The global PropTech sector is growing and evolving rapidly. In 2017, PropTech saw a record USD $12.7 billion of venture capital investment providing the capital base for growth in years to come. In 2018, select PropTech businesses saw meaningful traction with traditional real estate, however full-scale adoption of these technologies was still to be achieved. What will happen in 2019?
Economists have a tough gig. They take on the unenviable task of trying to predict the future. Will interest rates go up or will they go down? Will the market stay bullish or will it turn bearish? In today’s rapidly changing markets, any 12-month predictions are likely to be wide of the mark.
So, rather than reviewing predictions, let’s take some time to think about five burning questions for PropTech to answer in 2019:
#1 – Which Emerging PropTech Technologies Will Achieve Traction?
PropTech is exploding with new technologies – software-as-a-service tools, tenant experience portals, data and analytics platforms, drone applications, IoT solutions, energy solutions, mobility solutions, augmented & virtual reality, machine learning & artificial intelligence, material science – the list goes on and on and on. Some offer a better way of doing what is done today, others open up entirely new value propositions and business models. The sequence and speed with which they will be adopted will depend on the severity of the problem being solved, the immediate opportunity offered and the challenges of implementation into existing systems and processes. Which technologies will see significant adoption in 2019? And which will take a few more years?
#2 – Will Data Really Begin To Drive Decision Making?
Compared to allied sectors like financial services, the real estate industry is far behind with respect to collection, analysis and use of data to make key decisions. Property professionals rely on anecdotal transactional information to interpret market movements and on delayed operational information to manage asset portfolios. In 2019, real estate incumbents will continue the foundational work of improving digitisation and data standardisation, but how far will they extend into real-time reporting, market benchmarking and predictive analytics?
#3 – Will Tech-Talent Exercise Influence In The Real Estate Sector?
To take advantage of technology, traditional real estate firms will need to both partner with emerging PropTech businesses, as well as grow their internal tech capabilities. Digitally native talent will only be attracted to work at real estate firms that can demonstrate real tech-savviness and a roadmap towards greater technological application. In recent years, new Chief Technology Officers, Chief Information Officers and Chief Data Officers have taken a seat at the executive table, though it remains to be seen how much share-of-voice or budget they command. Will tech-talent be willing and able to exert influence in traditional real estate firms? Or will frustrated real estate professionals jump ship to start their own PropTech startups and solve known industry problems?
#4 – Will Real Estate Corporates And Asset Owners Meaningfully Engage In PropTech?
‘Disruption’ has been heralded as a threat to many traditional industries, however, PropTech should be viewed as more of a compliment to the real estate sector than an existential competitor. Emerging PropTech businesses help real estate corporates to solve problems and rely on them to get their solutions out into the world. In 2018, leading corporates like Stockland and Charter Hall launched external accelerators to improve these interactions, however, startups generally remain frustrated with their ability to engage effectively with the sector. Will real estate corporates overcome traditional cultural and process barriers to meaningful engagement? Or will more agile corporates in financial services, telecommunications and big tech take the lead?
#5 – Which Australian PropTech Startups Will Kick Ass In 2019?
In 2018, we started developing a database of PropTech startups in the Australian ecosystem. We identified over 500 PropTech businesses developing solutions to problems all along the built environment value chain, including planning, design, development, construction, sales, leasing, asset management, infrastructure, transport, energy and other adjacent sectors. In recent years, several Australian businesses including Aconex, Equiem, Safety Culture and Propeller have seen success domestically and abroad, leading the way for emerging PropTech businesses to follow. Who will rise to the top in 2019?
There you have it: more questions than answers. Whatever happens though, 2019 is sure to be another year of significant progress for PropTech and we look forward to looking back on how it has all played out. Watch this space.