Proptech Investment Primed to Surge This Year

Confidence in the proptech market has surged back at the start of the year. After a lull from the start of the pandemic, both capital investors and start-ups are reporting a renewed confidence in the market, according to the newly released Global Proptech Confidence Survey from MetaProp. The survey shows that investor confidence is 9.2 out of 10, while start-up confidence is 7.7 out of 10, the highest level recorded to date.

The renewed confidence is largely due to accelerated technology adoption during the pandemic and high-profile tech transactions, including Airbnb’s long awaited IPO, successful SPAC deals for Porch and Opendoor, the debut of a dozen new proptech-focused SPACs, and ThomaBravo’s acquisition of Realpage and CoStar’s acquisition of Homesnap, according to the report. On the start-up side, the accelerated tech adoption has created new opportunities for tech penetration in the market. This should lead to increased M&A and SPAC activity in the sector this year.

Indeed, the pandemic push is only beginning. In the MetaProp survey, 94% of investors claimed that COVID-19 will continue to accelerate the adoption of CRE technologies, up 5% from the mid-year survey, and 76% of respondents said that they expect to see increased acquisitions over the next 12 months, up from 63% at the mid-year survey. In addition, 59% of investors plan to increase investment in proptech companies this year, up significantly from 33% at the mid-year report. Thanks to this push, start-ups also expect to have an easier time raising venture capital this year, up to 39% from a historical low of 12% at the mid-year survey.

Integrated proptech platforms will get the most attention from investment capital, according to Kan Notoya, an investor in 31 Ventures of Mitsui Fudosan’s CVC arm. “Integrated service offerings will be preferred especially by companies without enough internal resources to promote corporate innovations,” he said in the survey, adding that he is also bullish on the intersection of fintech and proptech.

Other investors have also noted the importance of data transparency in the CRE tech market. “There are new technologies with innovative ways to gather data, such as Compstak, which crowdsources market comparables data to drive transparency in a way that has not traditionally existed,” said Josh Herrenkohl, senior managing director and business transformation leader of real estate solutions practice at FTI Consulting, in an earlier interview. Herrenkohl says that a lack of data transparency is one of the main inhibitors of technology innovation, but new technologies and technology investment is shifting the market and promising future growth.