4 minute read
Launching a real estate technology company ensures that you are operating in a market that is sufficiently large, fragmented, and ripe for disruption to give you every chance of success. There are abundant opportunities.
And if you are not looking to found a company but to work in one, then I suggest you consider choosing a proptech for your next employer.
Show Me the Money
Property is the world’s largest economic sector. This is where the money is.
The sums are enormous. Australian residential real estate is worth $8.9 trillion, according to CoreLogic nearly one-quarter more than just four years ago. Real estate is worth more than three times the value of all Australian listed stocks.
It’s not just the size of the asset class. It’s also the fact that more than $400 billion of housing transacts each year. As every real estate agent knows, where there is a transaction, there are also potential commissions and related expenditures.
With this knowledge, we can see why the real estate sector looks like a rich opportunity to many technology startups. That also explains why established proptech companies the REA Group and Domain are each worth billions.
Ripe For Disruption
If you were a would-be company founder, you might worry that the successful proptech companies already operating represent an insurmountable obstacle to your new business.
In reality, the opposite is true. The real estate industry is in fact both fragmented and ripe for innovation.
How can this be?
For one thing, the market is so large and geographically diverse that it is very difficult for any single company to dominate.
Virtual and 3D tours are a good example. At least a dozen companies offer these services. Matterport may be the best-funded, but it is a long way from running the table. Rather than a single dominant company, there is a profusion of brands and offerings that serve different market segments or parts of the country.
Another reason there is still so much opportunity for new proptech companies is that the pace of technological innovation in real estate has been relatively slow. Good real estate agents can make decent money with just a mobile phone and an Instagram account.
In the past two decades of massive disruption, tech startups targeted industries where margins were larger than in real estate. Meanwhile, property largely passed under the radar. This state of affairs is now changing.
The COVID pandemic made technology central to the industry. As has often been said, the pandemic forced 10 years of innovation into just six months. As a result, more than four out of five Australian real estate companies are investing in improving or acquiring technology in 2021, according to new research from the Property Council.
The real estate industry is seeking change. Why shouldn’t you be the one to bring it?
How to decide where to focus
Because real estate is multifaceted and immense, there is a surplus of opportunity for the clever entrepreneur. To narrow your focus, you may find it useful to categorize the world of proptech into four conceptual categories:
- Investing: enabling investors to evaluate opportunities more effectively
- Building: facilitating construction management
- Managing: tools for real estate agents, buyers and renters, or property managers
- Living: facility management or home IoT solutions such as security or energy management
There are innumerable opportunities in each of these categories where you can make your mark.
Over the past two decades, more than half of all global proptech investment has gone to property listings portals and similar businesses, which fall into the “Managing” category mentioned above.
With so much attention focused on a single sub-sector of proptech, there is a tremendous need for investment and innovation across nearly every other area.
The opportunities in proptech are practically endless. I encourage you to pursue them.