3 PropTech myths debunked. Why is this movement an opportunity and not a threat
Real estate remains one of the least disrupted field. But a revolution lurks just around the corner. It’s called PropTech. And it’s booming.
Oxford University says 15 percent of all venture capital is currently going into PropTech. CB Insights reported that the amount of disclosed funding of real estate technology companies was just USD 519m in 2013, but had leaped to USD 3.9bn by the end of 2018.
Something is happening here. And as it happens with anything that’s new, the whole movement is surrounded by baseless myths.
Myth #1: Real estate professionals should beware of PropTech
PropTech startups understand you. They get that it’s tough to get a grip on what PropTech really means. There isn’t even a definition on Wikipedia. But we can take a shot at it.
Simply put, we can define PropTech as any digital-based solution that in the end improves real estate and its services for people.
“Data analytics, artificial intelligence, the Internet of Things, virtual reality, blockchain — all of these will have significant repercussions for how we invest in and occupy real estate in the future,” observes Anthony Couse, CEO of JLL Asia Pacific. And PropTech is much more than that.
This all sounds a little bit abstract, but there’s no need to reinvent the wheel. The term PropTech also refers to items such as internet listings and search services. Or crowdfunding platform for investing the property. Or an app that enhances comfort and enables communication in building community.
Real estate owners or developers are not scared to build a property from scratch. But sometimes, their stakeholders are afraid to implement a new solution just because of the primary fear how something new will evolve.
Luckily, the majority of real estate owners, at least those we at Spaceflow meet day-to-day, are progressive-thinking professionals. They understand that PropTech is an opportunity. The result lies in how we grasp it.
Myth #2: The market and buildings can develop without PropTech
Our experience is proved by data: 86 percent of respondents of KPMG global PropTech survey see digital and technology innovation as an opportunity.
However, only 34 percent have an enterprise-wide digital strategy and almost half of them rank their organisation with regards to digital/technological innovation as behind the curve.
Real estate remains one of the least disrupted field. But a revolution lurks just around the corner. All it takes to see this is a look at the data: from 2015 to 2016 global investment to PropTech has risen by 36 percent. The question is what form this revolution will take.
Indisputably, new technology will change real estate deeply and those in the sector will have to adapt. On the other hand, sometimes we hear rather pessimistic vision about how technology will be replacing people. We shouldn’t let ourselves worry too much about that.
Myth #3 We need an all-in-one solution
It’s a common myth that more choices and features result in higher satisfaction. The truth is that the more functions a solution integrates, the more difficult it is for an user to comprehend it.
The segmentation of PropTech is the basis for segmentation of products. That’s why there is no one-size-fits-all solution. Nor should there be.
PropTech should be easy to use — for both professionals and for the final users, the tenants. Through segmentation, companies that are experts within their fields of work and can bring the best solution possible.
This article was writen for December 2017 issue of CIJ Magazine and edited in March 2019 for recency.