Asymmetric Competition in Property and PropTech

For many years, swathes of PropTech businesses around the world – with a heavy focus in London – have been trying to educate the property industry on the opportunities presented to it through new technology solutions.

More recently, the debate has moved on from the rise of PropTech to the wider digital transformation of the industry. We are now discussing both the symptom – PropTech – and the cause – digital transformation.

This of course is a double edged sword as behind every new revenue stream or cost saving opportunity presented by PropTech businesses is the implicit threat that those property businesses will ultimately face competition from the success of those same PropTech businesses. To date, however, the property industry has been slow to adopt or innovate. For any number of reasons, these threats are not seemingly perceived as urgent.

We at PropTech Consult have gone on the record many times to promote collaboration between technology and property businesses and we are active in the UK PropTech Association whose mission is exactly that. However, we also watch with great interest for activity in adjacent markets and consider how this may impact the dynamic explained above.

We think there are urgent threats in other sectors that property firms must recognise and respond to immediately. So many parties have vested interests in the built environment, it shouldn’t come as a surprise. While, as so often, much of this will impact residential markets first, it will also come to commercial.

Threats from asymmetric competition

  1. Threat from banks

PropTech is, in many ways, following on the heels of the FinTech explosion of recent years. As part of that revolution, many banks have undergone their own digital transformation. Why is that important? Well, for two reasons. Firstly, many of them are now equipped with intellectual capital and cultures which promote innovation and business model development, driven by technology. Secondly, banks have intricate relationships with property owners who are already their customers.

Asymmetric Competition

Take, for example, this article which covers RBS’ approach to home ownership. Their Head of Strategy and Innovation (by the way, how many property companies have roles of that nature?), Andy Ellis, says that home buying could be much quicker – “for example, you visit a house for sale, and your bank will see where you are because of the GPS on your phone. It will be able to say, ‘We’ve looked at your assets and liabilities, and we have pre-approved you for a mortgage for this house.’ It will then say it can offer help with your mortgage, getting a conveyancer, buying insurance or even buying furniture.

This is an enormous bank publicly stating that they are looking at how technology can improve the experience of residential property buying and transacting. They have the means to execute and the distribution routes to deliver. Scary stuff.

  1. Threats from insurers

Let’s look at Aviva and their PropTech portfolio companies, Opun and Cocoon, which have both raised money from Aviva Ventures.  Opun enable home improvements, repairs and renovations and has raised £5m while Cocoon are a smart home security company who raised about £2m. As an insurer with an enormous footprint, one can easily see the strategic synergies with these two businesses. Helpfully, the founders of Opun and Cocoon explained them for us:

Colin Richardson, Co-Founder of Cocoon – [The insurance industry] is ripe for disruption…There is so much we can do from a technical perspective to provide a much better experience for the customer and much richer information for the insurance industry.

Rob Brown, Co-Founder of Opun – “We wanted a partner that could give us more than just cash ….[Aviva] have blown our expectations away in terms of the level of support and enthusiasm there is.

To cut a long story short, any property owner who uses either of these two businesses to manage their asset is going to be handing value to Aviva, an insurer, which will benefit from improved relationships with its customers at property companies’ expense. Doesn’t this seem somewhat perverse to you?

  1. Threats from private equity

Blackstone is the largest real estate private equity firm in the world with $111 billion of assets under management. They consider themselves to be active investors, keen to improve the assets once they have acquired them.

Many readers will know that Blackstone acquired a significant stake in commercial property management and leasing platform VTS. Their $3.3m stake was acquired over two years ago, making them very early investors. How is this a threat to property firms, you might ask?

Well the typical value chain here is that the property owner/investor would hire a managing agent to handle the day to day matters arising from such a role and that managing agent would select the technology products of its choosing in order to do so. Instead, that relationship is circumvented in the Blackstone-VTS tie up and indeed it is rumoured that Blackstone now mandate all new buildings must be managed on the VTS platform.

The logical question owners/investors will pose is “shouldn’t my managing agent be offering me new innovative and value-creating tools as part of their jobs?” And the natural conclusion of that is that they may not require them at all – something which Blackstone are comfortable with in many jurisdictions.


While the property industry is only now becoming alive to digital transformation, it must not allow itself to be asleep at the wheel while businesses with vested interests in the assets themselves, or in having relationships with the consumers of the assets, sneak in the back door and create existential threats.

What’s more we will see this fast changing landscape continue to evolve over time. Once technology grabs an industry, it never lets go, and property won’t be any exception.



Recent Posts
pingbacks / trackbacks

Leave a Comment

Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Not readable? Change text. captcha txt