The real estate industry is going through digital acceleration, which not only impacts the way it operates but also significantly contributes to its growth.
One of the trends that stand behind that growth is the emergence of proptech AI solutions.
JLL predicts a bright future for companies that invest in artificial intelligence, calling it “the most influential technology in the proptech scene”. The property management giant assessed that the total capital funds raised by proptech AI companies reached $4 billion in 2022. This is twice the amount collected just a year earlier.
Despite the fact that tech-related real estate investments have lowered in 2023 compared to previous years, AI appears to be the exception, promising an array of productivity and budget improvements to the wider market.
Companies that want to develop proptech AI solutions for real estate businesses, however, need to be fast with delivering it to the market. That’s why rapid prototyping in proptech is essential for early adopters. It allows for quick feedback collection and iterative development, which results in the creation of user-centric design. Such an approach not only helps to validate market-fit and mitigate risk but also speeds up time-to-launch.
Using rapid prototyping for proptech AI
AI has the potential to revolutionize the real estate world by removing common bottlenecks in the production and development chain. For instance, let’s take operations on construction sites. In 2022, the construction market reported a $40 billion loss due to lowered contractor productivity. At the same time, estimates say that $25 billion of that amount could be spared in upcoming years through better real estate development management.
This shows how high the demand is for proptech which allows companies in the sector to optimize their work. Those who are first to propose and bring proptech AI solutions to the market are set up to meet an enthusiastic response. And, by ‘response’, I also mean the likelihood of securing seed funding.
Pete Flint, General Partner at investment company NFX, says that, “as investors, we always look at startup timing and we believe there is a clear economic impetus, enabling technologies and cultural acceptance that are going to propel adoption.”
To speed up the delivery of the MVP version of proptech apps, companies should turn to rapid prototyping and software development.
Challenges that proptech AI can help solve in the real estate industry
I came up with a short list of challenges that real estate agents struggle with and which you can tackle by investing in proptech AI.
AI together with machine learning is capable of processing and analyzing large amounts of data from various data sources providing insights into emerging market trends, which helps investors and property developers make informed business decisions. Thanks to the use of predictive analytics, real estate professionals can also spot potential issues, such as maintenance needs, legal/regulatory changes, or market fluctuations.
AI advanced algorithms improve security by using biometric authentication (like facial recognition), detecting anomalies in mortgage applications and financial transactions, securely handling documentation, and providing real-time alerts for suspicious activities.
Reducing tenant churn
One of the biggest challenges in property managementis preventing tenants from leaving and at the same time, attracting new ones to empty spaces. Since a lot of workers prefer hybrid work, it’s hard for occupiers to use the space efficiently, especially considering that they cannot downsize their lease. That’s where proptech AI comes in – it can offer personalized services, efficient communication, and quick issue resolution all of which boost tenants’ satisfaction and retention.
Energy efficiency optimization
Reducing energy consumption not only helps in reducing costs but also ensures compliance with ESG regulations and has a positive environmental impact. AI-powered new technologies monitor and analyze how buildings consume energy, identify opportunities for energy savings, and offer optimization suggestions for enhancing efficiency. This is possible thanks to real-time data analysis from smart meters, air conditioning IoT sensors, and other data properties' management systems.
Rapid prototyping and MVP development are crucial for checking AI-powered solutions
As you can see, proptech AI can completely transform property management – those who jump on board quickly will outpace the competition. The “speed” is of crucial importance here, and since the regular development process is both complex and timely, you should consider rapid prototyping.
It will prevent you from making costly mistakes as you’ll be able to show the MVP to your potential customers at an early stage and get feedback. You can either do it internally or work with experts like Netguru. If you choose the latter, you’ll get:
- A clickable prototype, which includes up to three features
- A report with technical recommendations on the architecture
- A roadmap explaining how to further develop your product
At Netguru, we’ll also share with you a cost estimate and a breakdown of what will happen if you decide to build your full product with us.
Proptech AI MVP development – key considerations
Yes, being a pioneer in AI-powered proptech can boost your chances of market success. However, like in all other fields, it’s not just about being among the first on the market; it’s also about meeting market demand and ensuring scalability once you’re past the MVP stage.
Among others, make sure that your AI technology based solution:
- Helps users fulfill their specific goals. For example, allowing them to optimize property management, improving their tenants’ and real estate buyers’ customer service quality, or providing accurate property valuation.
- Offers a good ROI as compared to non-AI-powered methods. Address how it will help them spend their budgets more productively.
- Provides easy integration with other tools used by your customers. Users must know how easily they’ll be able to connect with their internal systems. Here, it’s important to understand what other proptech and business tools your target customer persona will need to use to power your solution with data.
- Guarantee compliance with health and safety, data security, privacy, and sustainability requirements. Let’s consider the strong focus on minimizing carbon emissions by 2050. Or the need to regulate AI’s data access and permitted uses in business. You should pay attention to these regulatory requirements as early as in the MVP stage, to make sure you’re building a future-proof solution.
Rapid prototyping in proptech – an AI-powered market opportunity
While AI is in its early stages, it’s advancing quickly. The real estate AI technology market is still relatively uncharted territory, creating vast opportunities for those who have ideas on how to monetize AI in the industry.
That said, this doesn’t mean you should dedicate months to conceptual work or decide on developing a full-blown, complex solution. Quite the opposite. As in all other industries, if you want to bring a new product or AI-powered service to the market, you should begin by turning to rapid prototyping. This will allow you to create realistic, clickable prototypes you can use to collect insight from potential users and investors.
If you need support with scoping the features for your MVP and creating prototypes, then our team at Netguru is happy to help. We’ve helped over 1,000 companies bring successful products to the market, and have deep expertise in the real estate and AI industry– reach out.