Real estate is not known as an industry which readily embraces change. The nature of the asset class, which comprises large heterogeneous assets traded in a largely private market, is perhaps a good reason for this. It may also be the case that various stakeholders that dominate the investment and property management ecosystem clearly have had an interest in protecting their income sources, so might all be expected to resist tech-driven innovations designed to ‘disrupt’ their business models.
Nevertheless, in current times we are witnessing a battle for market share between traditional players and a discernible second wave of technology-based innovation. The real estate sector is now awash with disruptive technologies significantly changing the consumer experience. Recent property focused startups, including Purple Bricks, Airbnb and WeWork, have revolutionized the way agents, investors, lenders, property owners, and managers engage with their customers to deliver an enhanced experience to the consumer. According to CBInsights, US$2.6 billion was raised by Property Tech startups in 2016, a 40 percent increase on the previous year in what is one of the fastest growing startup sectors.
Property tech (or “PropTech”) is one of the fastest growing startup sectors which is hardly surprising as property and our relationship with an experience of it, whether that as buyers, renters, investors or agents, transcends every aspect of our lives - from where we work to where we eat, play, shop and live.
Exponentially growing technologies such as the internet of things, big data, machine learning and lower technological barriers to entry for startups are converging. The result is that the oft-referred to as archaic real estate industry is on the cusp of significant change.
The FinTech industry – in particular, online payment systems, crowd funding equity and debt platforms and online exchanges – provided the foundation for a large part of the PropTech revolution. The development of intelligent control engineering is another plank. Much relevant work has already been done in other places and real estate can, as usual, be a late entry to the party, using the lessons learned from what works and what does not in the wider world of banking and engineering.