What Trends to Expect in the PropTech Industry in 2023
As entrepreneurs and investors, now is a good time to consider what trends we can expect in the proptech industry next year. Real estate technology has reached a market size of $18.2 billion within about a decade, and experts are projecting an increase to $86.5 billion by 2032. This means there is still plenty of room for growing existing products and businesses, as well as creating new ones.
Here, I’ll discuss the five proptech trends that I believe will see the most significant developments in 2023.
Artificial Intelligence and Machine Learning
Due to its nature, the real estate industry relies heavily on endless numbers, calculations, analytics, and processes. Meanwhile, efficiency is key to making the right decisions and achieving the best performance.
This can be tedious for professionals such as agents and property managers. It may also be confusing and frustrating for non-professionals like homeowners. That’s why real estate is one of the industries that has quickly leveraged AI and ML.
However, there are still plenty of opportunities to continue improving the scope and precision of AI-based ML algorithms. For example, Poplar Homes (previously known as OneRent) has made significant progress in its creation of a tech-enabled platform that automates the management of single-family long-term rentals. Think something like Airbnb, but pertinent to the long-term rental market. Due to the large size of the potential market (valued at $485 billion per year, according to Zillow), Poplar Homes and similar products face ample opportunities to continue disrupting the property management industry—especially if they expand into other areas such as apartments, commercial real estate, and properties outside the US.
Real estate niches besides property management can also benefit from the expansion of AI and ML in 2023 and beyond. Real estate lead generation, market and property analysis, and real estate digital marketing are just a few areas where AI can help boost efficiency, accuracy, and productivity.
Big Data Security
Collecting, organizing, analyzing, and storing big data is a major component of the advancement of AI and ML in the proptech industry. After all, tech-driven algorithms and decision-making tools are only as good as the data that they can rely on.
However, the acute need for large amounts of data requires high levels of safety and security. Whether real estate tech companies gather data from their customers or third-party providers, they must guarantee strong cybersecurity and protection in order to gain the confidence of both data providers and customers.
In addition to personal data protection, consumers worry about the security of transactions that can reach millions of dollars.
While we have made some progress in this regard, there is still work needed for the proptech industry to meet the ever-growing demand for cybersecurity. However, real estate startups and companies do not need to do this alone—there are many opportunities to collaborate with actors in fintech, healthtech, and edtech toward a common goal.
One technology that has contributed significantly to the improvement of online security in real estate and beyond is blockchain. I believe that this trend still has a lot to offer to the proptech industry. Initially developed in the cryptocurrency space, blockchain has a high potential in real estate as well.
Real estate transactions can gain clarity, ease, efficiency, and security by using blockchain systems that result in high-level decentralization. This also boosts transparency across real, which has been infamous for lacking transparency and being traditionally dominated by a limited number of large players.
For example, Lofty.ai turns real estate property segments into digital tokens. This allows regular people to become real estate investors with as little as $50. The startup provides full transparency of all processes and safe transactions, as well as the opportunity to grow as an investor at your own pace.
Therefore, fractional investment is one aspect of real estate where blockchain can easily grow in the coming years.
Smart Home Technology
Yet another proptech trend that I expect to see in 2023 is more growth in the smart home tech industry. Valued at $62.69 billion globally in 2021, the smart home market is predicted to continue expanding at a CAGR of 27% per year (at least until 2030.)
Whereas some real estate technology is required by professionals, smart home devices are something that virtually everyone benefits from—from homeowners and investors to tenants, hospitality hosts, and guests. That’s why smart home technology holds such a large potential for further growth.
Smart locks, cameras, thermostats, and health monitoring devices are just the tip of the iceberg. There are many other devices that have not been conceptualized yet that can help enhance our safety, comfort, and wellbeing.
Virtual Real Estate
In addition to offering benefits for the physical real estate world, proptech companies are valuable for the virtual space as well. The size of the global metaverse market reached $38.85 billion last year and is forecast to grow at a CAGR of 39.4% until 2030. Celebrities and investors alike are already racing in the metaverse, building portfolios of virtual land parcels and properties. Earlier this year, somebody paid $450,000 to buy a metaverse parcel of land next to Snoop Dogg’s virtual mansion. For comparison, this is 26% more than the median price of a real home in the US at the moment. These findings highlight the high potential of virtual real estate in the years ahead.
As the metaverse attracts more and more buyers and investors, I expect this to stimulate the development of an entire standalone virtual proptech industry. In a few short years, we might see a demand for tech-driven tools that facilitate buying, selling, and managing virtual real estate properties for the benefit of virtual agents, brokers, investors, homeowners, and property managers.
2023 Is Just the Beginning of Growth in PropTech
Whether you are an entrepreneur, investor, or mentor, there are many exciting opportunities that you can pursue in 2023. While I believe the areas discussed above will see the most growth based on consumer demand, others might be equally prone to further disruption by proptech industry advancements.