Modern technology is now focused on making our lives easier. Some of the most valued companies in the world provide solutions to our everyday problems. Even though these tech firms were formed relatively recently in comparison to older firms, their rise has been meteoric.
Uber is an example of a tech firm that provides solutions to consumers’ need and has been one of the main firms to dominate headlines. The taxi service firm allows users to track cars on their smartphone, avoid hailing taxis, and enables online payment. It was only established in 2009, yet was valued at over $50 billion in 2015. No doubt this valuation has risen hugely as it has expanded its presence to more cities and expanded its product offerings to lines such as food delivery.
The transportation industry has been one of the main industries to be saturated with a plethora of mobile apps to solve consumer problems. Other popular industries for mobile apps includes food delivery services and, of course, social networking. It is strange, however, that there are no market leading apps in the property and property management sectors, industries which have typically been full of various consumer problems. As such, it seems that the technology sector has lagged behind in regard to penetration and transformation of the property sector. While words such as “fintech” are part of our technological lexicon, proptech still remains a relatively unknown and niche word.
This year, in 2016, it could be the year that proptech finally gains exposure and recognition on a similar level to other “hot” technology sectors such as transportation and fintech. Rightmove and Zoopla have been stated by some commentators as large proptech firms, but their business model is actually more similar to what could be described as a form of “Adtech”, where they simply charge to connect buyers and sellers. Although it is wholly focused on the property sector, their business model and software is not particularly unique to the property sector itself. Nonetheless, they are competing with – and perhaps gradually replacing – the traditional shop window estate agency model. Now, landlords can advertise properties online for a fraction of estate agency fees while reaching a much larger potential audience.
Other “disruptor” technology companies are growing in the property sector and quickly catching up to other tech sectors. It is perhaps unsurprising that the proptech sector is gaining momentum, since a PwC report indicated that the rental market is to become one of the biggest markets in the UK, with 60% of Londoners predicted to be renting in 2025. In 2015, Venture Capital funding reached a new high of $1.5 billion, of which the UK benefitted from about 25%. In addition, the first ever Property Tech Venture Capital Firm has now been established – Pi Labs – and will most likely soon be followed by other sector specific VC firms. With a country of renters, it means that there are a huge amount of opportunities for new problem-solving apps to come into fruition.
Just recently, a company called Goodlord was established to provide an online service to allow tenants to pay their holding deposits, complete their references, and sign the agreement from their computer or mobile phone. Essentially, the service provides a form of “rental passport”. The service has received multimillion pound funding from VC investors and existing market leaders and is now used by 200 letting agencies as tenants are now demanding better customer service from letting agents and an increased sense of independence.
Other areas of disruption in proptech includes the property management sector. Typically, this industry had been centred on expensive, flat-rate software packages that were often insufficient to meet the needs of the different user groups involved in the lettings process. Arthur Online is a recent “disruptor” within this sector that seeks to overhaul the traditional setting for user interactions. The company offers a multi-platform model priced according to units that is fully integrated with accounting software packages. It gives all user groups – from tenants to property managers to contractors – greater agency over the various elements of renting. Importantly, the function of Arthur Online is unique to the property sector and can therefore be definitively labelled as a proptech company.
Proptech will continue to receive increasing exposure which will lead to additional funding. 2016 will see the movement of existing proptech services into the mainstream, while developers jump onto the proptech bandwagon and start to create more and more apps and services for the burgeoning rental market within the so-called “Generation Rent”. Hopefully, proptech will become part of our regular business lexicon in the same way that fintech has established itself.
Article Courtesy of: Arthur