Nadeem Shaikh argues that PropTech is a booming trend in the property industry that is part of the wider digital transformation of the way business is done as a whole. It can be seen to have started to grow from 2012 onwards, and there are currently 4 $1+ billion companies on the market. Many PropTech business that are now globally influential began as individual startups, and the PropTech model is one that should be used as a blueprint by anyone with ambition. It works not just by modernising services, but by redefining what the services of the property industry can be, and it is highly significant that PropTech has been so successful by never standing still. The centralisation of technology in PropTech allows constant development and innovation, with a constant drive to build that the interconnectedness it provides has spurred.
PropTech companies work across a wide sector of the property industry, looking to grow not just in the commercial side of it, but in construction, future planning and in home economy. The aim is to create a new model of doing business, creating a self-sustaining cycle of change in the industry. There are a number of specific submarkets that have come out of the PropTech growth over the last few years alongside the development of the industry itself. Home Building, ‘Smart’ cities and buildings and the shared economy have all seen significant growth in themselves, creating holistic links across the wider sector and prompting further offshoots in development.
PropTech is a very recent development, first becoming significant in 2012. The relatively sharp rise in investment into startups over the next few years is notable. In 2013, the total PropTech disclosed funding was $459 million, and this had more than doubled in just a year to $1,148 million by the end of 2014. This is both the best way of demonstrating the impact of PropTech on the established property industry, with a scramble to not miss out, and the success of it as a development in the ideas of industry, not merely as a service provider. This is where the real significance of PropTech lies, not just in its potential for modernisation, but in its potential for creation.
What this means is simple. A PropTech service could be providing a much more profitable algorithm for targeting house sales, or it could be presenting a model for a new shared-working office. It is not just in the obvious commercial acts of the property industry that PropTech affects, but in the wider way of working and doing business, in any financial sector, where the potential for real change lies. There has been a much wider trend recently of looking to change the nature of work, and PropTech has grown into that, creating efficiency and cutting costs by making technology do the work. It can also be seen that in the concentration of several services into one PropTech service, how many startups broke into the market, efficiency comes not only by being cheaper but in reducing the physical space and people needed to work. It is not just a digitalisation of services, but a digitalisation of industry.
Ultimately, PropTech is the future of the property industry. It is important not to overstate the size of PropTech at the current time, but it is vital to look at the growth rate both real and projected. It is estimated that PropTech businesses currently make up 5% of the market, since 2012. It is estimate they will make up 20% of the market by 2020. This is the strength of PropTech, not just seeking to improve what is currently there, but working towards a connectivity in the property industry that will make it something new. It is using technology to change the nature of business.