Australian PropTechs: Determined to Grow
The Global PropTech industry is preparing for growth – and Australian PropTechs are expecting to grow faster, sooner, despite concerns their traditional real estate counterparts don’t yet completely grasp the potential of digital transformation.
The results of our Global PropTech Survey 2019 shows high confidence amongst PropTech firms for sector growth: 87 percent of the 92 global firms surveyed believe traditional real estate companies they work with will increase spending on PropTech solutions over the next year.
In Australia, 93 percent of the PropTech firms surveyed expected continued spending on PropTech, with no respondents expecting investment to stall or decrease.
This is because many traditional real estate companies have clients with complex and challenging needs. The digital transformation of the real estate industry is underway and traditional players know they must adapt.
They also know they do not have the capacity to tackle digital transformation in-house. The path forward involves investing in, partnering with or acquiring PropTech.
Despite the growth potential, some believe they are not really understood by the real estate industry at large.
Survey participants were asked what was the main barriers preventing closer collaboration between property and technology companies. 56.3 percent of Australian PropTechs felt further collaboration was not a business priority for property companies. Only 40.2 percent of global PropTechs felt the same way.
Many PropTechs have yet to demonstrate their value to traditional companies and need to take a more project related stance as opposed to role related – demonstrate the value to the corporate and gain their faith through the solution. This will see business priorities align with PropTech objectives.
But another factor could be at play: 43.8 per cent of Australian respondents stated a barrier to further collaboration was the property companies did not employ the “right talent”. Globally, only 27.2 per cent of PropTechs held this view.
These results suggest there is a correlation between traditional real estate companies employing digitally literate people and spending on PropTech services. I believe the burden is on PropTechs to reverse this trend. After all they are uniquely nimble, so it’s the PropTech’s role to educate the incumbent traditional company so they can understand where they are and where they aspire to be. Power is in collaboration.
So if Australian PropTechs are less confident in the technical expertise of their real estate partners than their global counterparts, why are they more confident they will continue to receive investment?
Quite simply, the levee holding back the digitisation of the industry has broken. The traditional real estate industry is one of the least technologised. It is natural this should change.
There is a need for better technology that serves the foundation of the way real estate works. A lack of sophisticated players means PropTech companies have an opportunity to take an applied approach, take the problems of the industry, understand how to do things differently and work with clients to build a new paradigm in property and construction.
So what comes next?
In the short term, the PropTech market will be highly influenced by the decisions traditional real estate players make as their investment and adoption strategies begin to roll out. This will involve not just Australian capital: I fully anticipate that foreign companies will begin to notice the PropTech sector in Australia and invest accordingly.
In the longer term, things will get really interesting. The maturation of tech such as AI, VR, IoT and smart sensors will change the way the individual interacts with the built environment in a major way. Our cities will be planned, financed and built differently, but in a more human-centric way. PropTech will probably make the key obsolete but (and the irony is not lost on me) PropTech is the key to a new future.
Thanks to Nigel Virgo, KPMG Partner and Sector Head – Real Estate for additional input.