Key Technologies Shaping Proptech Development

Despite facing a notable market downturn in 2023, proptech remains a promising arena, driven by the growing technology adoption among real estate investors and property managers. Projections suggest a robust trajectory, with market value poised to surge from $19.6 billion in 2023 to an estimated $47.8 billion by 2033, indicating an impressive annual growth rate of 9.3%.

The pervasive integration of technology stands out as a driving force behind this growth. Notably, in the commercial real estate sector alone, 40% to 50% of company executives planned to increase their tech budgets in the preceding year. Furthermore, there’s a discernible trend wherein investors redirect capital away from residential in favor of commercial and multi-family proptech companies. The proof is the substantial funding rounds secured by industry frontrunners like MaintainX and Verkada during the latter half of 2023.

In this article, we’ll explore the technologies driving proptech development and how they impact the real estate industry.

The internet is flooded with hype surrounding AI. However, the technology has proven valuable across various industries. As of 2023, nearly 85% of global digital leaders stated that their companies are actively considering or already adopting AI and ML on a small or large scale. The real estate sector is no exception. For instance, implementing AI in tenant acquisition, particularly within the virtual leasing market, has already led to significant efficiency gains. 

The adoption of AI also accelerates innovation and sustainability in proptech. A recent IDC report states that 66% of real estate companies invest in data and analytics, including AI technology, to meet sustainability goals. 

AI is a very broad concept, so let’s examine how its subsets are changing the proptech market scene.

GenAI

The integration of GenAI into proptech represents more than just a passing trend in custom software development. It signifies a transformative shift that is reshaping the industry. For example, according to EY, GenAI is poised to play a significant role in commercial real estate by enabling greater efficiency in property operations, investor relations, and asset management. In an EY survey, 61% of CEOs polled mentioned they are already using GenAI for report writing, lease abstracts, data analytics, and other business processes.

With its ability to generate new data and insights, GenAI is enhancing every stage of real estate operations. Here’s how.

• Personalized search and recommendations. Traditional search engines are not tailored for real estate, which has allowed specialized platforms like Trulia, Zillow, Homesnap, and Redfin to thrive. Yet, the integration of GenAI with MLS providers could be a game-changer. It would allow proptech companies to create more robust search engines tailored for real estate, providing personalized property recommendations for buyers and renters. 
• AI-powered chatbots.  AI chatbot is an intelligent tool that can handle inquiries across the spectrum of real estate operations, from buying and selling to rentals and insurance. They can be programmed to grasp the complexities of real estate transactions and provide informative and friendly responses. In addition to scheduling appointments and matching properties automatically, AI chatbots can handle complex tasks like property valuation, document verification, and transaction tracking, streamlining the process and enhancing overall operational efficiency.

As the technology continues to evolve, its impact on market analysis, property valuations, and overall industry efficiency is expected to grow, making it an essential tool for market leaders in proptech.

Predictive analytics

The real estate industry has been flooded with big data, which can serve as a base for accurate and reliable predictions, especially in commercial real estate (CRE). Creating models (basically mathematical formulas) with Python or Microsoft’s ML.NET can help transform those terabits of data into a treasure trove and boost the bottom line through more efficient operations. 

For instance, regression models can estimate relationships between variables like price and square footage. In contrast, classification models can assign high or low-risk labels to forecast property values and rental income accurately. Clustering models can group data points based on similarities, such as buyer personas. These are only a few examples of how predictive analytics can help proptech companies and investors optimize their strategies for maximum profitability.

Automation

As Gartner reports a projected 35% decrease in real estate CFO spending due to market conditions, proptech automation emerges as a strategic investment for significant operational enhancements. Whether it’s agents, brokers, investors, or property managers, automation can streamline their daily tasks, from lead generation and marketing campaigns to back-office processes, transactions, accounting, contracts, and asset management. The benefits are clear: increased productivity and cost savings.

AI’s role in proptech is multifaceted and expanding. It automates and optimizes existing processes and paves the way for new business models and strategies. As the industry embraces AI, we expect to see further innovations that will redefine the real estate landscape.

