Seven Common PropTech Myths and Whether They are Fact or Fiction

The world of PropTech is in a constant state of evolution and is home to some of the most innovative software on the market.  It’s easy to forget that, ‘The inception of Proptech 1.0 in the mid-1980s marked a revolution as personal computers entered the scene, empowering brokers with data at their fingertips,’ as Mipim reminds us. 

Instead, it can often seem like a new concept, even with such a marked prevalence in the UK, where there are, ‘Over 400 UK PropTech companies, roughly 58% of the ecosystem, focussed on the residential sector,’ according to Unissu.

For some reason, however, since its inception, the PropTech sector has been shrouded by a certain element of mystery.  This has left some parts of the industry unsure of its credibility, usability and future in the property market.  So, what is it about property technology that keeps raising questions, and is there any truth behind it?

In this blog, we look at seven of the most commonly held PropTech myths, with the aim of either debunking or confirming their legitimacy.

Myth No. 1 – Real Estate Professionals Will Be Replaced by PropTech

Everywhere we look there seems to be news coverage about the progress in AI technology.  Robotic machinery has already replaced the human element for certain procedures in fields like surgery and engineering.  So, it’s understandable that property professionals might worry that they will in some way lose their jobs to technology in the same manner.

However, the truth of the matter is that PropTech cannot replace the role of the property professional.  PropTech can offer solutions for almost every stage of the sales or tenancy process, but it can never replace the human input for one very important reason.  Amanda Pflieger, in her report ‘The Future of Proptech in the Real Estate Industry’ explains that, ‘There’s no need for concern; technology will never overtake the real estate industry because, fundamentally, real estate demands relationships.’ 

Instead of worrying about the future of the real estate industry now that the emergence of PropTech is truly underway, Pflieger advises: ‘Modern real estate agents should leverage technology to fuel their success.  Technology doesn’t eliminate human interaction in real estate; rather, it smooths out the wrinkles, enhancing the overall experience.’  The industry should therefore focus on the benefits the technology has to offer, and use them to enhance their operations, and concentrate on forming the relationships with consumers that they need to succeed.  The only issue property professionals should be wary of is becoming over-reliant on PropTech to the point they forget to do the human element of their job.

Verdict: Myth

Myth No. 2 – The Market Can Develop Without PropTech

While some believe that PropTech won’t play a role in development, a global survey carried out by KPMG found that ‘95% of real estate companies have someone responsible for leading digital transformation and innovation.’  This means that if your company isn’t at least exploring the opportunities offered by PropTech, you could soon find your projects lacking the latest tools and guidance, and therefore speed, that your competitors are benefitting from.  It would be wise, then, to consider PropTech as a fundamental element of the development of both your business and your homes, in order to stay ahead of the game.

Verdict: Myth 

Myth No. 3 – PropTech is Only for Large Real Estate Companies

The larger real estate firms may well have been the earliest adopters of PropTech, however, nowadays there are solutions available to companies of all sizes.  ‘It's a common misconception that a property management business has to have a large portfolio to justify investing in PropTech,’ says PayProp.  From property management tools to virtual reality home tours, there's a wide range of solutions tailored to different needs and budgets, making it inclusive for small and medium-sized enterprises, and even individual property owners.

It might be interesting here to look back to the emergence of the Blackberry mobile phone.  This arrived with a bang in the market.  As the Guardian remembers, ‘A decade and a half ago, there was no bigger status symbol than the BlackBerry.’  However, then came the iPhone.  Suddenly, the smartphone technology had been developed beyond the Blackberry’s capabilities.  And the Blackberry has now all but disappeared.  Using this analogy, we can look at the emergence of PropTech.  All the big real estate professionals want it, they have it already in fact.  Now, here is AI shaking up the PropTech game.  It’s not to say that the original platforms are no longer useful, they will now just need to be updated to include AI technologies so as to stay as relevant as the latest solutions on the market. 

