Proptech: Trends and Investing

If you’re involved in real estate in any way, proptech is likely to be a growing part of your life. metamorworks/Shutterstock

Property Technology, or “proptech,” may feel like the latest buzzword, but it’s been around for a while. If you’ve ever looked up your home’s value on Zillow or stayed in an Airbnb, you’re familiar with proptech.

Proptech combines technological advancements with the real estate industry. It has taken off dramatically in the past few years. In 2020, $23.8 billion in venture capital was invested in proptech startups, according to the Center for Real Estate Technology & Innovation (CRETI).

However, proptech is experiencing headwinds in terms of current economic conditions and challenges. The sector has seen far fewer venture capital investments recently, with venture capital investments in proptech and related companies falling by 14.3 percent in the first half of 2024, according to CRETI.

Rampant speculation is inevitably followed by financial discipline, so it’s not surprising that today, we are seeing more focus on profitability and scalability in the proptech industry.

Specifically, cash flow, revenue growth and consistency, and improved efficiencies are the dominant drivers in these investment portfolios.

Some of this change has been driven by higher interest rates. Higher interest rates raise the bar in terms of higher capital cost. That translates into greater scrutiny of investment returns, at lower risks.

Longer Funding Timelines for Startups

The current shift reflects the traditionally slow-moving nature of the real estate market.

Not surprisingly, it’s impacting proptech startups at both the seed and Series A stages, as they experience longer timelines to secure Series A funding. This in turn has resulted in multiple seed rounds.

Seed and Series A funding are stages in the venture capital investment cycle that startups follow in pursuit of needed capital. Both funding stages are part and parcel of proptech startups.

Seed funding is the first equity funding stage. Its purpose is to get the startup running. It’s needed for initial expenses: market research, product development, building a management team, and bootstrapping the opportunity in general. Seed rounds can range from thousands to millions of dollars.

Investors who provide seed funding can be angel investors, early-stage venture capitalists, partners from a network, or even family members.

Series A funding is further along in terms of startup maturity. It funds startups that have a track record of an income stream, a solid customer base, and/or a robust order backlog, but need capital to tweak, fine-tune, and continue to shape the business.

The amounts involved in Series A rounds can be significantly larger than seed rounds, perhaps tens of millions. Series A investors are venture capital companies that specialize in early-stage investments.

Google Nest Thermostat. Illustration by The Epoch Times, Amazon

Property Technology Means Innovation

Although its initial striking growth has slowed, proptech continues to reshape the real estate industry. By leveraging technology, startups can enhance everything from property management and leasing to financing and construction.

Let’s look at some tech advancements that have fueled the growth of proptech and continue to do so.

Smart Home Technologies

Security remains key, with sleek new smart locks and cameras hitting the market. Some of these systems use advanced features like facial recognition and Ultra Wideband (UWB) technology for improved accuracy and convenience.

Intelligent sensors in appliances are becoming commonplace: Features such as smart water sensors that can detect leaks and AI-enabled washing machines are saving energy and making appliances increasingly convenient and efficient.

With advancements in voice assistants and gesture controls, managing your home has never been more intuitive. These technologies streamline convenience and efficiency, making them a staple in modern homes.

Cutting-edge technology such as Apple’s Vision Pro offers the prospect of using augmented reality to help with home maintenance and assembly, along with new interactivity for DIY projects.

And, to help all those smart home gadgets work together, there’s “Matter”—a unifying standard for smart home technology.

Developed by the Connectivity Standards Alliance, Matter makes sure that devices from different manufacturers are a seamless whole. Interoperability streamlines integration into a single cohesive system, across the many different gadgets that make up a smart home.

Artificial Intelligence

Artificial intelligence (AI) is significantly enhancing proptech. Devices such as the Nest Learning Thermostat and smart washing machines make it easy to save money and energy on both heating and cooling costs. These products learn your schedule and show you how energy is used in your home, sending feedback on how to optimize and cut energy use.

AI-powered valuations are increasingly transforming property value estimates. Analyzing multiple valuation sources, market trends, property features, and economic indicators helps both buyers and sellers make better-informed decisions.

Blockchain-Based Transactions

Blockchain—a shared, secure digital ledger—provides smart contracts, which are digital contracts that are automatically executed when specific terms and conditions are met. In the otherwise stodgy world of real estate, smart contracts are a giant step forward in terms of technology

Blockchain can convert property into digital tokens. This facilitates investing in “fractional shares” of a property rather than the entire asset.

Blockchain automates proptech processes that were formerly done manually. From title transfers to other related paperwork, it reduces fraud and saves time.

Virtual Reality

Advanced virtual reality (VR) technology delivers highly realistic property tours. The interactive elements detail lighting and other aspects, making it seem almost like you’re physically present for the tour.

3D mapping for precise spatial representations, hybrid spaces, customizable options, and different layouts facilitates tailoring personalization. The integration of VR with AI analytics helps define behavior, preferences, and interaction patterns. Many of these apps are increasingly mobile, expanding accessibility.

A For Sale sign displayed in front of a home in Miami, Florida, on Feb. 22, 2023. Photo by Joe Raedle/Getty Images

What Does All This Mean to the Investor?

With higher interest rates, investors are getting more particular. They want to devote capital to proptech that is likely to provide a good return on investment.

Are you looking at investing in proptech? Armed with information on smart home technology, real estate platforms, big data and analytics, blockchain and AI, and virtual tours and 3D visualization, search out the most promising companies for your investment.

Examples of prominent proptech companies include:

• Airbnb: Transforming the hospitality industry through a shared economy model.
• Opendoor: Simplifying the real estate transaction process with Opendoor’s technology platform.
• Compass: A real estate brokerage using advanced technology to find, buy, and sell homes.

Or consider investing in real estate investment trusts focused on proptech. These companies can offer diversified exposure to the proptech sector, with fewer risks than those involved in direct investment in individual companies.

The technologies are awesome and still developing and improving. Whether you are considering investing in proptech or are simply intrigued by these technology offerings, hopefully, you have found this summary enlightening.

If you’re involved in real estate in any way—whether it’s investing in cutting-edge technology trends or simply buying and selling property—the importance of understanding and utilizing proptech applications will likely keep growing in the years ahead.

The Epoch Times copyright © 2025. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.