Top 3 Best Property Tech Stocks to Watch
Have you heard of the niche in real estate known as property technology?
This emerging sub-vertical of the real estate industry is becoming more popular hence the growth in popularity of property tech stocks.
What exactly is property tech, also known in short form as PropTech? What companies are considered PropTech stocks and what Prop Tech stocks are worth paying attention to?
We will overview all of the above and more, including how you can trade Property Tech stocks as well as how to invest in PropTech stocks.
Sounds interesting? Let’s get started.
Table of Contents
Best Property Tech Stocks: Introduction
Generally speaking, the real estate industry has seen many successful and unsuccessful public companies which would be considered real estate stocks.
While the real estate stock sector is nothing new or revolutionary, as the technology sector advances in development with artificial intelligence (AI), machine learning (ML) and otherwise, this poses an opportunity for new niches within the real estate sector.
Alas, this has made way for the property technology sector, which as mentioned is more commonly called ‘PropTech’.
Property tech or PropTech can be considered an umbrella term which includes all relevant technology and innovation related to the real estate market.
Let’s go into more detail to answer, exactly, what is property tech, as well as define what are PropTech stocks.
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What is Property Tech? What are PropTech Stocks?
While so far it is understood that property technology and hence PropTech stocks encompass all technological applications related to the real estate industry, let’s dive deeper and further define what these technological applications do and why they may be interesting to traders and investors.
There are various areas and aspects within the real estate industry that would crucially require the solution of property tech. The world as we know it is heavily reliant on technology, which unsurprisingly will affect any industry that requires the use of it.
When it comes to the sub-niche of property tech and therefore PropTech stocks, brands and companies are proactively finding their placement in how they can fix an existing problem and/or offer a product or service which makes various tasks in the real estate industry more efficient.
For example, property management companies can utilise and benefit the sake of efficiency by using PropTech solutions to leverage various digital tools to proactively manage properties in a more timely and cost-effective manner.
Minimising the need for a physical person to conduct and implement the tasks is, theoretically, a smart business decision which can allow a company to maximise profit.
As one may imagine, there are considerable or relevant PropTech solutions, therefore PropTech stock options, which revolve around software and hardware solutions relevant to the real estate industry.
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Top 3 Best Property Tech Stocks to Watch
Having gone through the basics, we will now take a look at the best property technology stocks to watch. Please note, that the best Prop Tech stocks to watch are based on the subjective view of the author.
Zillow has become a staple in real estate. The marketplace service has become synonymous with real estate sales and is usually the go-to option for buyers.
Zillow compiles information from multiple listings around the US. The company’s main source of income is selling advertising space to real estate agents.
Advantage of Zillow Group Stocks:
- With inflation expected to drop in 2024, the real estate market - and Zillow, consequently - is set to benefit from it. Zillow has already yielded some promising results recently, with its Q3 2023 revenue surpassing the estimate.
Disadvantage of Zillow Group Stocks:
- While the recent numbers have been positive, Zillow is still rebounding from a bad move into the residential redevelopers (also known as ‘home flipping’) business. Zillow Offers, the company’s home flipping service, shut down in 2022 after posting a combined $880 million in losses.
When it comes to iBuyers, Opendoor is the leader in this segment. iBuying refers to the instant buying and selling of real estate, combining Prop Tech and home flipping into one platform for buyers and sellers alike.
With faster and simpler transactions, Opendoor can boost the liquidity in the real estate market, leading to additional opportunities, by their company mission.
Advantage of Opendoor Technologies Stocks:
- Despite facing increased competition in the iBuying segment, Opendoor still holds the share of the market. As far as Prop Tech companies go, Opendoor is probably one of the most reliable names you will find.
Disadvantage of Opendoor Technologies Stocks:
- Much like the rest of the real estate industry, Opendoor Technology faced some serious losses in 2023 as a result of the rise in interest rates. Opendoor saw a huge drop in revenues in 2023 and could also see another drop in 2024.
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Redfin is a Seattle-based real estate brokerage. Since its inception, Redfin has made an effort to adopt Prop Tech, automating most of the process to lower costs.
The model has been fairly successful. Operating both in the US and in Canada, Redfin also holds a solid share of the American real estate market.
Advantage of Redfin Stocks:
- Even though 2023 was a down year for the real estate market, Redfin has performed generally well. The real estate market is potentially set to rebound in 2024, with a lower inflation forecast and a potential decline in mortgage rates. Redfin has ambitious plans to turn a profit next year.