Blockchain is gaining momentum in proptech software development because it has the power to improve the security and efficiency of real estate transactions. One of the prevalent applications of blockchain in proptech is through property listing sites. Storing property listings on a blockchain network as a unified, decentralized, and encrypted database makes it more challenging for external parties to tamper with the information. It diminishes the likelihood of third-party property listing apps and websites manipulating prices or posting fraudulent details.

Acting like an add-on to proptech software systems, blockchain can provide more transparency through smart contracts, asset tokenization, and non-fungible tokens (NFTs). Here’s what they can offer.

Smart contracts

Smart contracts represent self-executing contracts in which the terms of the agreement are directly written into code. According to Deloitte’s 2024 commercial real estate outlook, smart contracts and self-executing transaction protocols stored on the blockchain account for 63% of hard dollar commitments. No surprise since smart contracts can:

• Facilitate property transactions by automatically executing the transfer of ownership once predefined conditions are met (e.g., payment confirmation and regulatory compliance)
• Automate rental agreements by enforcing terms and conditions, managing rental payments, and handling security deposits
• Serve as escrow agents, holding funds until predefined conditions are fulfilled before releasing payment to the appropriate party (e.g., completion of inspections or repairs)

Thanks to it, smart contracts can remove intermediaries and improve the accessibility of real estate operations.

Asset tokenization

In proptech development, tokenization involves dividing a property’s ownership into digital tokens, each representing a fraction of the property’s value or income. These tokens can then be bought, sold, or traded on blockchain-based platforms, providing liquidity and access to a broader pool of investors. Thanks to tokenization, small and mid-tier investors can now own a piece of a larger asset they might otherwise find unaffordable.

However, only some blockchain platforms are suitable for real estate-related transactions. For instance, cryptocurrencies like Bitcoin, often used for retail payments, are rare in real estate due to their slow transaction speed and price volatility. On the other hand, tokens such as Cardano or Solana offer almost instantaneous processing, making them more viable options.

Cloud computing has become pervasive in many industries, yet the real estate sector is slowly embracing its full potential. This reluctance to digitize has left agents, brokers, and clients underserved with outdated systems and inefficient processes.

Cloud can play an indispensable role in real estate, helping to fight data silos and enhancing interoperability. By transitioning to the cloud, companies can reduce IT infrastructure costs and minimize reliance on on-premise systems. Moreover, hosting data on the cloud allows for real-time access, streamlining communication, and facilitating property management. 

Here’s a simple table outlining various ways proptech companies can use cloud services:

Choosing .NET for proptech and real estate software development offers several compelling advantages. .NET is renowned for its robustness and versatility, making it an ideal framework for handling the vast amounts of data and transactions processed in real estate and proptech applications. Its scalability and performance capabilities ensure that applications can grow alongside businesses, meeting their evolving needs over time. It’s no surprise that .NET 7.0 consistently ranks among the most popular frameworks and libraries, according to the 2023 Stack Overflow survey.

With built-in features like ASP.NET Identity, .NET provides a secure framework for managing users and roles, which is crucial for protecting sensitive real estate data. Additionally, .NET offers cloud-native support through ASP.NET Core, enabling the development of web apps, services, IoT applications, and mobile backends with ease.

The versatility of .NET makes it suitable for a wide range of real estate and proptech applications. Whether it’s CRE content management systems, property finance solutions, investment management portals, or other specialized tools, .NET provides the foundation for building robust and innovative software solutions tailored to the unique needs of the industry.

.NET Multi-platform App UI (MAUI)

.NET MAUI simplifies cross-platform app development by allowing you to build applications that effortlessly operate across Android, iOS, macOS, and Windows from a single shared code-base. Utilizing XAML, you can craft intuitive, native user interfaces tailored to each platform, whether it’s showcasing property listings, implementing search functionalities, or integrating interactive maps, all while maintaining shared business logic.

In the realm of proptech, where real-time communication is paramount, .NET MAUI offers SignalR integration to seamlessly incorporate multiplayer or real-time features into various aspects, such as property listing updates, chat functionalities, or collaborative tools.

Furthermore, .NET MAUI grants access to native APIs, facilitating seamless integration with device-specific features such as geolocation, camera functionalities, and push notifications. For proptech applications, this translates to effortless property location tracking and personalized alert systems.

