The fact that proptech is not a passing fad has been amply proven. Globally, investors continue to pump ever-increasing sums of money into the space, with signs of consolidation manifesting both through the concentration of investment into bigger rounds on fewer companies (SoftBank’s mammoth rounds into Opendoor and Compass, for example) and healthy M&A activity.
Globally, investors continue to pump ever-increasing sums of money into the space, with signs of consolidation manifesting both through the concentration of investment into bigger rounds on fewer companies (SoftBank’s mammoth rounds into Opendoor and Compass, for example) and healthy M&A activity.
At the same time, incumbents have firmly taken note of and started to act on proptech, via investment – for example RXR Realty’s newly minted venture fund or JLL’s well-known Spark fund – or direct acquisitions.
Two recent reports highlight proptech’s opportunities and challenges. In The Road to Opportunity by KPMG, 97% of real estate respondents indicated that digital and technological innovation will affect their business, although almost half admitted that they don’t have the right tools for it.
The BPF’s Lost in Translation report highlights the confusion around tech and innovation in real estate. Given the cultural, structural and technical barriers to digital innovation that characterise the property sector, the report calls for better information, greater cohesion and the fostering of innovation.
In November, the highly anticipated Real Estate Tech Week took place in New York featuring the second edition of Mipim PropTech NY. Like Mipim Proptech Europe earlier this year, it was a golden opportunity to showcase new trends in the proptech space.
The themes that stood out during the summit were innovation and collaboration. Similar to the BPF and KPMG reports, panellists agreed that, given the need for real estate firms to implement technology to address new client requirements and extract efficiencies, successful implementation cannot occur without collaboration with the technology sector. This is due to the radical differences in these new products from traditional real estate tools.
Data and connectivity continue – rightly – to be seen as of the utmost importance. As Scott Rechler, chief executive of RXR, said in one panel: “The greatest return on investment tech is providing is insight.” This was reflected in the event’s awards, with District Technologies and onTarget winning the NYC leg of the Mipim PropTech Startup Contest. Dealpath, the leading investment management platform for real estate, which prides itself on putting data at users’ fingertips, won the Top Technology award.
What does this all mean? Clearly, proptech has shifted out of the ‘faddish’ stage, where money was thrown at products that sounded interesting, and into a more mature phase of structured, bottom-line-driven thinking.
Moreover, because incumbents are thinking seriously about technology as a fundamental aspect of their business for the future, they are working to understand their limitations and planning tech implementation on what will work best for them – be it investment, acquisition, partnerships or simply purchasing products from tech firms.
As proptech consultant Antony Slumbers has noted, we are not there yet – but we shouldn’t be worried. Although full-scale adoption of tech in the industry has been – and will continue to be – slowed down by the stickiness of real estate as an asset class, the signs are all positive. Let’s also not forget how exponential proptech’s growth trajectory has been in recent years.
In my first Property Week column, I theorised that technology and real estate would evolve and grow together due to changing consumer behaviour, generational shifts and technological evolution that would bring tech out of its niche and into the mainstream. That prediction is slowly starting to come true.
Angelica Donati is chief executive of Donati Immobiliare Group