HexGn has researched the investments that have been made in the proptech startups over more than a decade. Unlike the period around 2008-2010 when proptech startups would take close to 3 years to raise their first seed investment, the startups that have been founded in 2016-2018 are taking around a year to raise their earliest investment. With investors bullish about the rise of proptech and entrepreneurs upbeat about being able to commercialize technology innovations, the indicator rotates back to the users to seek their sentiments.
As per the Global PropTech Time 2019 conducted by HexGn, most of the users, at different stages in the real estate lifecycle, consider proptech to be either at infancy, or poised to boom soon. A deep dive reveals that 50% of Asset Managers consider that proptech in their segment would boom soon, while majority of Consultants/ Advisors feel that proptech is still in its infancy. Around 42% of the Construction Managers feel that there will be rise in proptech solutions in the construction field, while only about 30%-35% of Brokers, Developers, Investors and Fund Managers are looking forward to the quick rise of proptech in their respective segments.
While almost 72% of the According to the Global PropTech Time 2019 Survey respondents acknowledge that proptech will impact the real estate industry in the future, it is crucial to understand how the industry sees proptech from the perspective of a business enabler. The key to the successful adoption of technology in the industry would depend not only on what value it offers, but also on what value is perceived by those who would use or adopt proptech. HexGn’s survey revealed that close to 80% of the respondents consider proptech as an opportunity that is yet to be fully tapped. More than 29% of the respondents consider proptech as a means to grow their business. This includes the use of tech to offer new products which are conventionally difficult to create, attracting newer customer segments by being able to offer products as per their taste and price points, and also by being able to enter new geographies without having to incur steep incline in the capital costs.The regulatory regime across the world is being modified to uphold client interest as supreme and real estate players are turning to proptech for support in this endeavor. More than 26% of the respondents opine that proptech is an opportunity to improve client service in the industry.
The increasing influence of regulations and the changing preference of ownership are among the many factors towards decreasing profits. Real Estate companies have been plagued by inefficient processes and the industry feels very strongly that proptech can weed out these inefficiencies and thus contribute towards increasing the bottom line.
Although the industry is optimistic regarding the upside, one cannot ignore the 20% of the representative population that considers proptech to negatively impact their business. This is not primarily due to lack of intent, but more due to the lack of a plan for technology adoption, no budgeting for the same, and being unsure of how to handle the changes in the human resource requirement.
While the industry is in general optimistic about proptech being a key contributor to the industry growth, it is important to understand the need of each player in the real estate lifecycle. This would help proptech players to understand the problems faced by the respective stakeholders and design value propositions to cater to them. As a result the product development journey from ideation to market would be quicker and wastage would be reduced.
Asset Management
The Asset Management segment has been undergoing continuous changes in terms of how they function, as new tech-driven applications debut within it. IoT & sensors and Data Analytics have aided in propelling the asset management services. Almost 70% of the respondents from this segment believe that drones hold a strong potential in impacting their business in the next five years. Aerial imaging using drones will paved the way for better property appraisal and predictive maintenance. 60% of the responses also titled towards the view that robotics will create huge ripples in this segment among the other technologies. Companies seek to explore the use of robotics for interacting with clients in the present day, apart from its use to perform repetitive processes. Both AI & Big Data and IoT & Sensor technologies also have been vouched for to create a strong impact, with 56% of respondents backing these as potential game changers in the industry. This is followed by 3D printing.
According to the Global PropTech Time 2019 Survey by HexGn, around 56% of Asset Managers have confirmed that they have a documented plan to leverage technology. 43% of this group state that this is a company-wide plan. Around 53% of the respondents have confirmed that they have already allocated budget to start the implementation of this plan. Additionally 26% of Asset Managers are in the process of creating a technology adoption plan. Overall, almost 63% of this segment are very actively looking out to collaborate with proptech players. The Asset Managers, therefore, are the most ready to adopt technology, as per HexGn’s survey. More than 63% of Asset Managers seek proptech solution in Leasing, and this is not surprising to note. The segment is also looking for solutions to better manage their properties and Facility Management solutions figures next list of wants. Refurbishment of existing properties is the next area where Asset Managers are looking for technology intervention with 50% of the respondents keen to adopt proptech solutions
Advisors/ Consultants
Advisors & Consultants have led the industry in the use of data and as a natural progression they are looking at solutions based on AI, for their field. Almost 57% from this group of respondents leaned towards AI and Big Data as an impactful technology in the next five years. Consultant are almost equally also keen about New Building Materials and Augmented & Virtual Reality with 53% of the respondents looking for associated products. Blockchain ranks next with 50% of Consultants considering it a game-changer in their segment.
According to the Global PropTech Time 2019 Survey by HexGn, more than 57% of Advisors & Consultants have a documented plan to adopt technology. While 31% have adopted this plan company-wide, 26% have a department level plan. This in spite, around 56% of this segment have allocated a budget for using proptech solutions. Around 23% of Advisors & Consultants have confirmed that they would have a documented plan for tech adoption ready in the next 6-7 months. However, the active search for proptech solutions has been commenced by almost 60% of the segment. The Advisors/ Consultants group is thereby ranked a close second to the Asset Managers, on readiness to adopt technology.
According to the Global PropTech Time 2019 Survey by HexGn, about 54% of the advisors look forward to sales and leasing application, almost 48% of the design consultants look forward to Planning & Design applications to support their business. Land Appraisals, Acquisitions & Permissions is another area where Advisors & Consultants are seeking proptech solutions.
Construction
According to the Global PropTech Time 2019 Survey by HexGn, close to 60% of the respondents from the Construction field vouched for IoT & Sensor technology to influence the segment. The other categories of technology, that around 53% stakeholders from the segment believed will create a large impact, are Robotics and New Building Materials. Both these technologies cater very directly to the segment of real estate construction; the former being highly sought after as well as the most resisted one evoking a fear of job losses over time. Drones follow with around 48% of the respondents seeking solutions based on this technology.
