Innovation and technology will fundamentally change the world of real estate, but real estate professionals don’t always find the best way to embrace these changes. Here are our top 10 takeaways from FUTURE: PropTech London, a proptech event that took place on 2 May.
- Technology presents a chance to improve the efficiency and increase the speed of asset management and investment decision making. One huge problem is that investment deals take too long to close. Market prices can change significantly in a 12-18 months period and it’s usually not taken into account.
- Sophisticated data on general market trends is hard to come by. Capturing data can be a huge challenge in itself and figuring out the right way to use the available data requires skills that decision makers never had to possess.
- Shorter lease lengths, which some say are only a new phenomenon in the world of offices, present a challenge from a valuation perspective. It is a general trend that office tenants are willing to commit to short and shorter lease periods, so valuers need to come up with a smart way to value these different contracts. Shorter leases are also gaining popularity in retail as well, and based on UK evidence landlords renting short term are generating more income.
- Tenants these days want everything as cheap, as fast and as flexible as possible, which is not in line with traditional valuation. This is especially true for tech companies that are not willing to spend much on fit-out. Tech offices often look so “cool” because they were designed under a short budget
- The effects of the growing popularity of e-commerce are overexaggerated. Online retailers are now opening physical stores because they realised that it's a great marketing tool, especially at times when online advertising is getting more expensive. The real threat for retailers is not e-commerce but the low quality of retail space. Retailers need to focus on user experience and they need to come up with right answers for consumers' mentality shift.
- Tech-enabled brokerage will reduce transaction fees, but agents will not disappear. In spite of technology, personal relationships will continue to play an important role
- Even though most market players want transparency and think that the best way to achieve it is to share data, not many are willing to share their own data. Sharing is even a problem within companies, but it is inevitable that the era of sharing will come one day.
- Even proptech companies are often not willing to share and they definitely don’t communicate beyond borders. Looking at proptech companies in Europe, there are not many original ideas. Different companies in different countries often try to come up with a solution to the same problem. This means that if a company wants to be successful on an international level, execution is usually more important than the idea itself.
- Not all businesses are destined to be large scale, but the reason why not many proptech companies have been successful so far might be that they were solving an issue that is only relevant in a limited area.
- No matter how significantly the way real estate professionals work is going to transform, the physical nature of real estate is something that won’t change. It’s always going to be brick and mortar.
