It is broadly recognised that PropTech is in its third phase. This raises the question, what's next for this virgin sector?
“PropTech” is evidently going through a renaissance and is becoming a highly desirable investment opportunity for both Venture Capitalists and Angels. Forbes has put PropTech investment in 2018 at $12bn globally versus $1.9bn in 2017 and $518m in 2013.
In the U.K SEIS and EIS (Seed & Enterprise Investment Scheme) has undoubtedly helped get the sector off the ground but does not account for all the hype and interest. This leads to the question whether this will be the next dot-com bubble or mania such as cryptocurrencies and blockchain. In the summer of 2017 I enjoyed lunch with an influential player within the alternative finance sector, and he told me at the time he could raise money for margarine yogurts if you attached the word blockchain to the offering ! Is PropTech going the same way?
With my background firmly rooted in the real estate rather than the technology camp, I know of companies offering solutions to improve real estate that which I believe are ineffective and unrealistic. They are often solving problems that simply don’t exist. These Ideas are concocted by people who either lack the sector experience or fail acknowledge the subtle nuances of the industry. To view real estate as one industry rather than many symbiotic interlinking sub sectors is surely misguided. However I have seen some ideas that are bang on the money and are now being adopted en masse.
If we agree for the sake of this article that:
PropTech 1.0 was the online listing property portals such as PrimeLocation, RightMove, Zoopla and FindAProperty.
PropTech 2.0 was the CRM systems used by estate agents such as Jupix and Reapit. Digital Signatures and online booking sites such as AirBnB. I’m tempted to include the early days of open data and Online/Hybrid agencies but for me they came later.
PropTech 3.0 is ongoing but consists of expansive open data platforms such as Sprift and Datscha, PlaceTech such as Matterport and Blockchain/tokenizing real estate assets such as Hip.property. We also saw the rapid scaling (and often decline) of online estate agents and hybrids such as PurpleBricks and Emoov.
My experience of founding and scaling a PropTech 3.0 SSAS (Sprift - an early property data aggregation platform), has led me to the conclusion that big data and algorithms are the future of PropTech, whilst PlaceTech can help visualise and make buildings sexy or easier to view.
My view is that PropTech 4.0 will feature companies such as Nested who use their place data and algorithms to make an instant buyout offer for properties, resulting in maximum internal profitability. Companies like Oparo, who use big data and algorithms to make informed, intelligent investment decisions U.K. wide, are the future. Scaling a PropTech on a subscription basis is a long hard, labour intensive slog with low value tickets.
I do not believe that PropTech has the potential to be a mania, as it is underwritten by one of the largest asset classes, and one of the slowest assets to innovate. It does however have the potential to be a bubble. Using data and information for an edge to trade or invest, will produce the highest returns which is why in my opinion, the application of big data and algorithms for real estate acquisition, optimisation and investment is the next revolution in PropTech. I’m very proud that Oparo is at the forefront of this latest evolution in the UK.
Toby Wilde is the founder of Oparo, the first Algorithm driven real estate investment firm. A founding partner of Sprift.com the property data platform, a Property Developer and ex Estate Agent. Toby is always happy to share ideas on PropTech, talk Oparo or real estate in general, please feel free to contact.