How PropTech is changing the real estate industry
Proptech is reshaping the real estate industry in many ways and offers plenty of opportunities for real estate professionals. Proptech refers to companies that are providing technologically innovative products and novel business models for the real estate markets. The digital landscape is constantly evolving. And so organisations are trying to keep up with these changes – as well as shifting consumer patterns – in order to gain a competitive edge, become more cost-efficient, responding to the diverse needs of clients, and offer innovations. This is the essence of proptech.
While real estate professionals all heard about proptech two years ago, it is still very much in its infancy. There is increasing awareness of how technology is transforming the real estate industry, but companies are also starting to understand why the digital age encompasses so much more than technology.
Industry Experts on Proptech
The KPMG Global PropTech Survey 2018 asked hundreds of real estate professionals what their opinions were on proptech. Key findings of the report include:
- 97% of respondents think that digital and technological change will impact their business.
- 60% think that this impact will be very significant.
- 73% see digital and technological innovation as an opportunity. A further 25% see it as both an opportunity and threat.
- 90% think that the corporate real estate industry views PropTech as an opportunity/enabler
- 78% feel that digital and technological innovation engagement from across the real estate industry has increased over the last 12 months.
- 93% agree with the statement “Traditional real estate organizations need to engage with PropTech companies in order to adapt to the changing global environment.”
- 66% do not have a clear enterprise-wide digital and technological innovation vision and strategy.
- 56% rate their business 5 or below out of 10 in terms of digital and technological innovation maturity.
- 30% of real estate organizations say they currently invest or plan to invest in PropTech start-ups.
Proptech is a Widespread Phenomenon
All over the world, we are seeing a sharp rise in the number of proptech companies. In Europe alone, the Real Estate Innovation Network (REIN) was able to identify 1,622 proptech startups. REIN, in collaboration with PwC and EXPO REAL, have published a PropTech Map, highlighting the top 100 European proptech startups in 2018.
Appetite From Investors
We have seen a dramatic rise in investment in the proptech sector. Indeed, global investment in proptech companies increased by 63% from 2016 to 2017, amounting to $17bn of total investment during that period. Furthermore, the Global Prop Tech Confidence Index for mid-2018 underlines that overall investor confidence in proptech has hit a record high. Aaron Block, Co-Founder & Managing Director of MetaProp NYC, said:
“Along with non-real estate-based institutional investors, the billions of dollars being directed to this investment category has catapulted PropTech to new heights of asset-class desirability.”
Meanwhile, Jordan Nof of Tusk Ventures stresses:
“The biggest change and opportunity will be watching how PropTech entrepreneurs execute on building their businesses during a market downturn, and how the investors who have supported them react. It is when the market gets difficult that we see who is really positioned for success.”
Nof also argues that companies who only make minor improvements in their approach to proptech could struggle in the competitive global market. KPMG make a similar point in their report, noting that many of its member firms are making piecemeal improvements, instead of taking a holistic strategy. Moreover, many of its firms seem to be doing a lot of talking when it comes to proptech, but aren’t putting those words into an actionable plan.
The Impact of Proptech on the Recruitment Industry
Given the rise of proptech, certain jobs are becoming increasingly in demand. This is due to the fact that specific digital, business, and numerical skills are now essential to any proptech company’s growth and success. Recruiters are now sourcing candidates for a variety of jobs, including:
- Full stack developer
- Business development manager
- Product manager
- Content marketing manager
- Analyst
Some key players (such as founders of tech companies) are trying to disrupt the real estate industry. These entrepreneurs have a purely tech background, with no past experience of real estate – yet they are utilising their knowledge and skills in order to fill a gap in the market.
One interesting company to keep an eye on is Appear Here, which describes itself as “the world’s leading marketplace for retail space”. Founded by Ross Bailey when he was just 22, the business helps brands to find and book space online, which they say is “as easy as booking a hotel room”. Appear Here has worked with some of the most valuable brands, including Apple, Nike, Coca Cola, Spotify, and Google.
Another promising business is Houzen, set up in March last year, with the aim of revolutionising the online lettings space. It’s a highly successful proptech business that focuses on the residential market. And so far, they have developed the fastest letting search engine that matches properties with ideal tenants. On top of that they sell services to tenants in order to generate additional revenue. Houzen has already a strong track record and they have mandates in place with top tier companies such as Greystar, L&Q, Kennedy Wilson, and Invesco.
Advice to Professionals
As a real estate professional, it’s important to keep up with proptech trends. Then, once you can gauge where the most promising technologies lie, it’s worth investing in them as quickly as possible. Competition for investment is tough. Another key tip is to regularly ask clients for how you could improve your services. This will help to keep you up-to-date with the latest consumer trends. Finally, while technology may be changing the nature of the real estate sector, there is still a need for human expertise. Technological innovations should be viewed as a means for enhancing, not replacing, essential human skills.
