Future of Proptech 2019

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R A C O N T E U R . N E T 13 Investing in proptech is an exciting opportunity, but problems facing companies such as WeWork are causing concern. So what does proptech have to offer? Mr Ross sees this as a genera- tional issue. "Privacy is a challenge for the sector, but that's likely to change," he says. "The average 15 year old doesn't care because who their data is shared with is very transparent. In-built transparency and the power to choose will play a major role in acceptance." Olga Turischeva, partner at ven - ture capital firm RTP Global, says there are other risks to invest- ment in the sector, caused by the slow speed of proptech adoption and investment multiples. But she expects markets to stabilise over the next 12 months. Another challenge can be get- ting traditional real estate funds to understand the implications of the technology. One way to identify value and address risk is to work out where you want to invest, not simply the sectors, such as travel, tourism, hospitality, commercial or residential, but precisely where in the value chain. Is it in automat - ing an existing service, cutting out the middleman, increasing effi- ciency or in creating a new way to do business? In the end, successful investing in proptech will be driven by the size of the market and an understand- ing of the opportunities available. Proptech is going to transform the sector. The need to enable real estate owners to adapt to market trends and consumer expectations means overall tech growth will con- tinue. What makes proptech excit- ing is that, as Mr Dewerpe points out: "It's not a choice any more. At $230 trillion, real estate constitutes more than half the world's assets and, one way or another, it affects everyone on the planet." The ways in which people live and work are changing, and proptech enables those changes. The most obvious of these is shared working and shared living. In-depth data ana- lytics and the automation of building and asset management provides the framework for new business models and new opportunities. James Lavery, marketing director at MRI Software, says: "Proptech allows everyone from a small prop- erty agent through to a major inter- national investor to gain action- able insight into their operations and holdings, helping inform busi- ness strategies and improve their day-to-day activities." The complexity of the UK tenancy system has made it difficult to find short-term lets. As the UK work- force becomes more flexible, com- panies such as Tipi and Lavanda cut through the difficulties, avoid- ing complex documentation or hefty deposits. For landlords managing proper- ties, platforms such as Plentific are a boon. By providing access to a net- work of maintenance providers, it enables landlords to keep their costs down while reacting swiftly to ten- ants' needs, benefiting both sides of the equation. For investors, information in the real estate market has been noto- riously hard to bring together, so REalyse and Datcha provide data on registered residential and commercial property which helps those with money to invest assess deals and trends. Proptech is not limited to start- ups. A survey by Altus Group reported two fifths of real estate firms are already using automation for benchmarking and performance analysis, and 16 per cent are using artificial intelligence for account- ing and property management. he real estate sector is the largest asset class in the world and the scope for achieving efficiencies through introducing innovative technology is a major market opportunity. Investing in proptech is about employing tech to minimise the complexity and delays that seem integral to real estate dealings. And there is an appetite; investment in proptech has grown from $20 mil - lion in 2008 to $4 billion in 2018. The fall of WeWork, however, from multi-billion-dollar funded unicorn to job cuts in a matter of weeks, has the real estate sector worried; in London it's one of the city's largest landlords. James Dearsley, co-founder of Unissu, says WeWork is a case apart. "It's not a proptech firm. It's a technology-enabled real estate firm because their innovation does not come from technology, it comes in the form of a disruptive business model," he says. So how can proptech investors ben - efit from real estate? Rupert Parker, head of future-proofing at Avison Young, says: "You add to the return on investment of a building by improving the services and service provision can be improved with the right kinds of technology." It's this growth opportunity that technology provides and drives the market. Danii Brown/Shutterstock T Felicia Jackson Gregory Dewerpe, founder of A/O Proptech, says we're now see- ing big real estate companies "get- ting investor pressure on efficien- cies whether that's in property and asset management or on transac- tional efficiency". Building's today may be dumb containers, but tomorrow they'll be smart. Philip Ross, chief exec- utive of Cordless Group, says: "It's about the building itself becoming intelligent and about people carry- ing smart devices enabling them to control their experience, interact with their environment and be pro- vided with new experiences." Of course, concerns about market volatility exist, as they always do when new markets are growing rap- idly. Privacy concerns have been raised, where people may not want biometric data to be used to track where, and if, they are working. Is the proptech bubble set to burst? Proptech allows everyone to gain actionable insight into their operations and holdings I N V E S T I N G Deloitte 2019 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 0 1 1 1 1 2 3 6 7 13 18 VALUE OF FUNDR AISING BY PROP TECH COMPANIES WORLDWIDE Value of investments ($bn)

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