multiple lending sources (including both banks and alternative investment fund managers) all require more efficient systems for aggregation, contextualization, and consolidation of information. 

A major hurdle to more rapid access to these technologies stems, in part, from the habitual use of manual processes and legacy systems that real estate professionals have come to rely on in a more stable time when pandemics, run-away inflation, record interest rate hikes and Russian aggression were hardly conceived. 

At best, we have been aware of multiple single-use technologies. For example, there are softwares that can automate one process or action, such as enhanced Excel files, or shortcut to the combining of files provided by real estate websites designed to help make recommendations for agents. This is hardly what is needed to truly make a difference or be transformative for the industry. 

It’s also the case that ratings agencies are in need of tools that help parse collateralized loan packages and the assets within. The secondary market is driving demand for technology as buyers and sellers seek the means to gain increased leverage and returns from their portfolios. 

Now, the time has come to close the gap and adopt the benefits of “Proptech”, as an innovative new classification that will act to achieve the most accurate and efficient data processes. 

For example, remediation efforts can take months to complete. But today, we can aggregate and scrub data at a pace that completes this process in a matter of hours or at worst days, all while the data is more accurate and reliable for making the most critical decisions. 

In the same vein, it’s also true that much needed data standardization across the European continent is likely only to be remotely possible through the adoption of new property technologies. Real estate professionals need to become educated and wake up to the fact that machine learning and AI are not for rocket scientists and theorists only, and are the building blocks for the future of how we will work in the days ahead. Who hasn’t seen the potential in everyday life for ChatGPT, Bard or Bing?

Technology providers must close the education gap in the real estate industry in order to remain competitive in a rapidly changing and volatile market place. While real estate has traditionally been viewed as a stable asset class, multiple unrelenting forces now demand that the industry gain access to more structured and automated processes for standardization and increased efficiency for processes in handling data.