Proptech in a Post-Pandemic World
With $9 trillion in global assets, real estate is larger than any other class of financial services assets in the world – worth more than all stocks and bonds combined.
However, it is not a secret that Proptech companies generally struggle to raise funding rounds when compared to their fintech counterparts. Global fintech investment was $105 billion in 2020 – the third highest year on record despite a significant drop compared to $165 billion in 2019 – and yet Proptech investment was only $23.8 billion, down 25% from the $31.6 billion we saw in the previous year. The lack of funding is not necessarily caused by a lack of technology innovation. If anything, it was because real estate leaders were overly cautious and too slow to adopt new technologies as they saw little need for them.
Despite that notion, Proptech companies are gaining momentum in the listing front now more than ever, many through mergers with SPACs. In our previous newsletter, we discussed the surge in number of SPACs since 2020 but what we haven’t mentioned was the huge number of SPAC/Proptech mergers. In 2020, iBuying platform Opendoor (NASDAQ: OPEN), on-demand home service provider Porch (NASDAQ: PRCH), and smart lock maker Latch are among the few notable Proptech companies that went public with a SPAC in 2020.
Matterport, a SaaS that enables landlords and operators create virtual tours of their properties, and Doma, are the latest proptech companies in the news with plans to go public via SPAC.
So what has changed here? Well with the crazy number of SPACs on the hunt for fast growing private companies and Proptech companies’ need for large capital to gain scale, investors simply discovered a match made in heaven. In addition, we are also seeing unprecedented surge of technology adoption following pandemic-related restrictions, especially in shared real estate spaces, which in return has forced further Proptech innovation. In this article, we take a deep dive on current real estate disruptions and what we can expect the industry to see in the upcoming years.
Proptech for Dummies
Now before we go any further, let’s take a look at the Proptech sector and what it looks like today. In the past, real estate tech only consisted of property listings for sale and rental purposes. Its offerings were so limited that it was considered a subset of the fintech industry for a long time before becoming its own behemoth category. Today, property technology (Proptech) is widely regarded set of cross-industry technologies changing the way people research, rent, buy, and manage property.
There are 4 main Proptech categories:
Real Estate Fintech
Tech platform that facilitates the trading of real estate asset ownership, whether it be in the form of buildings, shares or funds, debt, or equity. The platforms may simply provide information for prospective buyers/sellers, or directly facilitate transactions of asset ownership or leases.
Notable companies in Indonesia:
Collaborative Economy
Technology-based platforms which facilitate the use of real estate assets. The assets can be land or buildings, including offices, shops, storage, housing and other property types. The platforms may simply provide information for prospective users and sellers of space, or they may more directly facilitate, or effect rent- or fee-based transactions. This sector supports the real estate occupier markets.
Notable companies in Indonesia:
Smart Real Estate
Technology-based platforms which facilitate the operation and management of real estate assets. The assets can be single property units or entire cities. The platforms may simply provide information about building or urban center performance, or they may directly facilitate or control building services. This sector supports real estate asset, property, and facilities management.
Notable companies in Indonesia:
Construction Technology
Technology-based platforms which facilitate the building of new real estate assets. The platform involves interior designers, architects, engineers, construction firms and facilities managers. Examples include construction visualizations tools, project management tools for construction teams, and platforms to manage blueprints.
Notable companies in Indonesia:
Each of this sector encompasses various companies that assist users with finding information, conducting sales/rental transactions, and/or managing properties. We identified the various business models within the Proptech sector using the following matrix:
