PropTech has had about $70bn invested into it to-date. But what does it mean to you? Of course, PropTech has become a catchall phrase, and definitions will vary according to the environment you work in and your exposure to the market. For the purposes of this article, I propose that PropTech is the application of real estate domain knowledge to technology, enabling new processes, platforms and business models. In its many guises, PropTech has been around for decades. It has been championed by many, monopolised by some and abused by others. But, it is finally gaining well-deserved appreciation and traction. Globally, there are over 7000+ PropTech firms (see Figure 1). In the last 18 months, within the UK commercial real estate space, we have seen PropTech evolve and mature significantly. Even so, we’re still in the nascent stages of industry transformation. There is much work to be done, not only by technology and software vendors, but primarily for the traditional industry companies; for this is where the battleground for change will ultimately be fought. Technology is evolving much faster than real estate’s appetite for innovation.
Real Estate has long proven itself to be an impenetrable fortress. If the latest FuturePropTech, CogX and RealComm events are anything to go by, the queue of technology companies poised to breach is steadily increasing. Just outside the walls, tech giants are skillfully removing the hinges from the door. Don’t believe me? Take a look at:
• Google’s recent $13bn investment in data centers and offices across the US and the recent $1bn to build 20,000 Bay Area homes
• Sidewalk Labs’ new smart city dream in Toronto
• Amazon's HQ2, Alexa Smart Homes division and it’s ever increasing 288m sqft of offices, warehouses, retail stores and data centers
• Microsoft's numerous IoT products, Azure Digital Twin service, $500m pledge to fight housing affordability
• IBM’s Facilities Management products and IoT services
• Airbnb’s move into construction with Samara
• WeWork’s ‘Powered by We’ philosophy and its impending billion dollar IPO (Successful infiltrator who has been working on the locks from the inside)
Despite the buzz of high-profile activity, there is still a pervasive wariness and distrust about the use of additional technology. Some of the larger players are embracing it in theory, but their hands are tied in accessing the full value of such technologies until their own internal culture has been digitally transformed. It is a massive undertaking.
Amongst the SME organisations, of which there are thousands, it is fair to say the needle hasn't moved far. Where PropTech solutions are being used, they are usually implemented to solve an isolated problem. The short and long-term benefits don’t come to fruition because there isn’t a holistic approach being taken to digital transformation. For many years, “technology” has been a computer, MS Office, a phone and an underwriting tool (if you were really lucky).