Disadvantage of Redfin Stocks:
- Despite having outperformed some of its competitors in the real estate market, Redfin is still trying to rebound from significant losses (from the 2020 pandemic). Much like Zillow, the Seattle-based company also had to shut down its iBuying platform, Redfin Now.
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How to Invest in the Best Property Tech Stocks
If you are looking into adding Property Tech stocks to your portfolio, then an online broker is an option available.
A regulated broker, like Admirals, offers you access to the various financial instrument options on the live markets.
At Admirals, you can trade with the MetaTrader 5 tool, available on Windows, Mac, iOS, and Android.
MetaTrader 5 is the top platform for multi-asset investments, offering a variety of features for users:
- Automated trading with AI programs.
- Free market news and data.
- Personalised charts.
- Educational tools.
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Best Property Tech Stocks: Advantages and Disadvantages
Property Tech stocks, just like any other investments, come with pros and cons.
Here are some of the advantages and disadvantages of PropTech stocks you should take into account:
Advantages of Property Technology (PropTech) Stocks:
- Innovation and efficiency: The Prop Tech industry is attempting to drive innovation and efficiency forward. Companies frequently introduce solutions that streamline real estate processes, such as listings, transactions, property management, and so on. With plenty of startups being created in the industry, companies see it as important to remain innovative and hence, competitive. be innovative to stay competitive.
- Scalability: An ever-increasing number of real estate companies have been looking into Prop Tech innovations, which, in turn, means that there is a significant increase in demand. Prop Tech companies are prepared to deal with this, as their software can be easily scaled to supply the increased demand and the larger user base accordingly.
- Diversification: Prop Tech stocks may be a good alternative for investors who want exposure to the real estate market without having to own property. Not only, there are multiple segments within the Prop Tech industry, ranging from home security to mortgage software, which allows investors to further diversify their portfolios.
- Disruption potential: Prop Tech is a relatively new market, and it has already driven some significant changes within the real estate industry. This trend will likely continue going forward, and the disruption offers investors a chance to capitalize on these changes.
- Long-term growth: As mentioned above, Prop Tech is somewhat recent, and the real estate industry is still incorporating technological innovations. This integration won’t stop any time soon, which means that Prop Tech stocks have reasonable potential for sustained growth in the long term.
Disadvantages of Property Technology (PropTech) Stocks:
- Regulatory and legal challenges: The real estate industry is subject to constant regulatory changes. Naturally, Prop Tech companies are also exposed to this same risk.
- Market cyclicity: Real estate is considered a cyclical industry, which means it will follow the economy’s fluctuation. Likewise, Prop Tech stocks will also deal with that same problem. During periods of economic growth, Prop Tech stocks can skyrocket. However, during recession periods, Prop Tech stocks can sink.
- Competition: Since it’s a fairly new market, Prop Tech sees an ever-growing number of startups joining the industry every year, fighting for their share against established companies. While competition can be positive, it also has some disadvantages, such as market saturation, or a potential decrease in profit margins.
- Data privacy and security: As in any other tech segment, Prop Tech is subject to constant scrutiny over data privacy and security. Prop Tech companies handle sensitive data, including financial and personal information. This naturally creates concerns over their potential vulnerability to data breaches and other similar problems.
- Adoption hurdles: While the real estate industry is incorporating technology into its practices, the process is still very slow. Real estate companies are usually resistant to innovation, often refusing to change traditional practices.
Best Property Tech Stocks: Conclusion
If you are looking for a way to diversify your portfolio, then Prop Tech stocks could be worth some consideration.
With Prop Techs stocks, you’d add exposure to the real estate market, but without having to own property. Some Prop Tech stocks even offer good opportunities for long, sustained growth.
However, there are also some potential disadvantages to take into account. The real estate industry is slow to adapt, and will probably take a while to fully adopt new technologies.
Additionally, much like real estate itself, Prop Tech stocks are cyclical, which makes them a risky investment.
Before you make a decision, make sure to weigh all the pros and cons of investing in the best Property Tech stocks, and how they would fit into your portfolio and in your investing strategy.
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What are the top 3 Property Tech stocks?
Subjectively speaking, some of the top 3 property tech stocks to watch include:
- Opendoor Technologies
- Redfin Corp
What are Property Tech stocks?
Property tech stocks refer to publicly traded companies in the real estate technology sector, specializing in innovative solutions and services related to property management, investment, and development.
Other Articles of Interest:
- Top 3 Machine Learning Stocks to Watch
- Top 3 Best Construction Stocks to Watch
- Top 5 Finance Trends to Watch
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