Real estate tech – aka RETech or PropTech – had a moment during the pandemic, but what is the outlook now?
Battling to overcome dampened trade in 2020 and 2021, the industry was forced by social distancing and increased working from home (WFH) to accelerate its digital transformation, to keep functioning at a distance.
Meanwhile, venture capitalist (VC) firms pumped $32 billion into the sector in 2021, driven by ongoing growth in new tech, a rapidly growing user base seeking higher margins, and a constant inflow of capital at all stages.
A cooler period has followed so far in 2022, dominated by lower public equity markets, higher inflation and interest rates, the war in Ukraine, domestic unrest, and a return to the office (with some resistance by employees).
However, there’s been a divergence: incumbent PropTech stocks were down by ‘just’ 40% while new entrants fell by 65%. Analysts predict consolidation will drive the tech industry in the short to medium term, with investors looking for predictable returns from best-in-class solutions instead of making riskier end-to-end platform plays.
Despite the fall in PropTech stocks, total VC funding is on track to match or exceed last year’s. Some $13.1bn was invested in PropTech companies in the first half of 2022 – a 5.65% increase over H1 2021.
Is this positivity filtering through to real estate principals?
According to the National Association of REALTORS’ 2022 Member Profile, REALTORS are making use of multiple technological platforms – but their usage was mostly for client outreach and market research, not ongoing service delivery. Upwards of 70% reported using multiple listing service (MLS) software and electronic contracts at least a few times a week, but 41% rarely or never used CRM software, while 73% don’t yet use property management PropTech.
Despite that, PropTech platform Unissu reports that 21% of residential rental PropTech companies focus on property management and a further 8% on managing rents.
James Dearsley, co-founder, noted confusion among real estate professionals about the benefits of PropTech. “On the other hand, there is a dawning realization that the sector’s primary issues will only be solved by technological innovation.”
The challenge for the industry is now to use the growing range of available PropTech to deliver better, more efficient service throughout the customer life cycle. Those that move first could secure an important competitive advantage.
More PropTech headlines
PropTech market predicted to be valued at $86.5bn by 2032 – GlobeNewswire