Proptech in the Luxury Residential Market Is All About Access

“What we have seen becoming sort of standard is that when folks are building luxury apartment buildings now, they’re looking to incorporate technology to change the way that those properties function,” said Ned Murphy, general manager at Level M, a Redwood City, Calif.-based smart lock and property management platform for multifamily properties. “Proptech is essential when developers consider how luxury properties will remain relevant over time.”

The needs of residents and building infrastructure for multifamily properties are different compared to single-family homes and offices, but that’s “especially” true on the luxury end since “the residential experience is obsessed over,” Murphy said.

“Amenity fads will come and go and can be dangerous when they dictate material choices and how community spaces are used,” Murphy said. “But proptech, smart technology specifically, needs to show owners and developers how it impacts luxury building functions to consistently increase rental rates and leasing activity for years to come.”

Technology is not just for the luxury class, though. A 2022 survey found that 82 percent of renters across all class types want smart technology in their residences.

While applying technology can reduce ownership’s overall cost of managing luxury properties, for luxury renters there is an expectation that they will receive certain tech benefits as part of their community lifestyle to mirror what they experience in other parts of their daily life, said Murphy. He estimated that Level M is in 250 luxury apartment buildings across the country.

“And that’s where you’re seeing a lot of draw for the owners and developers who run those properties to make the investment in smart tech,” Murphy said. “The benefit of smart tech in particular is that it touches on delivering a premium resident experience, because it’s something that a resident interacts with on a day-to-day basis — how they get into their place, control the lighting, control the thermostat. These are the kinds of applications in a single-family luxury home that people interact with.”

However, the idea of luxury proptech is not limited to simply offering perks and amenities for residents — employing technology to find and close deals with buyers of primary and secondary residences is a necessity for brokers, said Alyssa Soto Brody and Erica Sachse, co-founders of Powered by DMT, a brokerage services firm based in Manhattan and Florida that offers integrated marketing and sales services to the new development and luxury resale markets.

“We have created systems and processes for our lead generation, in particular, which utilize different software and programs in order to do high-quality lead generation,” said Sachse. “We’re actually a brokerage that gets hired and then we implement these proprietary systems for our projects or for our listings.”

The company uses the same process for the rental market as well, added Brody. “And the data that we aggregate is what really sets us apart, because we use that data in implementing the marketing and sales strategy decisions.”

In New York, DMT defines the luxury condo market they address as priced at $3 million and up, while in Miami it is $1.5 million and up for “obtainable luxury,” as Sachse called it. “That’s changing very quickly and it’s turning into something very similar to New York. That’s part of the new evolution in the South Florida market.”

Part of that evolution is an increase in remote buying, necessitating greater digital dexterity by companies like DMT.

“We’re getting a mix of investors, secondary homeowners and primary homeowners,” said Sachse. “What’s really interesting is that we’re seeing trends between all three of those buyer markets based off of the data that we’re capturing. For example, right now, we’re seeing trends towards larger units for primary owners. The primary owner market is really out [looking] right now in South Florida, whereas over the winter, we saw the secondary homeowner market coming out in full force and looking at the under $2.5 million price point. Now, we’re seeing primary luxury buyers in that $3 million price range in South Florida.”

Sachse added that: “We’re seeing technology being critical for the secondary home market and growth in that market overall right now. A lot of them are all-cash buyers, a lot of them are international, and they’re doing other real estate transactions or other investments, like investing in a third home. Technology has been so critical for them because it’s a remote sale most of the time. So we are using proptech software to facilitate the sale for these remote buyers.”

One way DMT uses tech to facilitate remote buyers is through interactive digital presentations for the luxury residential buyer. “They allow the buyer to understand, visualize, and feel like they can touch and experience the property without being there,” Sachse said.

Tracking the digital footprints of prospective buyers across DMT’s web assets allows the company to be more efficient in closing deals, she said.

“We can put together the story of a buyer from when they first interact with the property all the way through to when they close, which sometimes can take two years,” said Sachse. “We had a buyer lead come in for one of our properties on Roosevelt Island in Manhattan, and they came in two years ago. We had been tracking them for two years, and about six months ago they were getting really active in opening up our emails, going back to our website, and looking at the floor plans we had sent them over the past two years. This alerted our sales agents that it was the right time to strike. They reached out, and when we ended up closing the deal, it was the second-highest sale in Roosevelt Island in history. 

“The reason we were able to do that was because we were in the background getting all that data about that buyer so the sales team knew exactly when the buyer was ready to go.”

Digitizing luxury listings is at the heart of Giraffe360, a Miami-based proptech company focused on streamlining the capture and creation of high-quality listing content, said Mikus Opelts, its CEO and founder. Luxury residences make up about 15 to 20 percent of his business.

A Latvia native, Opelts started the company in Europe and it still has its European Union headquarters in London. The company launched in the U.S. two years ago.

“Giraffe360 is a tool for real estate agents, particularly used in the luxury segment to create a rich media presentation of buildings, from 3D tours to accurate performance video production,” said Opelts, referencing the company’s proprietary camera that captures interiors and floor plans.

“Typically, a person who buys a luxury home, it is not their first property in the luxury segment,” Oplelts said. “But what we hear from our clients is that their applicants, the people who want to purchase houses, are very busy, and they want to pre-vet the buildings before they go and actually see them. So historically, we’ve had our clients creating 3D scans and 3D tours, in a luxury segment so that the buyer can be confident that they actually need to invest time and go to those properties. And recently, that has been even further escalated with the Apple Vision Pro release, its new VR headset. Luxury homebuyers can access buildings remotely in a very immersive and highly engaging environment.

“However, what I have seen is that the proptech and luxe segment doesn’t naturally, organically, work together, because technology is about automation — where the luxury market segment is more about the service. But actually the luxury segment is very keen to test and be in the forefront — checking what’s happening. That’s where we see that partnership working. Basically the realtor would deliver the headset to the buyer’s home, put the headset on, and provide white glove service to give them a virtual tour. It can also be on a big TV screen. The realtor would then tell the story and engage the client’s initial interest.”

Technological advances, particularly artificial intelligence, are accelerating the quality and acceptance of proptech for luxury, said Opelts.

“AI specifically in media production is in demand,” he said. “Today, media production is filming, photography and then manual CGI modeling. There will be new forms of media creation that will be possible through AI, where you can render a high-quality video and create a story of a property seamlessly, which is very essential for luxury sales. Today, it’s all manual, very labor intensive, and thus slow and expensive. This is the part where technology automation becomes also interesting for the luxury segment, because the output quality, the media quality, is actually high level and appealing.”

Even proptech that does something as seemingly banal as recycling waste water can be a value-add for luxury apartment building owners and residents, said Aaron Tartakovsky, CEO of San Francisco-based Epic Cleantec, a water technology company that captures wastewater, treats it, and then recycles it back into the building for uses other than drinking.

“What we’re seeing is that the market is demanding sustainability as a central feature in luxury property development,” said Tartakovsky. “Part of it is driven by regulation, but part of it is driven by people who live or work in these properties. If it’s a hotel, the guests want to be in a property that takes sustainability seriously and safeguarding natural resources. If it’s a multifamily building, people are choosing to spend their money in buildings that prioritize green. We are seeing that across the board.

“I would say a very large number of our projects today are luxury luxury properties. These are luxury high-rise buildings in downtown San Francisco from some of the largest developers in the country. It’s significant because I think folks used to just only do code minimum, only what’s required by the city. What we’re finding now is that a lot of these luxury developers are actually going above and beyond to incorporate technologies like ours.”

Philip Russo can be reached at prusso@commercialobserver.com.