PropTech (or property tech) is undoubtedly one of the current buzzwords of the real estate sector. All the new technologies for managing Real Estate construction, purchase, maintenance, investment and administration come under this term, and the PropTech market reached almost US$21 billion in 2021 (according to data from Crunchbase). The industry is expected to continue growing in 2022.
To understand the reality of the PropTech explosion, one must consider the breadth (and therefore complexity) of solutions encompassed within the industry. From (for example) tools that facilitate communication between all parties involved in an investment, to the application of artificial intelligence and data analytics to identify trends. In addition, if we look at the complexity of the Real Estate sector, the technological solutions found for the construction phase (which are further classified as ConTech) are not the same as those applied in the residential, commercial or hotel fields.
According to the PropTech Global Trends 2020 report, under the umbrella of PropTech we find twelve categories: commercial real estate search, vacation and short-term rental, long-term rental / purchase / sale search, home services, insurers, investment portfolio management, property management, IoT at home, property and service management, construction management, tools for real estate agents, and indoor mapping.
According to data from Ascendix, the United States holds the largest number of PropTech companies, with 59.7% of the world total, followed by Europe (27.2%) and Asia (3.5%). In Europe, a breakdown by type shows that B2B leads with 60.14%; in terms of industry, residential is the leader with 55.14%.
The recent development of this sector (according to data from the PropTech Global Trends report, the industry topped almost US$85 billion between 2010 and 2020), is motivated by various causes. Of course, macroeconomic issues are uppermost, but the increasing presence of innovative and easy to implement technologies, cultural changes that raise the capacity of use and appetite of consumers, increasing acceptance by managers, and, of course, the changes generated by the Coronavirus pandemic, have all accelerated the rising PropTech trend.
A growing and consistent investor appetite
All this is reflected in global investment markets.
In Europe, according to Property Week and also citing data from Pitchbook, the European PropTech market registered a record year in 2021, reaching approximately 20% of global investment, including over 200 venture capital investments totalling €3.8 billion (representing a growth of 350% compared to 2020).
In the UK, according to research from VC firm, Pi Labs, PropTech investment reached £1.6 billion (US$1.9billion) in 2021 – more than four times the 2020 total and more than 15 times higher than the total sector investment in 2016 (which was £105 million). The same report notes there were 152 global PropTech investments in 2021, with the total investment worth US$18.2 billion.
Across the pond, Houlihan Lokey’s Q1 2022 PropTech Market Update notes the U.S. market saw US$4.8 billion in investment across 134 investments. In the first three months of 2022, there were 27 financing rounds of over US$50 million, and 12 rounds of over US$100 million.
According to information from Startupeable, the number of VC investments in Latin American PropTech startups grew by 54% between 2018 and 2020 (collating data from Pitchbook), reaching 43 operations in 2020 with a value of US$571 million. This made PropTech the fourth largest industry of 2020 (by rounds raised), and the market hasn’t stopped since. Brazilian website, Startups, reported that SlingHub’s May 2022 market report noted that companies providing technology for the real estate market raised $367 million across nine rounds in the month – producing 3 LATAM PropTech unicorns: Habi (from Colombia), Dock (from Brazil -) and Nowports (from Mexico).
So, what are some of the most prominent uses of PropTech and where will it have the greatest impact? Let’s take a look.