The Role of APIs In Real Estate

The Role of APIs In Real Estate

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Several years ago, we wrote extensively about the potential for PropTech APIs to disrupt real estate. For context, that article was written right as the COVID-19 pandemic was beginning to unfold. But since then, according to Postman’s 2023 State of the API Report, at least 1% of those who work with APIs currently operate in the real estate sector.

In the wake of that, and the fact that BuiltAPI’s Ivan Nokhrin returned to speak about PropTech at our 2023 Platform Summit, we thought it made sense to revisit the topic. We have, after all, recently published articles on the role of APIs in manufacturing and the impact of APIs in the automotive sector in recent months, both of which represent slices of the overall market.

Plus, we got to wondering what happened to some of the predictions in that previous article. Were they overly ambitious? Have they merely been delayed by extenuating circumstances? Or does that 1% sliver only remain small because of the dominance of other sectors? Let’s find out while we revisit the role of APIs in the real estate sector.

Watch Ivan Nokhrin from BuiltAPI present at the 2023 Platform Summit in Stockholm:

How Buildings Learn (and How APIs Can Help)

In his talk at our last Platform Summit, Ivan riffs on the work of influential project developer and writer Stewart Brand. Brand talks about the relationship between buildings and users as follows:

  • Buildings adapt and change over time to meet the evolving needs of occupants.
  • The success of a building is often determined by its ability to adapt to the unforeseen.
  • Users’ behaviors and preferences shape the way buildings are used and modified.

Nokhrin states that, as opposed to physical space or land, “experience is the product of the real estate business.” He also points out that social models are changing at an accelerated pace. Consider, for example, how people adopted products like Zoom and Microsoft Teams to work collaboratively during the pandemic. However, Nokhrin observes that buildings don’t change so quickly.

He imagines a world where “APIs empower buildings with innovative technologies to meet our expectations.” We’ll get to that below, but it’s worth highlighting again how many hurdles stand in the way of that: a few years ago, Nokhrin’s team found that less than 1% of commercial buildings in the world are digitalized to any extent.

Still, he argues, “API-first solutions enable a hyper-personalized experience… We are a manifestation of our digital track record.” But despite all that potential, for reasons we’ll see below, the use of APIs to automate aspects of the relationship outlined by Brand is rare.

Deploying APIs in Real Estate Is an Uphill Battle

Anyone hoping to employ APIs in the real estate space, despite some exciting possibilities, faces challenges in doing so. That’s thanks, in part, to its close ties with the banking industry.

Nokhrin has previously explained that “the industry is very conservative, to say the least, and the interoperability of solutions and data streaming have just [recently] become major topics of discussion at property fairs and conferences.” Even if the appetite is there, adoption is difficult.

Perhaps then, given the monolithic nature of real estate, we shouldn’t be surprised that the rise of APIs in real estate is modest. That said, progress has been made: in Postman’s 2020 State of the API Report, the year we published the article mentioned above, real estate did not appear at all. However small it might be, growth is still growth.

To that point, there are real estate APIs out there. Many real estate portals, for example, use MLS (Multiple Listing Service) APIs to pull data and populate/update their listings. Zillow offers a range of APIs, too, including everything from listing performance data to mortgage rate data and neighborhood data.

And let’s not forget, as we highlighted in a previous article, more than $34 billion has been invested in PropTech startups since 2012. Granted, not all of those startups are API-centric (and many may not even use them at all), but that investment still represents change in the industry.

Folks like Nokhrin are eager to engage with that change. That’s evident from his own BuiltAPI marketplace, which contains lots of APIs that function like ready-made apps and can be integrated with minimal effort.

APIs and Building Management

Nokhrin also outlines some of the tasks faced by building managers in the real estate space, highlighting how many of these are now (or can be) managed using digital-first service layers:

  • Energy
  • Lighting
  • Fire safety
  • Surveillance
  • Charging
  • Plumbing
  • HVAC
  • Elevators
  • Access

The problem is that, even though many of these systems are managed digitally, they tend not to talk to each other in the way that those in private residences (using smart home automation) do. APIs could change all that, offering the ability to operate power, security, and other management systems remotely, or have them interact automatically based on safety protocols.

“If we put an API wrapper around this,” he continues, “we can think of buildings more as operational systems where we can install hardware and software. Turn buildings into more malleable structures that can respond better to our changing needs as customers or users.”

The desired outcome of Ivan’s vision? Edge infrastructure, with cities as mesh networks. Interconnected buildings that can “exchange information with one another… but also vehicles, handheld devices, drones, and other infrastructural elements that exist within the city.”

On a smaller scale (read: a less ambitious starting point!), machine-readable building data could be used to streamline how they operate. A more holistic view of things like water and electricity rates, rents in (and around) the building, and property taxes is useful to both management and residents. But, despite steps in the right direction, we’re not there quite yet.

The Future of APIs in Real Estate

At the end of his Platform Summit talk, Ivan referenced how, in his session four years ago, he spoke about the tokenization of buildings or real estate assets. In other words, decentralizing real estate assets to allow different parties to have a stake in them through token ownership.

“Maybe I was too optimistic too quickly,” he jokes. “So let’s see how things are going next year!”

Back then, on the subject of APIs, he suggested that “it’s all relevant for real estate because, when we connect all these things…we are moving towards the era of smart buildings and smart cities.” And the thing is that, even though adoption has been slower than Ivan hoped, the concepts he’s spoken about previously (and continues to evangelize) are solid.

The hurdle back then is the same as it is now: the real estate space continues to be conservative and resistant to change. And for good reason: according to Savill’s, the total value of global real estate passed $325 trillion in 2020. Capital growth and annual returns on real estate investments are solid, often outperforming the S&P 500. Meaning that there’s a lot at stake here.

In other words, in the real estate space, there’s simply no need to reinvent the wheel — if it ain’t broke, don’t fix it. But even though property financiers, investors, owners, and managers may not see any breaks, renters (both residential and business) are increasingly finding cracks.

The difficulty of dismantling the deep connections that real estate has with things like mortgages, escrow, leases, and so on means that patching those cracks is difficult. If the growing number of PropTech companies — many of which are very well-funded — can find the right way to use APIs, then they might just represent an effective way to reinforce them.