Angular is a powerful front-end framework for building dynamic, responsive user interfaces. Its component-based architecture allows seamless updates without page reloads, making it ideal for real-time property listings and search features. Each part of the UI and its features can be encapsulated into separate components, making managing and maintaining complex interfaces easier. 

Proptech applications often involve data-intensive tasks, and Angular’s performance optimizations contribute to a smooth user experience. As the proptech industry grows, applications built with Angular can quickly adapt to changing requirements and handle increased user loads. 

Extended reality technologies like AR, VR, and mixed reality have passed the hype in 2022. However, they are still evolving and have much potential in proptech, namely in CRE. Thanks to the following uses, immersive technologies can enhance the buying and selling experience.

• Virtual property tours. AR and VR significantly add to (if not completely replace) traditional physical property tours. By offering buyers and renters a lifelike experience of the space without the necessity of being physically present, these technologies significantly broaden the market reach for property listings.
• Design visualization. VR and AR can visualize architectural designs and floor plans in a three-dimensional space. This enables architects, developers, and clients to better understand the layout, scale, and aesthetics of a property before construction begins.
• Interior design planning. AR can be integrated into applications to allow homeowners and tenants to plan and visualize their living spaces more effectively.

Virtual tours peaked in popularity during the COVID-19 pandemic, but even now, many customers prefer 3D tours over traditional photographs. According to Forbes, companies using virtual reality 3D tours saw an increase in property leads by 25% and reduced the time on the market by 23% compared to properties marketed with professional photography only.

In 2022, the IoT in the proptech market was valued at $1,121 million and is expected to grow at a rate of 14.6% annually over the next decade. This growth is attributed to the widespread adoption of various IoT technologies, including smart building management systems, home/office automation, energy management systems, security solutions, environmental monitoring, and predictive maintenance.

According to Deloitte Research, 52% of commercial real estate firms consider IoT sensors and artificial intelligence key factors influencing tenant preferences. The use of IoT in heating, ventilation, and air conditioning (HVAC) systems allows for the development of a fully integrated building management system. Such systems allow residential firms and real estate companies to optimize the environmental performance of buildings by automatically adjusting operational systems based on real-time or predicted usage patterns. This, in turn, enhances energy efficiency, reduces operational costs, and improves tenant comfort and satisfaction.

Proptech companies operating in the real estate sector often rely on IDX (Internet Data Exchange) and MLS (Multiple Listing Services) integrations to facilitate property transactions, particularly in managing property listings. These integrations let them aggregate real estate listings from various sources, providing users with a comprehensive inventory of available properties in their area.

IDX is a protocol allowing proptech platforms to display MLS data on their websites or applications. MLS databases contain detailed information about properties available for sale or rent within specific regions. By integrating IDX, proptech companies can ensure that their listings are up-to-date and accurate, as IDX typically offers real-time or regularly updated MLS data.

However, incorporating IDX listings into a proptech solution can be complex. Real estate agents must request authorization from their local MLS to access IDX listings. Once approved, companies need to engage custom software development services to integrate IDX data seamlessly into their proptech application.

The rise of proptech software development is fueled by its ability to tackle challenges and remove obstacles within real estate operations. While buzzworthy technologies like Gen AI, smart contracts, and embedded systems can offer significant advantages to proptech startups, it’s essential to recognize that not every company may require them. On the other hand, less hyped technologies such as cloud computing, .NET, and Angular can be equally valuable in proptech software development, laying a strong foundation for future product expansion and scalability.

With expertise spanning both tech stacks, Leobit is ready to assist you in building a reliable proptech solution. Whether you require a proptech SaaS platform, a commercial real estate (CRE) solution, residential real estate software, or a property finance system, Leobit has the capabilities to deliver it with flying colors. Recognized as the Top Real Estate Software Developer of 2023 by Clutch and nominated as the Best Proptech Company of the Year at the 2024 Global Business Tech Awards, Leobit proves to know the ins and outs of the proptech sphere. Contact us to learn more about our capabilities and get a deeper consultation on the topic.