Around 49% of the Construction segment respondents are ready with a documented plan for technology adoption. This representative group is split almost equally into 24% who have a company-wide plan, and 25% who have a department level plan. However, out of the remaining 51%, only 19% are in the process of preparing a tech adoption plan, while the remaining 32% are still in the ‘No Plan’ stage. Interestingly, 47% of the respondent population have already allocated a budget for moving ahead in executing their tech adoption targets. Among those who have made some progress in this aspect, 61% are actively seeking to engage with proptech players, even if they are still trying to finalize their tech adoption way forward. HexGn ranks this segment third in their readiness for tech infusion. The Construction segment is primarily looking at applications for the construction management, fit-out and refurbishment.
Brokers / Agency
The Brokerage segment opines that IoT & Sensors, AI and Robotics will have the highest impact on their area of work. According to the Global PropTech Time 2019 Survey by HexGn, almost 56% vote for IoT & Sensors, around 50% of the respondents place their expectation on AI and Robotics. Surprisingly, Augmented & Virtual Reality, one of the most impactful technologies that has helped Brokers and real estate Agencies drive sales and marketing is seeing only 33% of the respondents betting on it as a game changer of the future. One of the reasons could be that the technology is already in use by some companies in this segment.
According to the Global PropTech Time 2019 Survey by HexGn, almost 60% of the Brokerage segment has a documented plan for tech adoption, either at a company level, or at a department level, with another 22% in the process of drafting and finalizing a plan. This is by far the highest among all segments in the real estate life cycle. In this segment around 51% of the respondents confirmed that they have allocated a budget to implement proptech solutions. However, less than 46% of the respondents in this segment are actively looking to engage with technology partners and proptech players. The Brokerage segment is thus pegged back to fourth on the tech adoption readiness rank, but with a lot of the ground work done this segment can bounce forward in the race to get tech driven.
The Brokerage segment is primarily seeking proptech solution for various facets of the sales and leasing business, while also wishing to explore fit-out solutions for the annuity businesses in their firms.
Developers
Developers are rooting for New Building Materials and about 63% of the developers according to the Global PropTech Time 2019 Survey by HexGn, feel that innovative building technologies will make a large difference in the upcoming years within the real estate industry. New building materials has a lot of real estate industry incumbents placing their bets on to help solve the issue of expensive materials or for the development of green buildings which reflect the use of sustainable practices in every aspect of the construction and maintenance. Closely following is Drones and 60% of respondents lean towards this technology to make a large splash. Other technologies that a significant share of developers who took the survey think will make elevate the real industry are IoT & sensors and AI & Big Data, both of which will help cater to the steadily growing demand for smart buildings. Robotics technology finds the least takers among developers.
The Developer group has around 47% respondents who confirmed that they had a documented plan for technology infusion into the business. Almost another 33% confirmed that they are working in preparing such a plan. Almost 46% of the respondents have allocated a budget to execute this plan, however, almost 48% are already looking out to engage with tech partners. The Developer segment is rated fifth on the on the tech adoption readiness.
Developers are looking for proptech solutions in Sales & Leasing and Planning & Design, both of which were voted for by more than 56% of respondents of the Global PropTech Time 2019 survey. Around a similar number of Developers seek solutions in Fit-out & Refurbishment. Construction and Property Management figure next, for which Developers are looking towards tech solutions.
Investor / Lender
A majority of the respondents from the investor/ lender group are backing Augmented & Virtual Reality applications when it comes to the potential for disrupting the real estate market. AR/ VR has proved promising so far driving sales for real estate. A whopping 80% of those in the Investor/ Lender category are looking at AR/ VR to change the real estate landscape further. Closely following is the new building materials segment, which 70% of the respondents in this category feel that will have a positive impact on the industry. Based on the purpose they serve (sustainability, stronger structure, and cost saving among the others), the new and innovative building materials are finding a lot of takers in the industry with end users of every scale looking forward to it being a part of properties built on such products. 50% of the responses also indicated towards the likeliness for IoT & Sensors and Robotics technologies to become an important player in the industry.
According to the Global PropTech Time 2019 Survey by HexGn, Only 30% of Investors/ Lenders have a documented plan for technology adoption in their business, while another 30% are working on a plan for the same. Interestingly, almost 60% of the segment has started looking to engage with technology partners. It is estimated that the other 40% with no tech adoption plan, though highest among all segment, will join soon. The Investor/ Lender group is therefore ranked sixth on tech adoption readiness. Investor/ Lender are looking out for proptech solutions in Land Appraisal, Acquisitions & Permissions, primarily from a risk assessment perspective.
Owner/ Fund Manager
According to the Global PropTech Time 2019 Survey by HexGn, about 60% of the stakeholders in this category believe that AI & Big Data technologies will be seen making a high impact in the real estate industry. It is particularly important in the Fund Management segment which his increasingly becoming tech enabled and data driven. Big Data & AI hold the potential to streamline fund management processes by contributing to make all decision-making processes more efficient. 55% of these respondents also placed their bet on 3D Printing technologies to be the next big thing that will re-shape the real estate industry in the coming years. Robotics and AR/ VR finds the support of 53% of the respondents and is among the top technologies that owners/fund managers think will influence the real estate industry in the upcoming years.
While almost 55% of Fund Manager have confirmed of a documented plan in their firms, only 37% of the segment is actively looking for technology solution. The Fund Management segment is thus ranked back to seventh in the tech adoption readiness rank, but with a significant part of the segment already with a plan or preparing one, this segment surge ahead in the tech adoption scale.