Property Technology or PropTech sector has witnessed monumental growth in the UAE in the last few years which has made the nation a new technology hub. This is very much evident from the latest report by Zoom Property Insights which reveals that the UAE is home to more than 55% of more than 200 proptech start-ups in the MENA region. The report also reveals that over the past five years, proptech start-ups in the UAE have raised more than $100m in funding. This reflects a rise in the confidence of global investors in the UAE proptech sector.
Some of the key drivers that have propelled the growth of the proptech sector in the UAE in the last half-decade include – a strong technology ecosystem, favorable government policies, and rising demand for faster & customer-friendly applications.
PropTech is also gaining ground due to rising competition in real estate. Developers are investing immensely in deploying proptech apps. to offer virtual property tours to enhance the buyer’s experience. The implementation of Proptech has also automated the lengthy processes of pre-sales, lead management, property demonstrations, and unit bookings to expedite the sales of the property. The future of the PropTech sector looks bright as the real estate sector is heading towards becoming more data-driven and using AI-powered tools and applications to gather intelligence and make wise investments and operational decisions.
Here are the Top 5 Trends which will drive the Proptech industry in 2023 –
1. Increased Focus on Sustainability
With rising carbon emissions and the challenges arising due to climate change, sustainability will be the top priority for the real estate sector in 2023. Furthermore, there will be an increased focus on sustainable practices in real estate as the 28th session of the Conference of the Parties (COP 28) Summit in the UAE is also around the corner. This year, there will be a surge in the number of real estate and property management firms using advanced property technology (PropTech) applications and softwares to track carbon emissions & energy efficiency and take timely measures to improve the overall performance of the buildings and lead the real estate sector towards sustainability. This will boost the demand for the services of Proptech firms and will have a profound impact on their revenues and business growth.
2. The Use of the IoT for Better Connectivity
In the last decade, the number of wireless connectivity has increased exponentially. As per the research by Statista, the number of Internet of Things (IoT) devices is predicted to triple from 9.76 billion in 2020 to over 29.42 billion by 2030. This will enable new services and real-time, always-on communication. The UAE has made a giant leap in the world of IoT to emerge as the most progressive nation. The study titled – ‘UAE Internet Statistics 2022’ by Global Media Insight reveals that UAE had 9.98 million internet users in 2022, which represents 99.01% of the total population. This has increased the usage of PropTech applications in the UAE real estate sector.
The emergence of IoT has significantly increased residents’ demand for smart home technology and created an urge for proptech firms to build innovative and user-friendly smart home devices and applications to improve resident satisfaction. Proptech firms are also developing applications to automate the routine tasks of property managers to boost their efficiency. This will facilitate property managers in devoting most of their time towards strategic goals for the greater good of the community and residents.
In 2023, Proptech firms will be developing advanced smart home devices and applications like connected smart lock systems for keyless entry, voice-assisted home automation, IoT appliances, and smart thermostats to boost resident security. Property managers will be able to effectively centralize leasing and back-office functions like utility management, inspections, maintenance, and access control using new technology platforms. PropTech firms will also increase their investments in developing intuitive dashboards to provide comprehensive visibility to the property managers on the operations of the community and assist them in measuring the operational cost, time, and savings for better decision-making.
3. Big data and AI
One of the biggest challenges faced by the real estate sector head honchos is to collect and analyze the humongous amount of industry and competitor data to make strategic decisions. This gigantic task can be done with ease in a few minutes with the help of Big data and Artificial intelligence.
In 2023, there will be an increase in the Proptech firms developing advanced AI-powered tools & applications capable of analyzing huge data in a few minutes. This will allow real estate firms to quickly analyze the investment potential of entire markets and specific properties within minutes. Proptech firms will also leverage big data and AI to facilitate small developers in getting access to industry data and compete effectively with the big players. Increased implementation of AI will also bring transparency to the real estate sector and make it easier for investors to invest in the property market which will fuel the sector’s growth.
4. Smart Buildings
Rising demand and limited supply of energy worldwide have created an urge for the real estate sector to construct more advanced and energy-efficient buildings which are capable of meeting most of their energy requirements from renewable energy sources like solar or wind energy. This is the primary reason for the rise in the construction of smart buildings across the globe with the UAE making headlines due to its rapid growth.
The global smart buildings market is poised for solid growth over the next few years with its value projected to grow from USD 80.62 billion in 2022 to USD 328.62 billion by 2029 with a CAGR of 22.2%, said a report released ahead of The Technical Seminar Series. Being a front-runner in advancement and technology, the UAE is deploying newfangled energy-efficient intelligent building solutions in the skyscrapers to reduce their energy consumption and make them smarter. UAE has made significant growth in constructing the number of smart buildings in the world. Due to this, both Abu Dhabi and Dubai are amongst the top 30 smartest cities in the world as per the Smart City Index 2021 which surveyed 118 cities across the globe. A vast amount of credit for this goes to the integral role played by the Proptech firms for innovating and deploying an advanced range of sensors, systems, gateways, and Building management software’ (BMS) to collect important data related to the building’s performance from thousands of sensors and automate it. This has enabled real estate leaders and property managers in taking timely steps to reduce energy consumption.
In 2023, Proptech firms will be enabling the real estate sector in integrating innovative smart building systems to maintain optimal conditions by tracking and monitoring the building’s energy usage, lighting, power efficiency, and water usage. This will lead the built environment towards becoming smarter, energy-efficient, sustainable, and net-zero carbon emission.
5. Fractional investing
The latest trend in real estate which is driven by the proptech revolution is fractional ownership of properties. There has been a colossal rise in fractional ownership of properties in the real estate sector in the last half-decade.
Fractional ownership is a common investment structure for expensive assets like real estate where the buyer or investor owns part or a fraction of the property rather than buying it as a whole. It allows multiple investors to acquire an apartment, villa, or other property types, with each of them having ownership rights through the title deeds. From February 2022 onwards, Dubai has started issuing ‘fractional’ property ownership title deeds to expand the investor base which is good news for the Proptech sector.
Proptech firms will be playing a huge role in facilitating fractional ownership of the properties in 2023. They will be developing unconventional and intuitive digital payment platforms which facilitate digital signatures, KYC, online payments, virtual investments, and Digi-lockers to streamline the property buying process and offer a secure & user-friendly experience to real estate investors.
PropTech firms will also be developing digital dashboards to provide real-time updates and tracking of projects with the expected investment returns and yield to assist investors from across the globe in making sound real estate investment decisions. There will also be a rise in prop-tech firms focusing on digital tokenization of the properties which will enable investors to instantly buy and sell their fractional ownership on a digital marketplace. This will ensure liquidity in the hands of investors and property distributors.
