Technology has been revolutionising the way that we live and work for decades, yet in relative terms there has been little impact on the traditional world of real estate. When we compare this with the financial sector’s openness to fintech, real estate has stood as a bastion of resistance. What is it about the property industry that has made it slow to adopt proptech? And will the year ahead see a greater move toward a more digitised approach?
Why the resistance?
With any form of commercial change, it is the economics behind an idea that will determine its success. Our recent proptech survey ‘Creating connections’ taught us that while 92% of all participants agreed that technology can help address the key challenges facing the property sector, there is still a long way to go before the benefits of tech will be optimised.
In real estate, the market is focused on the performance of property over a 20-30 year lifecycle and with a short term outlook on collecting rents. This focus on value ‘per square footage’ through the lifetime of a property is often at the expense of consumer/end-user experience. Real estate owners value their fixed assets under management and will avoid taking risks across their portfolio.
Technology on the other hand is a relatively young industry. Their mantra is to ‘fail first, learn fast’ with a highly consumer-centric, user experience business model. This feels like the opposite end of the spectrum from the traditional real estate sector.
The disconnect between the real estate and tech industries in terms of culture and understanding each other’s technical needs is a big barrier to proptech. The other is the mind-set within some property companies at the board level, which often fails to understand the need to bring in the appropriate tech expertise, to the boardroom and to every stage of decision making. Despite this, there are examples of practical proptech applications accelerating the speed of change.