Proptech: The digitalization of the real estate industry

What is Proptech?

Proptech is the intersection of real estate management and information technology. It can describe hardware and software solutions but is increasingly used to describe app-based property businesses like Airbnb and WeWork, which is only a tiny part.

The proptech market is constantly evolving, and AI and machine learning accelerate further growth. A survey by the Institute of Real Estate Management in the U.S. and Canada found that process automation was the number one challenge portfolio managers believe new technology will resolve.

Definition of proptech

Forbes and Deloitte define proptech as “businesses using technology to disrupt and improve the way we buy, sell, design, construct and manage residential and commercial property.” Proptech encompasses a wide range of technologies and platforms. Properly applied, proptech will improve owner, investor and tenant experience during the entire building lifecycle.

Driving sustainability and compliance: How proptech solutions address challenges

Proptech solutions seek to resolve multiple challenges in commercial real estate (CRE). Firms are adopting more comprehensive strategies to meet their long-term environmental, social, and corporate governance (ESG) goals and adapt to stricter environmental and corporate sustainability legislation.

In Europe, the EU’s Corporate Sustainability Reporting Directive (CSRD) will radically influence how organizations approach environmental performance delivery. Lowering direct and indirect greenhouse gas emissions is now a leading priority, and businesses are adopting complex proptech solutions to become more sustainable and in line with regulations.

Proptech’s growth trajectory

The proptech industry is still emerging but shows signs of meaningful long-term growth. According to Fortune Business Insights, the global sector was worth $33.57 bn in 2023, but its value is expected to rise to almost $90 bn by 2032. Data from KMPG shows that investment in proptech businesses tripled from $4.1 bn in 2022 to $13.4 bn in 2023.

Cutting-edge technology is already revolutionizing real estate in many different ways, from startups that use AI and data analytics to leverage property buying and selling to ESG green buildings with building optimization technology built into them from the start. Proptech is helping CRE portfolio managers reduce energy use and carbon footprints to meet ESG standards efficiently.

The digitalization of commercial real estate

We live in a highly digitized world. Tech companies dominate the commercial landscape, and emerging mediums such as AI are continuing to advance our societies. The technological progress occurring within real estate is no different.

It is now vital for CRE portfolio managers to harness the data and insight offered by proptech to optimize the operational efficiency of their buildings, offer curated tenant experiences by using smart solutions to adapt indoor conditions to their needs and decrease energy use with a toolbox of ESG-driven proptech SaaS technologies.

From aspiration to action: Proptech’s role in ESG and profitability

For many CRE organizations worldwide, proptech solutions are no longer an aspirational ideal but an essential resource in managing their day-to-day operations. In the face of higher global energy prices and government-imposed sustainability reporting disclosure regulations, ESG has become a leading priority.

A 2022 CBRE survey shows that 76% of European property investors are sharpening their focus on this area. Integrating Energy and ESG strategies through proptech can significantly enhance a CRE business’s profitability, thanks to the built-in optimization savings achieved with a portfolio-scale system.

The intersection of digital twins, IoT, and BAS

Data is the driving force behind the proptech revolution. If your CRE organization can accurately report its energy performance and utilization metrics, it will be much easier to identify areas for efficiency gains and where to invest the maintenance budget most appropriately.

Digital twin software powered by sensor-driven technology can offer game-changing insight into your operations. Your teams can develop virtual copies of building systems and physical assets using an Internet of Things (IoT) network backed by cloud-based integration, 3D modeling, and artificial intelligence.

This can unlock so much more than just insight. You could adopt predictive maintenance software to fix critical system failures before they happen. You could implement a building management system (BMS) that optimizes the HVAC and other core building infrastructure settings based on building occupation, temperature, time of year, etc.

Building Automation Systems (BAS) take this further by adopting those ideal changes of their own accord. Harnessing IoT technology feeds the BAS system with the information it needs to adjust individual system settings for optimal use; it acts as a building’s eyes and ears to maximize power savings and efficiency gains.

Case Study: Vasakronan

ProptechOS has continued to support large ESG-focused property owners in optimizing their complex CRE portfolios to meet decarbonization targets. Vasakronan, Sweden’s largest property owner, operates a portfolio comprising 168 properties with a total area of 2.4 million square meters.

By adopting ProptechOS’s Optimize software on its portfolio, Vasakronan could monitor its buildings’ performance within minutes, saving 36% in district cooling and heating costs, minimizing emitted CO2 levels, and engaging employees in their daily optimization work.

Built on top of RealEstateCore

At the heart of our core offering is an open-source platform that sets the standard for naming and categorizing real estate data, allowing the combination of information from different building systems.

RealEstateCore standardizes communication between different technical real estate and external IT systems, creating opportunities for advanced data analysis, intelligent control, and building monitoring. It also visualizes property data for digital twins and other building information modelling (BIM) systems.

RealEstateCore focuses on binding together and bridging four different domains for standards:

• Digital representation of the building’s construction elements (e.g., BIM/IFC)
• The control and operation of the building (e.g., Brick Schema, Project Haystack)
• IoT technology (e.g., SSN, WoT)
• Business data for processes and agreements (e.g., CDM/IBPDI)

How ProptechOS works

ProptechOS helps your properties perform at their best. By connecting building systems to an ecosystem of cutting-edge BMS, BAS and digital twin applications, ProptechOS empowers property owners to uncover hidden opportunities and streamline operations.

Underpinned by RealEstateCore as a standardized platform, ProptechOS allows for advanced automation and data-driven decision-making, ensuring peak efficiency and profitability.

An ecosystem of applications

As there are so many different systems besides a BMS that need to be connected using a master global standard, RealEstateCore’s plug-and-play functionality gives property owners greater freedom. Once the platform is installed, the system can easily be upgraded to suit new and emerging technology.

Rather than multiple buildings having different standards, everyone in the network can contribute to the open standard. The widespread adoption of RealEstateCore as the standard will make it more cost-effective; doing so will catapult the future of buildings to a new green industrial revolution of smart cities.

Why we encourage you to get involved

Our world is constantly changing, but our need to decarbonize the ever-expanding built environment grows greater with each passing year. The United Nations predicts that almost seven in 10 people on Earth (68%) will live in an urban area by 2050—equivalent to 6.5 billion inhabitants.

We know that around 40% of global energy-related carbon emissions come from the built environment. The CRE sector is under increasing pressure to implement meaningful decarbonization strategies and is facing stricter regulation to publicly disclose its sustainability reports and modernize legacy infrastructure.

ProptechOS is more than a solution to decarbonize and optimize the operational efficiency of your CRE portfolio. It advocates for a greater culture shift within the built environment to clean up our act and harness the advanced technology at our disposal to create a more sustainable and profitable industry.

Regional authorities, national governments and major investors are driving the push for sustainability within CRE, and our cities of the future will be dominated by IoT-driven smart infrastructure. These are no longer the futuristic visions of an idealistic generation but a growing reality we must embrace.

With ProptechOS as your operating system, your CRE organization can embrace the future of real estate, transforming your properties into smart, efficient buildings to meet ESG targets, comply with new and existing sustainability regulations and achieve higher environmental benchmarks.

Get started with ProptechOS for free today to see how integrating your Proptech solutions can enhance your operations.