Tech innovation tends to follow a pattern. A new technology is introduced to a sector or something changes, which sparks innovation.
People and entrepreneurs latch on to these issues then build products. Innovation can be invisible or small before quickly becoming unstoppable. Some winners emerge, but then the market starts to consolidate and the winners become bloated. Then, you see start-ups trying to eat away at the sides and find new niches and ways of topping their competitors.
This can happen in different ways: you can innovate by delivering a service, such as online mortgage brokers; offer the value proposition of a service, for example the Ring doorbell; or adopt the operational model that provides the service, such as AI tenant management.
Before the pandemic, all these approaches were being played out within the proptech world and some winners in niche areas were shining through while others were falling away.
In 2019, there was an uptick in activity for proptech products and services that solve real problems – the solutions leading to productivity gains in the face of tighter budgets and busier workloads. However, many tech companies are still using a technology hammer and trying to find a nail, rather than solving real user problems.
Then Covid-19 came along. Our deals pipeline dried up overnight as everyone held fire on making decisions or signing off on new projects until the market stabilised. We did not know what to expect for the future of the industry or for our business that we have worked so hard for in the past decade. But, after the initial panic as sales stalled, we saw a big uptick in demand and the cycle time of deals decreased.
There is hard data to demonstrate the uplift in activity after the initial panic subsided. On 1 September, 1.8 million properties changed use class overnight as reform of the use class system came into effect. Within a week, these properties already accounted for one in four searches on LandInsight. To put this in context, one million land parcels are assessed on LandInsight each month – that is a lot of property being looked at.
Separating the winners from the rest
There are a lot of companies in technology and proptech that either were not solving real user problems or had not perfected their product’s market fit. The ones in trouble are those that had not got to the point of finding a solution to a problem and an effective way of selling that solution.
In that situation, these companies will have raised a lot of money, built up a team and be spending a lot of money each month, but they will not have worked out how to sell a product yet. I suspect they will struggle.
Change brings uncertainty
To have the efficiency to gain the customer’s attention and make them aware of your product, you need huge amounts of funding. For companies that have got a good idea, there is still opportunity to raise some capital – but right now, it is about surviving.
The shift to homeworking will also change things. A recent customer survey we conducted found that the number of people expecting to work in the office all the time has halved.
The biggest challenge that not only proptech but the whole of the property industry faces is how will the impact of the pandemic play out? Are we all going to work from home in houses with big gardens? What will happen to existing office spaces? What will happen to flats in city centres? Will the same kind of demographic still live there?
Experts are still forecasting a dip in the market but it is a question of when and how deep.
The government’s strategy is to release open data. It believes this will grow the market of innovators creating new proptech solutions that will provide new opportunities to get into property development.
I am sceptical that the government will manage to release valuable datasets that are of a high enough quality to make a difference to innovation in the sector. My other concerns are that this approach will create a feeding ground for corporates, allowing big companies to sit behind the curve and buy up the innovation, rather than create any real new breakthroughs themselves.
To see the maximum positive impact in the shortest amount of time, the government should be looking to engage and work with the proptech players who have already innovated and put in the years of work to get to where they are now.
This would significantly increase the speed of further innovation in the market and show a truly collaborative approach to improving the property market for all.
Over time, we have worked hard to build both our products and our brand. We invested heavily in our tech stack early on, which pays off later on. If you are trying to compete with that, it is very difficult to find a unique proposition you can feasibly cover.
This is another reason proptech and data are more important than ever to modern property businesses. There is now clearly a synergy between planning legislation changes and the ability for proptech to shine a light on the new opportunities. For something of the magnitude of these planning changes, against the backdrop of the pandemic, having technology that speeds up the execution on new opportunities is a win for everyone.
We have seen it with light industrial change and with conversion of offices to residential. We can tell you exactly where the new opportunities are. Instantly, you have got access to the full range of opportunities and the tools to filter through and find the best ones for your specific requirements.
Of course, we have to focus on weathering the pandemic at the moment, but some key areas of the proptech market are still ripe for growth in these strange times. First of all, there is the cloud, which is enabling collaboration that needs to happen way more in property. We also have machine learning, which has enabled data processing and big data. I know it can cause indigestion, but we have not seen a clear market leader yet, so there is everything to fight for.
One of the newest (and most beneficial) impacts for us has been rising interest in our LandFund product. Due to Covid-19, customers have been clamouring to get access to a cloud-based appraisal product that enables collaboration. Frankly, we were lucky with the timing being accelerated on this, which has made the LandFund product more useful than ever. But the move to the cloud and collaboration is the direction of travel we have been working towards for years.
In summary, there is so much potential in the market that is constantly driving us to innovate. We do not want to be left behind. Covid is going to change the way that property development happens and it is going to lead to more innovation and more efficiency in a better housing market.
LandTech provides software to streamline the property development process and get the right deals done faster. Established in 2014, LandTech is the fastest growing proptech company in the UK. For more information, visit land.tech.