Was 2020 a tipping point for proptech?
As the real estate sector grows in size and sophistication, property players and service providers are looking for new ways to streamline their operations and gain an edge over their competitors. Increasingly, that edge is found in property technology, or proptech.
To better understand the path to innovation, especially as the COVID-19 pandemic reshaped our work and life and recalibrated our relationship with space, real estate systems provider Yardi commissioned two reports last year.
The first, in collaboration with Asian real estate news source Mingtiandi, polled 180 real estate specialists across the region in August 2020. The second surveyed 216 members of the Property Council of Australia in November 2020.
What did we learn? Firstly, companies across the region are enhancing their existing systems, looking at collaboration tools and investing in technology that simplifies reporting under crisis conditions. But 18 percent of Australian companies and 13 percent of those in Asia had no plans to up their investment and were just “muddling through”.
The largest obstacle to proptech investment — cited by 35 percent of Asian respondents and 34 percent of those in Australia — was resources. Resistance to change and cost were the second two biggest factors for both regions. This is revealing. People are beginning to understand that resistance to change remains a barrier because there’s a lack of resources focused on the change. Leaders understand that expertise is needed to shepherd proptech projects through that resistance, but that expertise is not always easy to find.
More than a quarter (27 percent) of Asian companies and more than half (55 percent) of those in Australia thought big data would have the biggest impact on real estate over the next few years. Despite this, spreadsheets remain the industry’s workhorse. Microsoft Excel is still the go-to for 23 percent of Australian companies and a massive 58 percent of Asian companies. People think they need big data, when instead they need to start small by fixing the data they already have.
As I travel around the region to talk with senior property leaders, I have observed that COVID was an investment opportunity for some companies, while others took a “wait and see” approach. But universally, regardless of their decision to throw money at technology or press pause, they wish they’d been more ambitious. Why? Because the challenges of COVID will continue to reverberate for years.
Meanwhile, real estate’s appeal as an asset class is attracting institutional investors who expect the same level of real-time reporting and transparency that they get from equities and other markets. This places new pressures on developers and fund managers to find systems that can streamline delivery of data.
But the biggest driver of proptech is not pandemics or investor expectations; it is the building occupiers who now want the same seamless and customised experience that they enjoy online. Proptech will allow real estate companies to embrace true customer-centricity.
So back to my first question: Was 2020 a tipping point? We will know for certain when our 2021 results are revealed early next year. But my challenge to the real estate sector is clear: If now is not the time to invest in technology, when will it ever be?
Bernie Devine is Yardi’s regional director for Asia Pacific. Download Yardi’s summary report, Tech Adoption in Australia and Asia 2020: [here].