CRE Tech Funding Breaks Record, Migrates to Established Players

Real estate technology funding is reaching new highs, while at the same time migrating to established players, asserts a new report from JLL. 

However, the company cautioned the industry shows signs of maturation and a range of issues are slowing progress, including a fragmented technology landscape, lack of industry standards, privacy and security needs.

Last year JLL found that venture capital equity funding to built environment technology slowed to $13.4 billion in 2020, down 19% from $16.6 billion in 2019.

The funding of $9.7 billion in the first half of 2021 makes this the most active first half on record. In 2020, the money put into real estate tech startups reached $8.8 billion

“While real estate technology adoption was on the rise before the COVID-19 pandemic, it has become essential for today’s leading real estate players, buildings and spaces,” said Ben Breslau, Chief Research Officer at JLL. “Technology is at the center of the most important trends shaping business and real estate. That includes hybrid work, health and safety, and sustainability initiatives, all of which are in high demand.

Trends are indicating there may be no better time to invest in real estate tech, said Raj Singh, managing partner of JLL Spark, the global venture fund of JLL Technologies. “The opportunity to shape the industry for the future by supporting innovation holds great potential for strategic change as well as return on investment,” he says.

One of the trends JLL sees is companies look to apply rapidly proliferating new technologies to take advantage of developments in computing power, analysis and connectivity. The number of startups offering technology solutions in the built environment has blossomed from under 2,000 to nearly 8,000 in the past decade. They’ve raised in the range of $100 billion of equity funding in the past decade.

Many of those startups have been consumed by mergers and acquisitions by industry leaders. In 2020, M&A activity was at a record high of$21.9 billion, and it is already above$18 billion so far in 2021, JLL said.

About half of the so-called “proptech” funding has come from the US with China at number two followed in Asia and the Pacific by India, Singapore and Australia. JLL said the UK and Germany make up the majority of fundraising across Europe, followed by France, Spain and Sweden.

Last year during the height of the pandemic, JLL said real time data was fast becoming not only a key tool to fight the impact of Covid-19 but was also causing the CRE industry to realize it is essential for ordinary tasks as well.

“From analyzing rent-collection rates, to monitoring crowds in malls and understanding space utilization in offices, the pandemic has prompted more property industry players to use proptech to deliver real-time data outputs,” JLL said last fall.

“High-frequency data in particular is in demand to help make decisions—especially relating to health, mobility and space usage.”