PropTech 3.0 Report Review
Our Response to Professor Andrew Baum’s PropTech 3.0 Report
Professor Andrew Baum revealed his report “PropTech 3.0: The Future of Real Estate at the offices of TH Real Estate on 9 May 2017. PropTech Consult Partner James Dearsley joined the panel and subsequently recorded a podcast with Professor Baum, which you can hear below:
The report attempts to categorise the hundreds of PropTech businesses which exist today into three verticals:
- Real Estate Fintech;
- Shared Economy; and
- Smart Real Estate
Which are driven by three horizontals:
- Transactions/marketplace; and
We welcome a rigorous academic approach to understanding the PropTech sector. The collection of accurate data can only assist property companies and investors make better informed decisions when it comes to their digital transformation strategies, particularly where those intersect with PropTech.
However, we do have some suggestions for future research in the sector which we think will better reflect the PropTech landscape and ensure the research is even more helpful. Our recommendations are as follows:
- Three verticals are not enough. While James’ infographic undoubtedly contains too may sub-categories, this attempt to reduce the number to three seems too limiting. Two problems arise from this in our view:
- The term PropTech is not yet widely understood, particularly amongst the property industry and it is important that it is maintained as a broad categorisation for marketing purposes; and
- Categorising companies like Matterport and Rightmove as “Real Estate Fintech” is unlikely to be intuitively understood even by those who do understand the wider PropTech space.
- We don’t think that using data from accelerator applications is representative of PropTech businesses. The very nature of the stage that many of these “businesses” are at – namely applying for accelerator programmes – gives rise to the likely event that most of them are simply no more than ideas. In addition, accelerators give the opportunity for likeminded potential founders to join forces. In such scenarios, two separate individuals with similar ideas may converge two business ideas into one business. This could skew the data.Therefore, we would suggest utilising an international data set of trading companies rather than a UK focused data set of ideas and trading companies.
- Absent from the report is attitudes to PropTech amongst property industry businesses and key influencers. Analysing PropTech in isolation from the wider issue facing the property industry – namely digital transformation – reduces the value of the research and means it cannot be placed in context of the industry that is customer, supplier and partner to so many of the businesses discussed in the report.
- We consider that there are two very distinct drivers which are not discussed in depth and those are related to the different user or customer base of PropTech businesses.The first driver is the consumer trend towards adoption of tech throughout their lives represented by B2C PropTech businesses which serve consumer problems.The second driver is the recognition that B2B property solutions could be enormously improved, both internally through business efficiencies and externally through new products for business customers.In our opinion, the attitudes and ultimately viability of these two distinct PropTech solutions are markedly different and we would very much like to see this explored in future work.
Overall, the report is a very helpful contribution to the wider discussion and we are grateful to all who gave up their time to contribute in support of the industry as a whole.
What did you think of the report? Please let us have your views and suggestions in the comments box.