
Last year was marked by continued volatility in the multifamily real estate sector, with economic uncertainties casting a shadow over the market. While some pockets of real estate technology also faced challenges in 2024, we saw venture investment increase modestly and witnessed the further growth of several new technologies that are poised to drive the industry forward in the years ahead.
With 2024 now behind us, here are some of the most prominent trends shaping real estate technology and innovation that will likely define the sector in 2025 and beyond.
Real Estate Tech Investment Will Rebound as Conditions Stabilize
Emerging from a slow 2023, venture investment across the board saw early signs of recovery in 2024, with inflation normalizing and interest rates beginning to be cut. Real estate technology was no exception. We see this continuing in 2025, with improved business confidence and capital market conditions supporting positive growth, offset by continued budgetary pressures for real estate operators and still limited late-stage venture funding and exits, excluding artificial intelligence (AI).
IPO activity is expected to remain relatively muted in 2025, so the public markets and late-stage crossover investors may not be a viable capital source for late-stage companies. That said, there is a massive pool of private equity dry powder—totaling around $1 trillion—that can help fund mergers and acquisitions. With some of the largest private equity investors having invested in real estate technology in recent years and as the sector matures, for the right profile companies who can achieve both growth and profitability, we expect to see a meaningful amount of this capital invested in later-stage real estate tech companies.
Software vs. Hardware and Centralization
It goes without saying that “internet of things” (IoT) solutions have shown incredible potential to residents and property managers, and we expect technologies like smart-home tools and electric vehicle charging to continue to be prominent components of the real estate tech stack for the foreseeable future. But, as a whole, hardware deployment remains a significant logistical and capital cost hurdle, and it’s challenging for owner-operators to justify the short-term return on investment (ROI) of some of these IoT tools. As such, in 2025, the pendulum of tech adoption is likely to favor software and AI, where easily deployable and scalable solutions can improve operational efficiency across many different functions.
As real estate software tools become increasingly ubiquitous, we’re going to see the continued growth of centralized real estate operations. “Centralization” refers to the ongoing transition of real estate management from taking place on-site at each building to being centralized regionally or even nationally to a larger scale with more flexible teams and processes. While some amount of physical maintenance obviously has to remain an on-site function, we’ve already seen workflows rapidly centralized like marketing, leasing, resident and prospect communications, maintenance coordination, and back-office shared services like accounting. Sophisticated best-in-class point solution software has grown dramatically in the past few years, and the industry focus on these innovations will help push centralization further ahead in 2025.
AI Will Dominate Almost Every Corner of Real Estate Technology
As was becoming very apparent a year ago, AI has fully emerged as the dominant theme in the real estate tech space. Despite the unstructured nature of most real estate data, there are already numerous use cases for which AI tools are providing significant value. In 2025, owners and operators looking to fully leverage AI are devoting resources to improving their data infrastructure so as to ensure they can ingest, transpose, and query data more efficiently. As the technology matures and becomes more interconnected, the ability to leverage AI’s full power—unlocking more meaningful insights and ultimately driving workflow and ROI—will be a major differentiator for real estate companies this year.
As part of AI’s evolution within real estate, we expect to see more collaboration between vertical (industry-focused) and horizontal (industry-agnostic) technology. To date, the vast majority of funding has gone to horizontal AI infrastructure tools, which require substantial infrastructure and investment in building models of increasingly impressive function. Existing vertical real estate software has continued to maintain data as the “systems of record” with integrations across a web of application programming interfaces (APIs), point solutions, and property management systems. As the data infrastructure improves, we are going to see growing partnerships between vertical real estate tech and horizontal AI that can leverage the expertise and proprietary data sets of the first group and the latter’s best-in-class AI capabilities to deliver the best insights for real estate operators.