Proptech and AI Are Reshaping Commercial and Residential Real Estate
Technology has profoundly influenced the commercial and residential property markets in recent years, and this trend is expected to continue into 2025. As technology evolves, new tools are emerging that will change the landscape of property management and investment. Some of these technologies have been gaining traction over the past few years, while others are just beginning to make a significant impact.
In the residential sector, technological advancements, combined with shifting demographics and consumer preferences, will continue to disrupt traditional estate agent practices and other residential property services. A notable example is the rise of digital estate agencies like Purplebricks, which offer tools for determining the value of a home. This trend of digital-first home valuations and real estate services is expected to grow as younger buyers enter the housing market.
Let’s dive deeper into the tech trends transforming the real estate industry.
Proptech: Changing the Game in More Ways Than One
Property technology, or 'proptech,' has been steadily influencing various aspects of the commercial property market for years. Initially, proptech focused on relatively simple innovations, such as property management software. Today, however, proptech has expanded into areas that were once the stuff of science fiction.
Virtual reality, for example, has introduced 3D virtual property tours, and property owners are increasingly creating 'digital twins' — 3D digital models — of their buildings. Proptech’s influence is not limited to property management; it is also reshaping institutional property investment. Real estate crowdfunding platforms are bringing billions of dollars into the investment sector, while blockchain technology, particularly through tokenization, is changing how people invest in real estate.
As reported by Coindesk last year, billions of dollars' worth of "real world assets" (RWAs) are now being tokenized, with major players like BlackRock beginning to tokenize private investment funds.
Tech Disruption: Changing the Game for Estate Agents
As younger generations, such as millennials and Gen-Z, enter the housing market, the traditional ways of conducting residential property sales have undergone a transformation. Today’s homebuyers conduct much more online research before they even consider touring a home. As a result, estate agents are increasingly focusing on how they present properties online.
Proptech innovations, including 3D home tours, are becoming more popular. Technologies such as drone photography are also gaining traction. Additionally, estate agents are leveraging automation tools like chatbots and virtual assistants to enhance customer service. These technologies not only help reduce operational costs but also increase customer engagement.
Another key trend in the residential market is the rise of iBuyers — companies that purchase homes for resale using advanced pricing algorithms and other technologies. A recent survey revealed that 71% of home sellers would be willing to sell their property to an iBuyer.
Looking Ahead: The Role of Generative AI
Generative AI (GenAI) has emerged as a game-changer across various industries, and real estate is no exception. GenAI and machine learning play a crucial role in the pricing models used by iBuyers, property investment firms, and other market participants.
Moreover, these technologies are having an impact in areas like mortgage underwriting, property insurance, and other real estate services. Over the next year, we can expect even greater adoption of GenAI to perform property valuation analysis, automate processes, and enhance other proptech solutions, such as 3D mapping and digital property management.
Conclusion
The real estate market is undergoing a significant transformation thanks to existing and emerging technological trends. Proptech and AI are making their mark on both commercial and residential property sectors, disrupting what has traditionally been considered an "old school" industry. While personal relationships and connections still hold value, real estate professionals who fail to embrace technological advancements risk being left behind by more tech-savvy competitors.
The future of real estate will be shaped by those who adapt to the technological revolution taking place around them.