Today, Fortune Business Insights released a report, “Property Management Market, 2021-2028,” that found the U.S. property management market size is projected to grow from $3.62 billion in 2021 to $6.16 billion in 2028, according to a press release.
This projected growth estimate represents a CAGR (compound annual growth rate) of 7.9% during the 2021–2018 period, with the report also finding that the property management market exhibited significant growth of 6.2% in 2020 compared to the average year-over-year growth from 2017 to 2019.
The report attributed the rapid growth in 2020 to the impacts of COVID-19, stating that there was an “unprecedented and staggering” impact on the property management market due to a negative impact on demand across the country caused by the pandemic.
It also noted that the rise in CAGR is attributable to the market’s demand, growth and return to pre-pandemic levels following what some would call “a return to normal.”
Fortune found that new proptech and real estate technology solutions are increasingly enabling property managers and owners to digitally streamline tasks such as vacancy alerts, customer interactions, marketing, payment related processes, revenue management, lease management and more.
It also stated that the integration of advanced technologies like virtual reality, artificial intelligence, machine learning and the Internet of Things (IoT) are likely to boost market growth, citing AppFolio’s AI-enabled utility management and leasing assistant solution as an example.
One significant factor expected to drive market growth, according to the report, is the rise and adoption of IoT technology (or the connection between devices, sensors, appliances, beacons, WiFi and other devices). The report states that software vendors have started to integrate the technology within the communication technology connecting managers, owners and investors, and expects the rapidly growing shift towards smart homes to boost software demand in the future.
It also states that the large amount of data generated through connected devices, platforms and appliances can be leveraged to boost software functions. To highlight this point, the report cited Johnson Controls survey that found 70% of respondents believe the implementation of IoT for predicting and diagnosing patterns is expected to drive demand for the software.
In addition to driving technology factors, the report states that the real estate industry is witnessing rapid growth in both commercial and residential rental properties. According to America’s Housing Vacancy Survey, the rental market saw 350,000 more renters during the first quarters of 2019, with the availability of accessible, affordable and quality properties in major city locations driving increased growth in the volume of U.S. renters.
Other demographic factors driving market size growth include rising employment opportunities, immigration and domestic migration, increasing international students, rising residential home prices and a shift towards urbanization. The report also noted the U.S. Rental Housing 2020 report, which found that the breakdown of U.S. rental units in 2018 was:
- 33% single-family homes
- 17% small apartments
- 23% commercial buildings with 20 or more units
As a result of these findings, which showcase a growing demand for rental properties and increasing administrative burden for property managers, Fortune states increased demand for software adoption.
In contrast, the report states that due to the crucial and personal information involved with property management software (e.g. social security numbers, payment information, phone numbers), real estate is at high risk for security threats and data breaches are a growing restraining factor for the market.
Based on end-user, the global market is segmented into four main categories in the report, including property managers, housing associations, real estate agents and others. The report found that property managers hold the largest share of the market (40%), which is expected to continue during the forecast period.
Based on application the market is split between commercial and residential, with residential holding the largest market share. While the growth of the market is primarily due to demand for residential property management solutions (such as single and multistory apartments and houses), the commercial segment is also projected to achieve steady growth during the forecast period.
Lastly, the report states that cloud-based software currently dominates segment share and is projected to experience further rapid growth in the coming years, with advanced security and cost savings expected to drive the demand.
While the majority of organizations are moving from on-premise deployment to the cloud, the report did note that some organizations are investing in on-premise models due to reduced risk of security threats.