Will Leyland, 10 July 2020
One good test of whether you think ‘prop tech’ is something worth getting excited about, or whether you think most of it is nonsense that won’t get off the ground, is to go and Google the top property tech companies to follow this year.
There’s any number of articles listing companies they think are going to shake up the market and ultimately succeed in making the industry more efficient or wow consumers, but try to figure out what they actually do and it can be a little exhausting.
Pretentious names, achingly corporate videos and vague blurbs are all common when browsing through some start ups, and it’s ultimately quite difficult to work out what a lot of them actually do.
That being said, there was a lot of hype for these emerging technologies not too long ago, with many expecting some big names to start emerging, but it doesn’t seem like they’ve materialised and there isn’t much appearing on the horizon to make us question that assumption either.
Certainly with the way this year has been going, it’s perhaps understandable that some of these companies haven’t been able to make progress, but also with the pent-up demand that it’s created you’d have to imagine there’s also opportunities.
Prop Tech is essentially the application of information technology within the real estate market, so which of these technologies might we expect to see? And if we don’t, why not?
Hybrid estate agents initially did well at disrupting the existing sector by cutting fees and costs, and slim lining the process of selling or buying a home, but perhaps the most famous example, Purple Bricks, has arguably failed to kick on from there.
Online estate agencies as a whole, whilst offering a value service, never quite attained the market share they were predicted to roughly 5 years ago. Some had predicted they may reach up to 30%, but currently they cover less than 5% of the market.
Student property technologies are more suited to the tech sector due to demographics, and the long distance nature of the industry. Students tend to select their accommodation from home when they first apply for university, and then tend to pool resources with friends, and are usually in the under 25’s market, meaning they’re more willing to adapt to online services. This, in comparison, is probably something that has legs.
Finally, tenancy management is something that lends itself quite well to online platforms and customer management systems, but rather than this being something that larger companies can market themselves as a standalone product, it probably makes more sense to sell it to existing agents who can white label the product. But then, if there’s a large cost involved, it may make more sense to simply employ in-house developers.
Comparatively, it appears extremely tough to muscle out traditional estate agents and property management companies for levels of trust, ease and service.
Given that there has been huge advances in finance, AI and the internet of things, the theory that if property tech hasn’t already made a mark then it never will, holds some weight.
Customers and landlords alike seem to prefer the traditional structure of the estate agent and management company, and there’s reasons for that. The personal touch, the expertise and the trust are hard things to earn as a tech start-up.
It’s not similar to finance where start ups were vying for the business of banks that had lost a lot of trust already. It would seem however, that property tech companies may never be able to replace the established traditional high street agent.
Will Leyland, 10 July 2020