Lately, the once-ignored sector of real estate technologies has become a really important area of investment, producing two of the three most valuable startups in the United States, WeWork and Airbnb. Considering the fact that real estate is one of the largest and most profitable enterprise areas, a serious reinvention of this sector is expected in the years to come. In this next phase of real estate, participants ranging from real estate agents to agencies and developers will have to become more familiar with the latest in technological innovation to fulfill consumer demand and maintain investment returns. RealTech development will have numerous implications, with the following aspects being most important:
1. Capital
There will be a significant growth of capital invested in RealTech companies, which will eventually outgrow the annual level of capital currently invested in FinTech. It is expected that by 2020 the capital invested in this area will reach $20 billion.
2. Volume
It is expected that the volume and depth of RealTech innovation will increase. We will witness a maturation of this sector, which will offer more technological solutions to particular real estate challenges and present increased competition for existent solutions. More variations of business models and services will emerge, as well as new and valuable technology propositions. As a result, more clearly defined offerings in the commercial, industrial, retail, and hospitality categories will develop.
3. People
Specialists from the real estate sector will begin to exit the major real estate corporations and consulting firms to build new businesses that will focus on solving issues familiar to them in better, more energetic and more rewarding work environments. Many examples of RealTech companies show that most of them were founded by former real estate sector insiders. This process will affect the ability of big corporations to attract and retain talent at all levels.
4. Incumbents
Real estate incumbents and those with material exposure to real estate assets will gradually understand the value of technology in this sector and incorporate it into existing and future projects. Corporate venturing functions are going to be established by more and more corporations, and these teams will eventually become as important as M&A currently is.
These are just some of the general ways in which the development of innovative technologies in the real estate sector will impact the market. Overall, we will notice the emergence of easier solutions for buying, selling and renting properties, and these solutions will be at the fingertip of millions. In this regard, “brick and mortar” companies have already begun the process of integrating new technologies into their projects and all of them will eventually have to do so if they want to stay competitive, efficient and relevant.
Considering the rise of the real estate technology sector, and the implication of this process, it seems like a great candidate for investment opportunities at the moment. If all goes well, both consumers and big players can look forward to raking healthy profits in the years to come.
