In my last column, I theorised that 2018 may be the year when proptech becomes mainstream, and tech 2.0 investments start bearing fruit. I referred to ‘deep’, data-driven technologies, and picked IA – intelligence augmentation – as the ‘one to watch’. With Q1 2018 well behind us, are there any signs that those predictions were accurate?
Proptech was a huge focus at Mipim 2018, with an entire workstream around the topic. It is also the inaugural year for Mipim Proptech Europe, which to me is the biggest single indicator that mainstream players in real estate are starting to take a real interest in proptech on this side of the pond.
FUTURE:PropTech and Propteq are growing ever bigger and a host of other events are popping up all over the UK, including Property Week’s Proptech Bytes. Although an increase in the number of events on a subject does not necessarily result in an immediate growth in user adoption, it is a significant leading indicator.
#DeepTech is a massive opportunity for the #realestate sector: #BigData, #IoT and #AI applications can improve the way we do business, particularly if we foster collaboration between large companies and startups #proptech - My talk last night at @WiPUK pic.twitter.com/RD2jTZW2ev— Angelica K Donati (@angiekdonati) April 26, 2018
Several meaningful occurrences over the past few weeks firmly point to increasing maturity in the proptech industry:
- Pond crossing. It is not deep tech, but Purplebricks launched in NYC on 3 April. It is using $71m of the $177m raised from Axel Springer on expansion into the US.
- Pond crossing in the other direction. US private equity fund Värde invested in London-based VC Pi Labs in February, a very positive signal for London’s proptech scene.
- Retail partnerships. Tesco has chosen iSite to underpin its global building operations model, to attain data transparency and real-time intelligence on its property assets. This, to me, is the strongest indicator overall: a retail giant strategically using proptech to maximise its real estate portfolio.
- M&A. JLL Spark has made its first proptech acquisition, buying Stessa, a commercial property portfolio management platform. Granted, this was in New York, but yet another commercial real estate giant is now a proptech investor, which is significant for the industry as a whole.
- Monster numbers. In my year-end piece, I told you that VC investment in proptech in 2017 was set to top $3bn globally. That appears to have been too conservative, as MetaProp partner Zak Schwarzman said on 4 April that the figure eclipsed $12bn last year.
I also ran a quick search of the term ‘proptech’ on Google trends, and found two interesting facts. Over the past 12 months, the term has gone from a relative popularity of between 25 and 50 to one between 75 and 100. Up until the start of 2017, it was firmly under 25. Further, when checking this relative popularity by geography, it was most popular in Singapore, then the UK, in the past 12 months.
It’s clear that proptech is firmly front and centre so far this year… but which tech? There is exciting growth in all areas. The winner of the 2018 Mipim start-up competition was Disruptive Technologies, a Norwegian start-up that produces smart sensors. Above all, I think what led it to win is its brilliantly inexpensive solution to making any building a smart building, as well as the wealth of data that can be harvested along the way.
There continues to be a lot of buzz around AI-driven property management applications, and I have been seeing renewed interest in blockchain technologies in the wake of the rise and fall of cryptocurrencies. On 10 April, 22 European countries signed an agreement to establish a European Blockchain Partnership, which seeks to prepare for the launch of EU-wide blockchain applications.
As discussed in a RICS paper I co-authored, it will take years before the technology will be in everyday use, but this is a huge step in the right direction.
Is proptech now mainstream? It is in terms of awareness, and user adoption will follow over time. In my opinion, data is and will continue to be the driving factor for the success, failure or indeed speed of implementation of any ‘proptech 2.0’ technologies. So far, so good!