PropTech arrived at a rocket’s speed and shows no sign of slowing down. Rewind a few years, and you would have seen only a handful of ambitious new organisations leading the way and attempting a hard sell of their innovative services to reluctant property companies. Today, PropTech is part of the daily life of many lettings professionals - especially in a post-Covid world.
There is (intentionally) no official definition. However, Savills classifies it as: "Technology that is aimed at the real estate industry and attempts to change the way we buy, sell, finance and manage property."
Whatever your level of interaction with PropTech so far, there's no doubt that the solutions it can provide are increasing in popularity - and its impressive growth can often be chalked up to three things: the growth of the internet, the need to reform, and an influx of large investment.
Throughout the 1990s and the early 2000s, the property market was thriving. Construction was booming and property developers had no problems offloading their supply through high street agents, who were becoming more and more profitable thanks to successful business models that matched the needs of the market.
Then, the internet as we know it today was born. The internet changed how the world operated and conducted its business.
In every industry you can find examples of companies who capitalised on the opportunities that were now available to them by adapting their services to changing customer needs - and many of them now count themselves amongst the largest and most profitable businesses around today.
The first to do so in property within the UK was Rightmove in 2000, which was founded by four of the top UK estate agencies (Countrywide, Connells, Halifax and Sun Alliance).
People no longer had to travel to High Street offices to look for new places to live, and the way the customer interacted with the industry instantly changed forever.
With this lucrative trend, online property listing portals popped up all around the world, including Zillow and Trulia in the United States, PropertyGuru and gohome.com.hk in Asia and, in 2007, Zoopla arrived to challenge Rightmove here in the UK.
The PropTech revolution had officially begun, and its wheels were truly set in motion.
"The opportunity is driven not only by the size of the industry and its lack of tech adoption, but also by industry practices plagued by inefficient processes and unnecessary transactional costs defended by self-interested professionals and institutions," says Professor Andrew Baum, Chairman of Property Funds Research.
More recently and under a glaring spotlight, PropTech has also gained the attention of government bodies and the general public.
Why? For the same reason real estate is the world's largest asset: having a place to live is declared a basic need.
Additionally, as other industries evolve and the power of technology becomes more influential within them, the voices of those interacting with the property industry become louder and the pressure on it to adapt becomes amplified.
For these reasons, we have seen a boom in the number of technology companies from a handful to thousands, all trying to disrupt the property industry.
Many of these are supported by some of the largest investors and property companies in the world - and Covid-19 has only accelerated this growth.
Despite a dip in investments across the globe in 2020 when the pandemic struck, the sector is now booming as the property industry recognised the benefit of having systems in place to facilitate remote and hybrid working models in the wake of the pandemic.
The possibility of the world’s largest asset - property - performing at maximum efficiency is extremely appealing to investors all over the world, and they know technology is the most direct route to this lucrative goal.
Incubators and venture capital firms have emerged that are solely and relentlessly focused on the success of PropTech.
London-based incubator PiLabs and property fund LifeVentures are two of many examples of larger companies branching off and specialising in bringing technology to property.
The Center for Real Estate Technology & Innovation reported that $32 billion in private venture capital was invested in real estate tech companies in 2021 - an increase of 28% year on year. Residential tech companies received the lion's share, at 49% of the global funding.
PropTech investment is evolving too, as venture capital investments shifted from early-stage to mid and late-stage companies throughout 2021.
Additionally, residential real estate companies are jumping on board and investing directly as well, with CBRE acquiring Pathzz in 2021, as just one example.
“We’re seeing the maturation of proptech, which is really encouraging, and you also have larger companies in the ecosystem who can be potential buyers of companies, which is huge,” says Lauren Weston, an associate at Thomvest Ventures in a 2022 Crunchbase article.
High street agents should see technological advancement as a positive. With the largest global and UK agencies accepting, adopting, and innovating their offerings through technology, change is no longer just a suggestion but a firm reality for the modern day letting or estate agent.
There are many classic examples of prominent companies ignoring the power of technology and, ultimately, losing their business as a result - just think of Blockbuster and Kodak.
However - and encouragingly - there are even more examples of traditional and long-standing companies embracing technology and thriving as a result. One example is National Geographic, founded over 130 years ago.
National Geographic battled falling print-based subscriptions in the late 2000s as the rise of the internet made media and content easily available online.
By diversifying their media streams, investing in a mobile-friendly website and implementing an extensive social media plan, National Geographic turned a dying brand into a thriving digital and print company.
Letting agents are in a favourable position as they engage with their customers directly and daily. They can make the most of this position by regularly consulting with the people they provide a service to, and asking how they can improve their offering.
Furthermore, the UK is now well-supported by leading technology companies wanting to help agencies adapt to a changing industry and maximise their efficiency.
You may not have to change in order to survive, but it’s in your best interest to speak to your customers and explore what technology - such as a lettings platform like Goodlord - could do for your business.
Consumer habits have changed, and, just like Rightmove transformed the way we search for new properties at the turn of the millennium, we should accept that the business model of traditional letting agents no longer meets the needs of the market. What are you doing to adapt?
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