Apr 15, 2021
By Oliver Ridgwell

Property Technology (PropTech) – The Ever-Changing Market

Earlier today, I spoke with a colleague and reflected on the sheer volume of funding being driven into the PropTech Marketplace. During the conversation, I was asked a simple question which, I believe, has a very complex answer;

How does this all shake out?

The context & intent of the question is important.

My colleague and I reflected on the volume of PropTech acquisitions that have happened over the last 12-24 months while also considering potential acquisitions we believe will occur soon. Our aim was to understand what the PropTech landscape will look like in the short, medium, and long term.

By way of background, PropTech startups raised circa $43 Bn between 2012 and 2017.

In 2020 alone, the Center for Real Estate Technology & Innovation (CRETI) identified that $23.8 Bn was invested in PropTech startups by venture capital funds worldwide. That’s more than half of the figure invested in the five years from 2012 to 2017, and these investments were made in the middle of a pandemic that profoundly impacted the use & occupancy of real estate globally.

While the 2020 figure represents a 25% decrease from 2019 levels, all current signs point to the fact that the trend is for PropTech investment levels to continue to rise.

With such a dynamic market drawing significant investment, I found answering the question “Where do you see this landing?” quite thought-provoking.

I have twice been part of an organization that has been acquired, so I felt I could weigh up my experience from this with the outcomes customers are looking for from PropTech. My aim is to understand if the customers benefit from such activity as ultimately I feel it will be the customer’s expectations and requirements that will shape the market in the coming years.

Organizations purchase & Implement PropTech to achieve a wide range of outcomes, such as:

  • Reduce the cost of Ownership / Operations
  • Establish and deliver on a defined real estate strategy
  • Improve Workspace environment for employees and customers
  • Drive productivity

The many solutions available in the PropTech market claim to deliver on one or many of these desired outcomes.

Now the intent of the original question in this blog becomes, will the various acquisitions improve the outcomes for clients?

Acquisitions can consolidate multiple solutions under one business, creating a more compelling functional offering from one vendor. On the face of it, this is an attractive proposition. However, there are many examples across the PropTech market where products owned by the same business are sold as one solution but the reality is that they as disparate solutions – with minimal integration and even separate databases. This undermines the core reason for the investment.

When evaluating your next solution, I recommend considering the application architecture in detail and being specific about any integration required between the functions your business requires.

Beyond the simple lack of integration, acquisitions require follow on investment to unify solutions and technology. Not delivering on this leaves the PropTech business, and ultimately their clients, with multiple technologies which need to be supported, upgraded and developed.

I have first-hand experience of solutions not being developed and maintained; this ultimately leads to tech debt and the solutions being put into end of life (or simply hold and maintain cycles). These outcomes cause friction for clients and require reinvestment in technology that may have been unplanned.

Having said all of this, PropTech will continue to drive investment with acquisitions and mergers continuing to take place. Having been on the vendor side of this equation my advice is to carefully consider the technology a solution is designed and built on, even for SaaS solutions.

For example, Nuvolo is built on the NOW platform and is directing their Series C funding into product development, not acquisition.

Clients can remain confident that the Nuvolo solution will remain a Connected Workplace solution that is market-leading and built in modern technology with a single truly integrated platform.

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About the Author

Oliver has 12 years of experience working with Enterprise Asset Management (EAM) and Integrated Workplace Management Systems (IWMS) across North America, EMEA, and APAC. His experience includes engagement with a variety of industries including Financial Services, Healthcare, Utilities, Government, Retail, Transportation, and Service providers. Through these engagements, Oliver aims to ensure organizations understand how the tactical functions of solutions support delivery of strategic real estate objectives appropriate to each specific business and industry vertical. In his spare time, Oliver enjoys travel, Formula 1, Football (Soccer), and Golf.