Home Opinion & Blogs Impact of COVID-19 Pandemic on Proptech Landscape

Impact of COVID-19 Pandemic on Proptech Landscape

Impact of COVID-19 Pandemic on Proptech Landscape

Proptech investment market has slowed down because the impact of covid-19 pandemic on proptech landscape is deep. The startups that depend on traffic in the built environment to demonstrate value or those supporting industries such as hospitality and retail, have suffered. 

The risk-averse population is most likely to invest in properties. According to a study, unless you have invested in the stocks like Amazon, PayPal, Apple or Nvidia, real estate has proven to be one of the most reliable investment options. But considering the pandemic scenario, is the real estate market well equipped to stay afloat? It is difficult to say when things will go back to ‘normal’. Before that happens, will this industry undergo a significant change? That is the question we shall probe into.

Technological Factor in the real estate

The real estate industry is quite traditional in many countries. The startups that have simplified the processes in the property sector by eliminating or reducing face-to-face communication and have digitized the physical processes like signing deals, visiting houses etc. are in a better position. The interest in technology has peaked like never before. Companies are striving to remove internal hurdles and promote innovation, in order to make their customers feel safe and satisfied.

The transition to normality will definitely see a greater use of technology. As once the market picks up again there will be a substantial technological shift in real estate. The shift from bricks and mortar to data and insights will be enabled by an ecosystem of property-focused technology companies. The longer the pandemic drags on, the higher the chance that digitization initiatives will stick around for the long run.

Investment in the property sector

Investor sentiment in the property sector has become very cautious due to the pandemic. As investors are prioritizing their existing portfolio companies over making new investments, startups are facing difficulties to navigate the crisis. Especially, the ones with weaker balance sheets.

As VCs take into consideration the long-term strategic views, the pandemic situation has added some additional elements into their considerations, superior and innovative technology being one of them. Proptech firms that will reduce the need for human contact, make real estate transactions easy and allow safety and social distancing in construction sites, shall emerge as winners. Investors are looking for efficiency and an improved consumer experience. There is hope that in the mid to long term this sector will bounce back strongly.

The Proptech Scene

If we look at the mid to long-term perspective, proptech could benefit from the current disruption caused by the pandemic, despite real estate having taken a huge hit.

House-bound investors got more time to interact with companies, be it through emails and calls or by consuming content and attending webinars. Virtual property viewings have become common as well. This is pushing realtors and different platforms to provide a seamless user experience.

With companies moving towards mandatory remote work and retail businesses forced to temporarily shut down, the traditional world of real estate has become unclear after pandemic. Therefore, this gives companies a chance to move away from the traditional world into a more sophisticated and efficient world of real estate.

The declining interest rates are supporting pricing strength and buyer demand. With the digitization of real estate in a big way, agents and brokers are using technology to manage the sales process, from conducting virtual property tours to moving legal paperwork to the cloud to closing deals remotely.

Modernization due to the proptech sector like electronic signatures, document checklists and cloud storage services are helping agents and buyers collaborate virtually and also maintain critical files in order. Failure to adopt such tools that simplify real estate buying and selling will lead to a poor customer experience, which can turn out to be risky in the current economic climate. With lockdown restriction lifting up, retail businesses are reopening and employers returning to offices. Therefore, it is a crucial time for Proptech startups in the commercial real estate sector to adapt to new tenant needs.

Manual tasks in the real estate industry are becoming a thing of the past. There has been a rise in digital platforms that can streamline property management, personalize the on-premise experience and boost tenant retention. Real estate is one of the largest asset classes that has massive potential for disruption. Because of impact of covid-19 pandemic on proptech scene the next few months will be definitely tough for the real estate sector but it will also be the survival of the most innovative. The pandemic is bringing an innovation wave to this industry and these companies will be at the forefront of this innovation wave. 

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