Technologies in real estate law – proptechs and their applications
Artificial intelligence, virtual and augmented reality, blockchain, big data are some technologies used by proptechs to achieve innovation in this sector.
The acronym “proptech” designates “property technology”, innovations applied to the real estate sector, which include “construtechs” and “contechs”, specifically linked to the construction industry, among other expressions that reflect specific objectives in this space. Similar to what happens in cases of “fintechs” or “lawtechs”, startups focused on the real estate sector offer innovative products and standards or new business models, both supported by technology.
In 2017, four proptechs were valued at more than $ 1 billion. The performance of these companies consists of: a platform that brings together brokers and brings customers closer together in real estate negotiations; online representation of buyers (obtaining financing, budget organization, selection and comparison of properties and negotiation) and sellers (market analysis for price determination, adjustments in the presentation of the property, advertisements and negotiation); property management providing “big data” analysis, real-time visibility of costs and service verification; and an algorithm developed for the purchase and sale of properties online, from which the user indicates the characteristics of the property, the solution automatically points the estimated value, performs the evaluation based on the video sent by the user and suggests the business options.
Artificial intelligence, virtual and augmented reality, blockchain, big data are some technologies used by proptechs to achieve innovation in this sector. Examples of functionality are varied, including: algorithmic pricing; predictive market analysis; due diligence for real estate transactions based on natural language processing; contract automation; intelligent solutions for energy management, lighting and fire protection; virtual assistants; 3D virtual tours; private blockchain network to register and track properties in order to increase trust and transparency.
In Brazil, a diagnosis of the innovation ecosystem in this space, prepared by Construtech Ventures in 2018, identified more than 350 startups in the real estate and construction sectors acting in: rental, purchase and sale of properties; construction site; condominium communication and management; sharing spaces; portfolio management; contract and document management; inventory and material management; real estate market intelligence; investment and crowdfunding; land prospecting; renovations and interiors; smartbuildings; among others.
Proptech Report District, a study organized by the innovation hub of the same name in 2020, identified important characteristics regarding Brazilian startups that operate in this area. In the last four years (2016-2020) more proptechs have emerged than in the last 20 years combined, which are concentrated in the Southeast and South regions of the country, totaling investments in excess of US $ 700 million in this period. Platforms stand out that facilitate procedures involving renting, buying and selling real estate.
Therefore, the fact that the emergence of new skills and the insertion of technological innovations in the real estate sector will become evident will require adaptation of the legal professionals who work in this segment to meet different and extremely specific needs. It is necessary to reflect on legal and regulatory compliance in different jurisdictions, data protection and privacy, adaptation of contracts, risk mitigation and on the new types of transactions involving real estate assets.
By: Wilson Sales Belchior