https://innovateuk.blog.gov.uk/2016/03/24/heralding-the-next-generation-of-proptech/

Heralding the next generation of PropTech

Property Technology, or PropTech, is coming of age, having grown into a multi-billion pound sector in just a few years and creating household names along the way. We expect further investments to follow as opportunities are unlocked by the latest developments in technology for property.

In this blog, I look over the basics of PropTech, illustrated by projects and companies we have supported. I also forecast for how PropTech could develop further and how you can work with us on this journey.

So what is PropTech?

So what is PropTech?

There are 26 million existing properties in the UK and almost all are poorly understood and badly managed. They are also frequently sold, improved or tenanted, each of which involves costly processes. PropTech is the adoption of hardware or software technologies to solve these business problems.

  • Property managers suffer from not knowing what their buildings contain physically.
  • Property owners suffer from not knowing how to make their buildings cheaper to run, better to occupy and safer to invest into.
  • Almost everyone who purchases, leases or disposes of property finds the processes to be inefficient, costly and frustrating.

The customers for PropTech therefore include a diverse mixture of homeowners, real estate agents, corporate heads of property, building managers, and individuals who simply wish to use a building to get on (which includes you and me, practically every day). [1]

Should I have heard of PropTech before?

Perhaps not the term, although you may have heard of Nest Labs (whose smart thermostat technology was acquired by Google in 2014 for $3.2bn) or maybe you have seen the Apple Homekit in your local electronics store. These are both PropTech hardware.

You may have also been on the Zoopla or Airbnb websites recently. These too are PropTech, on the software side of things and shaking up the productivity of the real estate sector.

PropTech has emerged as a term that unifies the different ways in which technology is making ground in the conventionally traditional property sector.

Is Innovate UK having an impact on PropTech?

We have been funding and connecting entrepreneurial start-ups and SMEs in PropTech for many years. This has been the focus of entire programmes including Building Performance Evaluation and Future Energy Management for Buildings.

By supporting individual facets of PropTech we have primed the UK to now capture the global market for more integrated solutions.

Providing information on what buildings contain physically

Providing information on what buildings contain physically

  • RIBA Enterprises Ltd leads a project with the British Standards Institution and the Construction Products Association to develop Digital Object Identifiers (DOIs) for building products. By creating permanent and unambiguous identifiers DOIs could link Building Information Modelling, which is primarily a construction technology, and PropTech.
  • Asset Mapping is developing a HyperCAT compatible platform to visualise assets and data from any metering sensor and major IT system in a property. This SME has already worked on the large estates of the Royal Bank of Scotland and Canary Wharf Group and they’re starting 2016 on the £10m Manchester CityVerve project.

Providing information on how to make buildings cheaper to run, better to occupy and safer to invest into

Providing information on how to make buildings cheaper to run, better to occupy and safer to invest into

  • AlertMe developed HIVE which turns home heating boilers into internet connected devices. AlertMe grew from a start-up receiving support from Innovate UK into a business of over 100 staff and was bought by British Gas in 2015 for £65m.
  • LCMB Ltd is building a software model to enable buildings to have a greater impact on the satisfaction of building users. Their innovation aims to make buildings better places to work and increase their productivity.
  • Digital Catapult is developing the Building Data Exchange (BDx) to open up access to open data on the performance of properties in use. BDx provides a resource of information for property professionals and a databank for software developers to integrate their own PropTech products into.

Improving the processes for purchases, leases or disposes of property

So what’s next for PropTech?

While these projects continue we can already see a need for innovation in several key areas.

  • Integration with city infrastructure. PropTech enables buildings to respond to issues that occur outside the physical boundary of the property; for instance to make the local power network more resilient or to improve air quality at city street level.
  • When PropTech transfers data which could affect the financial value of the property the data must be trustworthy and incorruptible. Distributed ledgers, such as the blockchain, could find early applications in PropTech. Indeed it is reported that the first real estate sale using BitCoin is currently going through.
  • Linking to Virtual and Augmented Reality to enable designers and investors to remotely immerse themselves in property and use data to gain a new level of understanding.
  • A focus on the customer’s journey through the process of purchasing, letting or re-mortgaging property.   B2C solutions that pull information out from PropTech like the BDx could see very quick take-up and potentially impact on deal negotiations.

To contribute to the conversation

As well as keeping up-to-date with the companies we are supporting there are several further things you could do.

Contact Richard John at the KTN’s built environment team if you would like to join a working group and help us to plan our future investments into PropTech innovation.

Engage with the activities of the Digital Catapult and the Future Cities Catapult.

Or contact me directly on Twitter or LinkedIn as I would be very keen to hear your thoughts on the direction of PropTech globally and the opportunity for UK innovation.

Follow me on Twitter: @RickInnovate

Find me on LinkedIn: https://uk.linkedin.com/in/rickholland1

[1] I say practically as one of the Innovate UK Monitoring Officers is an avid mountaineer, known to spend days on end living out of a tent at high-altitude. TentTech is yet to make its way into the PropTech fold.

You can follow Innovate UK on:

3 comments

  1. Mike Stephens

    Good read thanks. Alongside the definition "PropTech has emerged as a term that unifies the different ways in which technology is making ground in the conventionally traditional property sector." - I would say that some other characteristics of Protech are: new suppliers, more agile suppliers, tech led innovation rather than customer led (not always a good thing). However the fledgling sector needs to ensure that the innovation cycle is not so fast that it confuses customers who think that something even better will emerge if he/she waits......

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    • Rick Holland

      Thanks Mike. Solid points made.
      The best PropTech I've seen provides solutions to problems where either no existing solution is available or the existing solution is blown out of the water by the proptech business case. There will always be early adopters and laggards. The earliest adopters often reap the greatest rewards. Particularly when the cost of 'doing things the way we always have' is so great. Thanks for posting a thought stimulating comment!

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  2. Trevor Mealham INEA mls idx UK

    Prop tech is changing as some models are working. Proptech still needs some radical changes to open up sharing and big data. unfortunately the bulk of UK property data operates under a non open interoperable way. Too many VCs are pushing cheap list models over consumer best interest where agents are being hit by proptech that is not in consumers best interest and often backed by VC's who are funding little more than ponzi fronts.

    The government needs to open its eyes to whats really happening

    In consumer interest we need to advance the restraints of current single directional data schemas held hostage and in place by portals and look over the pond to a better agent and consumer model MLS that opens access to more available listings under cobrokerage and multi-directional data schema.

    Another problem is data protection. many agents are using software to collect Joe Public details and some service providers are running contracts that potentially abuse consumer protection under data protection.

    We have worked hard in this area and would love the opportunity to show the government a better model.

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