proptech in 2024

Report summary

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As industries adapt to evolving market demands and global shifts, Proptech has emerged from being a niche offering to becoming integral in reshaping the impact of real estate and construction.

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Traditional real estate solutions are experiencing a significant shift, losing their relevance due to macro trends, changed expectations and technological advancements. The meaning of Proptech itself has changed, and will keep changing, to meet the needs of these new assets. We, at The PTC, define Proptech as any technology that impacts how we live, work, and consume within space.

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2024 heralds an era driven by the convergence of eight trends that we have identified. This report unravels these prominent forces that are shaping the Proptech landscape and steering owner’s investment strategies. This narrative unfolds against a backdrop of environmental consciousness, technological integration, and the practical challenges faced by the industry. We expect these trends to develop in 2024 materially and a changed real estate landscape to emerge.

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Trends snapshot

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Driven by global economic trends, these are the eight major technology solutions that will shape Proptech development, adoption, and technology investment in 2024.

ESG reporting systems

Driven by global economic trends, these are the eight major technology solutions that will shape Proptech development, adoption, and technology investment in 2024.

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A 2021 survey by PWC revealed a stark reality — slightly over half of the organizations within the ASX 200 did not disclose any ESG metrics. Only 9% of the entities surveyed for a WEF report actively utilize software designed to facilitate data collection, analysis, and reporting on ESG matters. Global ESG funds reached $2.5 trillion in investments in 2022, but there remains a notable lack of confidence among professionals with 54% expressing uncertainty about their organization’s financial team’s preparedness to accurately report ESG metrics.

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Against this backdrop, asset managers grapple with the challenge of incorporating ESG reporting into their existing frameworks. Many managers already operate BMSs intricately linked with their building hardware and IoT setups. The prospect of transitioning to an entirely new system is met with reluctance, as it may disrupt established operations.

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A cost-effective solution has emerged in the form of purpose-built systems dedicated to ESG reporting that can be retrofitted onto existing BMSs offering asset managers a pragmatic way to enhance their ESG reporting capabilities. This approach minimizes the hurdles associated with the integration process, providing a smoother transition for owners.

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Streamlined digital transaction enablers

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We are seeing increasing amount of platforms and micro services targeting untapped efficiencies, markets and financing options.

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Where large established market players have not tapped into, we see smaller start-ups facilitating niche needs, while using tech and data to streamline workflows.

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Some of these companies are partnering with established players, whether they be platforms or real estate agents. These synergies allow the smaller organization to benefit from the partner’s network and market capture, while the other entity, such as a real estate agency, can incorporate the smaller organizations streamlined transaction service into their offering.

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We expect to see further implementation of streamlined digital transactions enablers in the construction, acquisition and sale phases of the asset lifecycle.

AI and Machine learning

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We are seeing increasing amount of platforms and micro services targeting untapped efficiencies, markets and financing options.

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AI has been a buzzword for 2023, although lot of the innovations have been made around models themselves rather than in application. Besides a few examples, standard application of AI integration in systems and products is still in it’s infancy.

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In data analytics we are seeing AI utilized in two primary use cases – market analysis and building management systems. Big market data is allowing AI platforms to assist transactions through identifying investment opportunities, valuing properties and pairing buyers and sellers based on preferences.

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Furthermore, lead generation and sales management through AI is becoming more commonplace with AI integrating with established CRM systems.

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Building management systems are increasingly integrating AI models into their platform to assist in occupancy forecasting, predictive maintenance, and automating reporting functions.

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AI will continue to augment real estate related processes, enabling business to make more informed decisions, optimize their portfolio and adapt space for optimal usage.

Looking forward...

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2024 will see further implementation of many of these emerging techs. Some are still immature, and current implementation primarily through commercial POCs.

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Others are improvements on or combinations of existing technology with well-established use cases and common adoption. For example, SMART Buildings utilize BMS, solar and existing building hardware and sensors that have been around for decades. However, it is through the combination of these techs and the middleware actors that SMART building applications are emerging as compelling use cases.

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In terms of measuring the development of a tech, we, at The PTC, split our observations into two lenses - 1) the market adoption of the tech; 2) the actual stage of development or readiness of the tech.

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Where there is misalignment and a tech is at a later stage of development than the amount of adoption reflects, we point to marketing issues such as pricing hurdles. We believe there is great opportunity at this stage of tech innovation as it means a solution is not being optimally monetized.

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Further, many of the techs mentioned implement other related technologies. It is important to note that the development of these solutions is not done in silos and that the introduction of a new tech can drastically transform a once stagnant technology.

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In the last few years, we have seen rising economic uncertainty attributed to high interest rates and lower economic growth. Though 2024 is likely to see the rate of global average interest rates slow, lending conditions for business will continue to be tight. Additionally, increasing geopolitical conflicts will be a major influence of economic volatility resulting in most economists expecting a weakened global economy.

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At The PTC, we see economic tightening have an impact on technology investment but overall benefiting the Proptech sector through a flight to quality. Solutions that demonstrate a measurable ROI will succeed other solutions that lack direct economic impact where they will struggle to raise funds or gain significant commercial traction.

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Read the full report to get insight into smart buildings, immersive experiences, tenant engagement tech, sustainable construction and more

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