PropTech Roundtable

A nascent sector, PropTech is on the rise of late — with a range of companies beginning to gain both traction and headlines. With that in mind, we gathered a number of founders, senior leaders, and investors, from both incumbents and disruptors for a spirited roundtable discussion. The following key themes emerged:

1. PropTech represents a huge opportunity

PropTech is currently a particularly attractive opportunity for two key reasons: the size of the market, and the lack of digitisation in the space to date. At a global value of $217 trillion, property represents one of the biggest asset classes on the planet, yet one of the last major sectors to face digital disruption. $2.6 billionwas invested in PropTech globally last year, and whilst this went largely to companies in the US and Asia, the pendulum has swung back towards Europe in 2017.

2. A fragmented ecosystem

One notable aspect of PropTech is the sheer diversity of companies in the space — to the extent that some questioned the usefulness of the term itself. The complexity involved in purchasing (and, to a lesser extent, renting) property, and the differences between consumer and business propositions means that there is an incredibly diverse range of companies falling under the ‘PropTech’ umbrella — including estate agents, aggregators, and FinTech companies.

Similarly, there is fragmentation within these individual points of the value chain, creating friction points for users through their journey. However, this does provide attractive, albeit challenging, opportunities for disruptors who can navigate this fragmented ecosystem and offer seamless customer journeys.

3. Diversity of funding

Unlike many other sectors that have undergone transformative change in recent years, whose financiers have been dominated by venture capital and, to a lesser extent, private equity firms, investors in PropTech are much more diverse. Only a small handful of companies in the room had received venture funding. Investment instead comes from corporates, high net-worth individuals, or from crowdfunding rounds. PropTech firms must not be disheartened at an initial lack of venture capital interest, and instead be ready to be resourceful in the pursuit of funding to help them scale.

4. Second-wave disruption

PropTech has been around for over a decade, and is now seeing a second wind. First-wave disruptors have either fallen by the wayside, such as House Network, or become established, successful companies — ZPG, for example. Those that prospered have played a complementary role in the real estate ecosystem, with services that, for example, aggregated properties from multiple sites in a single location.

The new wave of disruptive PropTech startups, instead of playing nice with the established players, are playing a more directly competitive role; companies such as eMoov and Purplebricks seek to attack, rather than augment, the established franchise estate agent model. Meanwhile, successful first-wave PropTechs are consolidating their positions and expanding their offerings via M&A. ZPG provides a good example: the company has recently acquired both SaaS platform Expert Agent and FS comparison provider Money.co.uk in order to enhance its offerings to estate agents and consumers alike.

5. The future of PropTech: diversifying propositions and changing attitudes

Revenues for companies in real estate track, almost exactly, to transaction volume in the space: the more property sales or rental contracts, the higher a company’s revenues. And although there is a growth in transaction volume amongst younger generations, overall transaction volumes remain steady in an increasingly crowded market.

As such, it is essential for companies to diversify their offerings to both provide ancillary revenues, as well as to add genuine value to the consumer. Companies such as Amazon, Apple, and Uber have reset consumer expectations, and real estate must collectively catch up to reduce the friction and better serve customers.

We would like to thank all those who attended, and look forward to future innovation in this space with great interest.

Companies in attendance: Ask Porter, Beringea, Breather, CreditLadder, eMoov, habito, No Agent, OneDome, Pi Labs, Property Partner, Property.Works, PropTech Consult, Regus, Silicon Valley Bank, Urban Spaces (part of Countrywide), Virtual Commercial, ZPG.