While 2023 does not look like a perfect time to invest in real estate, the volatile macro-economic environment could hold attractive opportunities for proptech investors – if they look in the right direction.
Most residential investing trends will be defined by macro-economic drivers: soaring interest rates, squeezed incomes and the cost-of-living crisis. These economic waves will keep people away from major financial decisions such as buying a house and push them towards affordable housing and other budget-friendly solutions.
This opens up a number of investment opportunities: for property-rental marketplaces such as the US platform Zillow; for schemes such as Bilt Rewards and SingleKey that help tenants and landlords optimise their budgets; for multi-family accommodation and management solutions; and for modular construction technologies.
Meanwhile, according to Savills, retail warehouses will deliver the highest investment returns of all asset classes, estimated at 9.8% and 8.4%, respectively, for 2023 and 2026. This will be largely driven by a need for retailers to shift to online shopping as malls and brick-and-mortar stores continue to close.
The shift to online will reinvent supply chains and logistics. Retailers and warehouse landlords will need to adopt new transportation management systems or polish existing ones to automate workflows and cut turnaround times – this is another investment possibility.
In the office sector, occupiers have new expectations of working space and expect high levels of technology integration and user experience. Investors can leverage such demands by providing office landlords and occupiers with the following solutions: building management systems; smart workplace apps; virtual event platforms; and building information modelling software.
If office buildings fail to comply with those demands, they are likely to be converted to residential use – or at least there will be attempts to do so, as the world is suffering from severe housing shortages.
If office buildings fail to comply with those demands, they are likely to be converted to residential use – or at least there will be attempts to do so, as the world is suffering from severe housing shortages.
Regardless of the real estate type, the market is slowly but steadily moving towards a better and more efficient future in terms of environmental footprint and property ownership. I envisage two major investment trends here: first, converting real estate assets into digital tokens that can be traded using blockchain technology; and second, green technology, such as building automation systems, smart lighting, energy-efficient HVAC systems, and other technologies.
The global economic environment remains uncertain, as do real estate markets. But if you take a deeper look, you’ll find myriad ways in which proptech can respond to those fluctuations. I see a huge investment opportunity in warehousing management and workflow automation as these will be a new industry standard as the retail business shifts online.
Residential property seems more volatile, but there are ways to make money here too, such as developing rental marketplaces to cater for the surge in demand for rented space.
Wes Snow is chief executive, co-founder and president of Ascendix
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