WHAT PROPTECH MEANS FOR THE SMALL TO MEDIUM SIZED RESIDENTIAL DEVELOPER




It seems that there is a revolution happening which will affect small and medium-sized


residential developers. Proptech has arrived and it is increasingly being used by the bigger players in real estate. Broadly, it’s a term for all digital technology which increases efficiency by streamlining processes for the real estate industry. But what does this really mean for residential developers? If used properly it should mean faster, smarter, more accurate decisions and better interaction with lenders, construction teams and legal teams.



The property industry isn’t known for its love of disruptive innovations – change is painful but even though it hasn’t really hit our sector yet, change is coming. Broadly speaking, residential developers seem to fall into one of two camps. The seasoned, traditional developer with an excellent track record, who - if convinced - could use proptech to improve profit margins and cut the amount of time to source land and analyse numbers. The second audience is the younger developer, who doesn’t have as much experience but is technologically unphased and often uses proptech as a roadmap to the residential development world.


Aprao, www.aprao.com, a leading UK proptech provider, says the industry is at an inflection point in real estate, where the next generation of change makers are taking over key positions within leadership and innovation across the sector. Those in real estate are now looking for more data, greater transparency plus efficient processes and software to build strong and resilient businesses which will stand the test of time. While this is certainly true of millennials, other target audiences including Gen Xs and Baby Boomers are often established developers who have been doing things a certain way for many years; for these audiences change won’t happen overnight. The change is likely to occur when there is an obvious or immediate need, or if the disparity becomes too great to ignore when competing with tech-savvy developers.


With over 800 proptech companies in the UK alone and all offering something different, it can be bewildering working out which solution is the right fit for your business. It seems that the benefits of proptech aren’t effectively being communicated, as often the message is too broad for a sector which isn’t known for being technologically innovative. This needs to be addressed by the proptech companies, to encourage the residential development sector to utilise new technologies.



Choosing wisely can have a huge, positive impact. Aprao’s research shows that their users can effortlessly calculate residual site values, calculate profit, evaluate finance options and create detailed cashflow forecasts up to 85% faster than current methods. If this type of message can be clearly communicated then smaller residential developers may become more engaged and be prepared to invest. The benefits of an effective analysis tool such as Aprao are numerous. Not only does this form of analysis allow the developer to review deals quickly but from our perspective, as a lender, it allows a transaction to be more readily analysed efficiently. Without doubt, the quality of initial information provided by a developer has a direct impact on the ability of lenders to analyse the viability of the scheme and to respond in an efficient manner.


Just as household names like Zoom, Rightmove and Google are now used every day, it is inevitable that integrating proptech into residential development businesses will become the norm. Developers, agents and planners are all having to grapple with the reality that proptech is here to stay. So, the challenge for proptech companies is to connect meaningfully with their target audience and let them know just how brilliant and valuable their ideas and innovations are.