PropTech and its place in the future
There are over 7,000 PropTech businesses around the world. Funding is at an all-time high: from January to July of 2019, funding was just over $10 billion. Yet despite being such a popular sector, the business is still trying to grasp the challenges regarding its position in the future. In terms of digital transformation, whilst companies understand their position in the industry today, comprehending their value proposition in 5, 10, or 15 years down the line is more difficult for them. As they don't yet understand this, they are wrestling with figuring out what solutions they should be looking for in order to help position themselves in that future role. If companies don’t understand where they’re going in the next 10 years, then they can’t recognise what solutions they need to use today. For example, landlords know that sustainability and energy efficiency in buildings are crucial and that they need to drive energy usage down. However, they may not know exactly what the solution is to that problem. Sensors, IoT, big data analytics, and artificial intelligence can all help solve the problem, but the landlord doesn't necessarily know that these PropTech solutions exist. This lack of know-how, coupled with the belief that the status quo doesn’t need to change and that investment in solutions isn't necessary, is a challenge that needs to be addressed. Thinking specifically about that, we can understand why this is receiving so much attention at the minute because it’s a global problem, impacting everybody. We’re all the consumer of the industry as well as an employee and resident, as we spend 85% of our time in buildings. Residential, commercial, retail and industrial sectors all are very close to us as people, so it means something more to us.
The future of digital transformation
The fear of change is where digital transformation comes in, because it plays an important part in understanding the value proposition and how to answer one’s clients. Rather than a fear of innovation in the real estate sector, there is certainly a fear of failure. The real estate industry is somewhat conditioned to succeed and we feel we have a responsibility to shareholders and to the customers, and to our staff. The landscape of building and measuring and learning and failing is therefore completely alien. This is probably one of the biggest challenges that the industry is going to face in the future: in order to make the best decisions, businesses have to learn, to try and test new things, and in terms of failure, they have to figure out how to fail quickly so that they can move on to new product ideas.
We’re all the consumer of the industry as well as an employee and resident, as we spend 85% of our time in buildings. Residential, commercial, retail and industrial sectors all are very close to us as people, so it means something more to us.
Two sectors that don’t speak the same language
As for the relationship between the property sector and PropTech, at the moment the two sides of the business are confronted with a problem: they don’t speak the same language. Traditional businesses are generally slow to change due to bureaucracy, complex management hierarchies and the fear of failure, whereas fast-paced start-ups can change fast but fail hard. As these two cultures collide, a personnel change occurs in the traditional industries; they now often recruit new members of staff from outside of their sector to help them with this transformative journey. It can be predicted that companies that don’t integrate new innovations will slowly lose market shares.
When anticipating the future of the real estate market, one can see how PropTech is playing a considerable role in shaping the landscape. Whether in terms of digital transformation, integrating new technologies, or searching for new innovations, the real estate market should be able to seamlessly integrate PropTech solutions in order to position itself for the future.