For all London agents of a certain age, do you remember the days when details were delivered daily in a huge pile that needed to be sifted through by the junior, divvied out to the relevant people and then filed in actual filing cabinets?
What about the days when you had to go into an actual bank to make a transfer between two accounts or you had to go into an actual restaurant to collect your takeaway?
Today, you can do all your banking on your phone – and that technology is known as ‘fintech’ – or financial technology. You can also go online and order whatever food you want without having to go into another restaurant, ever. It magically shows up at your front door. That’s called ‘foodtech’.
Now, a new buzzword is gaining traction in the converging worlds of media, property and technology – ‘proptech’ or, as you will have undoubtedly correctly guessed, property technology.
What is Proptech?
Proptech is a fightback. Food delivery, banking, transportation and fashion have embraced tech to quite phenomenal proportions – just look at the market shares of Amazon, Just Eat, Hotels.com, Asos and Uber for example – but the property industry has remained somewhat traditional. The only question is why, when other vintage industries like travel and books have embraced it with staggeringly good results?
The emergence of businesses like Right Move, Zoopla and Airbnb are evidence that the resi side of the industry has been disrupted by young, bright Shoreditch hipsters churning out game-changing tech carrying exactly the same messages – get it done faster, cheaper and with zero hassle – and now it’s the turn of the commercial property industry to finally succumb to change.
It’s worth noting here that agents pounding the streets and proper old-school deal making with a handshake isn’t going away anytime soon, if ever.
Proptech is a fightback, according to the German Prop Tech Initiative, ‘in response to decades of inefficiencies and antiquated processes in the real estate industry.’
What’s Going to Happen?
Commercial property is an industry that’s long overdue for disruption and it’s already happening. As of right now, there’s lots of elbows-out jostling for space in this emerging market and there isn’t a single app, idea of piece of proprietary tech that stands head and shoulders above all but it’s coming. When it does, it could have the potential to fundamentally change how we do business.
An article in a recent Property Week offered up this most incredible of statistics: ‘As much as a third of the world’s commercial real estate is still being managed using spreadsheets; that’s £8.9tn worth of assets controlled solely from Excel with each professional in the chain working in a different silo. Nobody is talking to each other and – without sharing data – people are making suboptimal decisions and spending much of their time gathering information rather than doing the job they’re paid to do.’
All these new tech firms (and they are tech firms, not food delivery firms, travel agents or cab companies) have targeted the key elements of wastefulness and efficiency. It’s far quicker, easier and (often) cheaper to order a cab or dinner from your phone so doesn’t it figure that it would be easier to apply for a mortgage, source development opportunities or find high-quality market data and crucially, stay competitive, in the same way?
The simple fact of the matter is that digital technology drives results faster and more conveniently than traditional methods. A diesel-spewing black cab driver has studied for five years to know every street, landmark and back double in London; an Uber driver has sat-nav and a hybrid.
Is the Revolution Coming from Within?
One argument suggests that commercial property companies know what they want, understand what will make them more productive (and, ergo, more profitable) and will take steps to make it happen. In reality, we all know this isn’t true, or at least generally speaking it isn’t.
The biggest disruptions will (and do) come from tech firms, but tech firms astute enough to talk to agents and developers to find out exactly what will make them more efficient, or cheaper, or faster, or more relevant, and then deliver.
Money is easier than ever to come by, and, says the nasstar.com blog ‘you can tell when a tech sector has reached critical mass when someone sets up a specific VC for the purpose, and Proptech now has Pi Labs, which has been developed specifically to serve eager start-ups. Billed as 'Europe's Leading Proptech VC', the fund has channelled funds into some 16 projects since its inception two years ago.’
Proptech start-ups raised over $1.7bn in 2015, an increase of over 820% on 2011’s numbers and 2016 will surpass that figure easily, so what does the short-term future hold? How are our lives about to be revolutionised?
The Future of Proptech
The simple answer is that no-one quite knows what’s going to happen and who will be the Facebook or Uber Mozart to the Friends Reunited or Hailo Salieri. What is for sure, and experience tells us so is that for every enthusiastic start-up with decent funding and a good idea, another 10 will wither and die until the biggest players hoover up the smaller ones either for data, tech or talent or indeed a combination of all three.
One thing that’s worth reiterating again is that the status quo – the traditional ways of doing business in our industry – will remain the same. Agents will still have to spend days out with investors taking them all over town and someone will still be needed to make a judgement call matching buyer with seller.
One simply cannot remove the human element out of doing business – especially our business – and no-one is proposing that as a viable option. What is happening is that we are seeing the beginnings of a Proptech revolution, one that has the ability to dramatically change the game in ways we simply cannot fathom today.
Will we see a Proptech business emerge with the clout of a Facebook, a Netflix or an Uber? According to the nasstar.com blog ‘There's no doubt the property world has the global spread to offer massive returns to the right project, but whether or not this will happen before another inevitable bursting of a bubble remains to be seen.’
Remaining cautiously optimistic, we think it’s a case of watch this space…
In the meantime, from all at BDG Sparkes Porter, we wish you a happy and healthy New Year.
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