For smaller developers, who are yet to include PropTech in their operations, this can be seen as an opportunity.  Entering the world of PropTech when your options are just becoming a lot more interesting is an exciting situation to find yourself in.  And if the most cutting-edge solutions are out of your price range, it might be an idea to take a staggered approach to your adoption of technology.  Start with the software you can afford, maybe something administrative that can digitise your processes to use up a fraction of your time and resources.  Then, once you have reaped its cost-saving benefits, invest in something more complex with your increased budget.  In this way, you will be able to integrate the best and latest in AI technology when it comes.

Verdict: Myth

Myth No. 4 – PropTech is Only for Residential Real Estate

While there are numerous platforms aimed at the residential real estate market, there are also a plethora of solutions that meet the needs of the commercial property sector.  And as Larry Goodman wrote for Forbes magazine, ‘As one of the highest-valued markets, I think it's high time for the commercial real estate industry to jump on the technology bandwagon.’  Goodman suggests commercial real estate could benefit from platforms that use AI to make recommendations.  As these tools can quickly analyse large volumes of data, they can help investors find properties to match their specific requirements in a much shorter timeframe.  ‘It can also help predict market trends so investors can make more informed investment decisions using historical data and patterns in the market,’ says Goodman.  He also points to platforms that can carry out market research, to help investors monitor movement within the market, and those that can digitise processes that would otherwise require verbal communication.  ‘Telephone may have been a fun game when we were kids, but it can seriously hinder the buying and selling process,’ he says. 

Although PropTech might be more prominent in conversations in the residential sector at present, commercial real estate professionals should be looking into its implications for areas such as office spaces, retail properties, and industrial facilities.  From smart building management systems to data analytics for investment decisions, PropTech offers solutions that can benefit various sectors within the real estate industry.

Verdict: Myth

Myth No. 5 – PropTech is Primarily About Flashy Gadgets and Futuristic Concepts

While there are PropTech solutions that use cutting-edge technology, like augmented reality and blockchain, the majority of solutions aim to solve practical challenges faced by real estate professionals and property owners.  As Mipim argues, ‘This field is about embracing software solutions that address real estate needs head-on—from data analysis and automated monitoring to scrutinising energy consumption patterns.’ 

The practical tools available include efficient property management and tenant communication platforms, and software for financial analysis and forecasting, to name a few.  PropTech is about leveraging technology to improve processes, increase efficiency, and deliver better outcomes for stakeholders.

Verdict: Myth

Myth No. 6 - PropTech Won't Have a Lasting Impact on the Property Industry

As we learned earlier, PropTech has been around since the 1980s, giving it a four decades-long reign, so far.  This is no short-term phase in the property industry.  PropTech has significantly reshaped the real estate landscape, with online searches for homes being the first port of call for most potential buyers and tenants.  

A report published by Valley, earlier this year, titled ‘The Present and Future of PropTech: Charting a Clear Path in Murky Waters’ concluded that the sector would indeed grow and withstand the uncertainties in the current market.  According to the report, ‘Regulations compelling greener construction will also prompt a consistent trickle of funding for more radical innovations in materials and techniques, especially via digitalisation.’

So, as our requirements evolve, so does technology to meet these new challenges.  It is likely, then, that PropTech will play an increasingly integral role in how properties are bought, sold, managed, and utilised.  And with ongoing advancements in artificial intelligence, Internet of Things (IoT), and data analytics, PropTech is sure to remain a key driver of innovation and transformation within the real estate sector. 

Verdict: Myth

Myth No. 7 – PropTech is Expensive

When it comes to the price of PropTech, the variation is enormous.  This is understandably confusing and often leads consumers to wonder why there is such difference in price points.  There are a number of reasons that this software can be expensive, such as ongoing development of the technology and the increased demand pushing up costs.  And there are reasons that some solutions are less expensive, as they only offer their users one basic service.  However, when choosing a solution, it is also worth looking at the history of the company.  Lots of PropTech start-ups introduce their product to the market at an inflated price for the simple reason that they need to financially recuperate for investors who are eager to see returns.  They sometimes also use external developers, whose work and time they need to mark-up in order to make a profit.  At Spaciable, we handle our development in-house and are self-funded from our long-term industry standing.  This allows us to offer a much more competitive rate than some of the younger companies, as well as over 25 years’ industry experience.  To find out more about our solution, get in touch here. 

Verdict: Myth