An industry as old as society itself, real estate long remained a sector that saw little innovation. But today that could not be further from the truth, with entrepreneurs applying the latest technologies and business models to rethink every aspect of property. The companies founded by these innovators seek to disrupt established practices in a wide range of areas: from property search, buying and selling through to home purchase financing and construction. While some of these ventures may not stand the test of time, there can be little doubt that real estate as a whole is undergoing a digital transformation whose implications will be felt for many years still to come.
Platformification reaches real estate
In the innovation story of real estate, platforms play an outsized role. Although they were initially confined to outliers such as Airbnb, today platforms are found in all sectors of the property industry. Buyers and sellers, tenants and landlords, borrowers and lenders: all of these real estate industry stakeholders can now connect through web-based marketplaces.
Among the areas seeing the greatest disruption by platform business models is home rental. Leaders in this space include Zumper, founded in 2012, and Onerent, founded in 2014. These enterprises match landlords and tenants, often using emerging technologies such as AI to personalize the experience.
As with their competitors, the viability of both Zumper and Onerent’s offer hinges on making the property rental process more convenient for both sides of a transaction compared to traditional offline methods. As Onerent advertises on its website: “we take the stress out of rental management for owners and provide a seamless rental experience for renters.”
A similar philosophy underpins the platformification that has taken hold elsewhere in the property sector, including in home buying and selling. In this arena, firms such as Zillow, which was founded in 2005, have been joined by young technology companies such as Entera, a San Francisco Bay Area startup operating since 2017.
As with their counterparts in rental, these firms are utilizing technologies such as machine learning and big data to more efficiently match real estate buyers and sellers. Their goal, ultimately, is to transform property markets that have long operated according to models established long before the internet existed.
New models of home ownership
While platforms may be helping match more interested parties than ever before, a successful search is only the first part of a purchase. For the buyer, the next step is financing. With property prices in recent years rising steadily in many markets, it’s a part of any deal that has become more complex.
Yet for one group of entrepreneurs, the problem of house price inflation has been the catalyst for innovation. These visionaries are behind the founding of a wave of companies creating new ways to achieve home ownership.
Prominent among the upstarts is ZeroDown, a venture based in San Francisco since 2018. The company’s model consists of buying homes for cash on behalf of its customers, before the customers then purchase the home from ZeroDown up to five years later.
Similar shared ownership schemes are on offer from several other players in the sector, including Haus, Patch Homes, and Divvy. While each company has its own unique approach, they share the goal of widening access to home purchasing. What’s more, that these enterprises have all emerged only relatively recently suggests the trend for innovation in home ownership is only just beginning.
Smarter, connected homes
If the process of buying and selling real estate is becoming “smarter”, then so too are properties themselves. This is down to the proliferation of internet-connected devices and appliances in our homes. A trend that can be said to have hit the mainstream in recent years through products such as smart speakers and televisions, today connectivity comes packaged into everything from washing machines to window blinds.
Leading innovators in this space include the now Google-acquired Nest Labs, makers of sensor-driven, Wi-Fi-enabled, self-learning thermostats and smoke detectors. They are joined in an increasingly crowded smart home market by companies such as SmartThings – acquired by Samsung – and Ring, a home security company that was snapped up by Amazon in 2018.
That so many of the world’s tech majors have made acquisitions in the space suggests that big bets are being made on smart home as a growth market of the future. Among the innovations we can expect to see going forward are refrigerators that autonomously reorder items missing from their shelves and wardrobes that can clean and iron clothes on-demand. with a few taps of a smartphone app.
Digital transformation from the ground up
Yet the smart home phenomenon runs deeper than simply adding internet connectivity to home appliances. Today, innovation is built into the very foundations of property, as the construction industry experiences its own digital transformation. Computer vision, machine learning, drones and internet of things: these technologies and many more are now brought to bear on every aspect of the design, planning, and realization of building projects.
Among the many startups pioneering new solutions in construction is HoloBuilder. Founded in Silicon Valley in 2016, the company’s enterprise software-as-a-service documents construction projects with AI-powered 360° image technology. Fieldwire is another disruptor; a field management platform designed specifically for construction, the company has to date attracted more than $40 million in funding since its founding in 2013.
Elsewhere, more and more companies are developing construction industry use cases for unmanned aerial vehicles. DroneDeploy, a Bay Area startup founded in 2013, is just one example. The company’s drone software for real-time mapping and data processing has attracted some $90 million in funding to date. Robotics developer Skydio, meanwhile, has raised $70 million in venture capital to back its flying robots that it believes, “will deliver a step-change in usability, reliability, and capability for the emerging drone market”.
This article covers just a small selection of the many areas of the property industry where we see disruptive activity today. Others include:
- Property investment, home equity, and digital tools for landlords
- Co-living, co-working, and vacation and business rentals
- Property maintenance and insurance, energy efficiency, and payments
To learn more about these trends, meet the companies making them happen and see what the future of real estate will look like, download our brochure Navigating Real Estate Disruption.