The promise of emerging technologies, championed by the most forward-thinking in the PropTech space, could have been inspired by nostalgic French electro - work it harder, make the industry better, complete tasks faster to make the property sector stronger.
A similar sentiment was put forward late last year, when the UK Government unveiled a new advisory council dedicated to digitally transforming the property sector. The aim is to discuss how the government can help to turbocharge the use of technology and improve the entire industry.
The move is an acknowledgement that there’s an imminent need to bring an old-fashioned industry, still held back by inefficient and often paper-based processes, into the 21st century. The urgency not only comes from the need to protect an industry that is vital to the UK economy, it is also the solution to an acute housing crisis.
In the UK today, demand for housing across the board, whether social, to rent or buy, is outstripping supply. This, in turn, is leading to issues around access to safe, quality housing for people to call home.
There is huge scope for PropTech players to address these serious market challenges with technologies like AI, machine learning and blockchain. So what emerging technologies are today’s PropTech players harnessing and how is this set to positively transform the industry in future?
AI: improving experiences, reducing fraud and facilitating city-hopping for ‘Generation Rent’
AI algorithms are already helping PropTech companies to deliver a value-rich service across geographical borders, a new must to meet the needs of today’s city – or even country – hopping ‘Generation Rent’.
You no longer need to be physically based in the city where you wish to rent to book a room securely, safe in the knowledge that the property and future flatmates have the potential to live up to your expectations.
At Badi, our AI algorithms are central to improving the service we provide to property owners and renters. Founded with a mission to improve the room rental experience, we built an AI-powered platform to provide a seamless and flexible way for people to find and rent rooms in major cities, from anywhere.
Initially, AI was used to help match a seeker with a listing via a recommendation engine that analysed social data, behavioural data and preferences, as well as user attributes from seekers. Such is the demand that a booking request is now made on the site every two minutes.
In fact, AI has helped to dramatically speed up the process, increasing the number of bookings made per booking request by 50% and reducing the time between a room being published and being booked by 30%.
The essential thing about having a platform based on AI algorithms, is that they can also be updated regularly. At Badi, we make adjustments on average every two weeks.
Challenging market conditions in big cities like London, where demand for quality property is so acute the city sees a bigger risk of fraudulent listings, has prompted further AI innovations to help protect users.
A collaboration between our data science and engineering teams has resulted in a dedicated anti-fraud engine for the platform, based on a new machine learning algorithm, to ensure user safety is optimal.
AI algorithms not only help analyse data to make finding, matching and securing property easier and faster, the predictive nature of the technology means it also becomes a weapon against fraudulent activity, helping to identify patterns in behaviour and therefore protect against future risk.
Blockchain: reducing risk in transactional processes and validating ownership
Another technology minimising risk in the property sector is blockchain. The purpose of the online distributed ledger technology is to record and manage transactions. There are many ways this technology is being applied to the property sector, from sharing data across a peer network between professionals, to validating land ownership and improving transparency around transactional processes with smart contracts.
The simple promise of blockchain technology is to remove the risk of human error and fraudulent activity by making it extremely difficult to forge records, thanks to its strict (multi-party) verification process.
Blockchain also has the capacity to manage the swift exchange of data to multiple parties directly, replacing an information exchange that previously required personal time and the need to attend a fixed location.
One country testing the role blockchain can play in validating land ownership is Sweden. The process of moving land registries onto a blockchain is estimated to have the potential to save the Swedish taxpayer over €100 million per year by eliminating excess paperwork, speeding up processes and reducing the risk of fraud.
Another application of blockchain is in contractual processes via a smart contract, which is a digital contract that is stored within a blockchain that enforces all aspects of an agreement using cryptographic code. The aim of a smart contract is to facilitate an automatic exchange, for example of data or funds, once predetermined criteria is met.
This technology could help assist with a mortgage transaction or tenancy agreements where multiple signatures are required, only releasing funds when all parties have agreed. This in time could reduce the need for intermediary figures, such as lawyers, to validate a transaction.
Start-ups driving accessibility of emerging technologies
Emerging technologies, such as AI and blockchain are already filtering into the PropTech sector in ways that may not be immediately visible, but there’s no denying the potential of this technology to improve processes, experiences and reduce reliance on paper and time-intensive practices, is huge.
With big challenges facing the industry, the prospect of new technologies that can help to remove some of the burden and speed up the ability to do business, while also improving transparency and reducing risk, is not only proving welcome, it’s becoming a necessity.
New PropTech players are driving this change and with the industry potentially worth £6 billion in the UK, we expect to continue to see a flurry of flourishing start-ups, founded on the promise of making these emerging technologies a reality for the industry, further driving the accessibility of these technologies in the future.
*Guillem Pons is chief data officer at Badi, a Barcelona-based rental platform which has offices and operations throughout Europe