Breaking Property News – 17/07/2023
Daily bite-sized proptech and property news in partnership with Proptech-X.
ERES on how Research Institutions and Proptech can better integrate
Last Thursday in my day job as CEO of Proptech-PR ‘A consultancy for Proptech Founders’ I was on a panel hosted at the University College London (UCL) for the 29th ERES Annual Conference. The panel moderated by Björn-Martin Kurzrock, Professor of Real Estate Studies at RPTU, President of ERES, addressed the process of – ‘Translating Research into Business Models and the Proptech Ecosystem.’
On the panel I was lucky enough to have Andrew Knight, Data & Tech Thought Leadership & Analytics, Tech Partner Programme & Data Standards at RICS, Damien D. Nouvel, Associate Professor of Real Estate and Urban Economics, ESPI2R (Research in Real Estate), France and Verena Rock, MRICS, President of the German Society of Property Researchers (gif) / Digital Real Estate Management and PropTech.
Everyone had some deep insights on how academia and the commercial world of Proptechs could better be entwined, and because I think it is very important that the next generation of practitioners in the property technology space gain ‘education’ at the earliest possible point, I set out below my thoughts on the matter.
Have you seen many Proptechs cooperating with Research Institutions?
Andrew Stanton CEO Proptech-PR Notes for ERES UCL panel 13th July 2023
In real terms the answer is not many, and here is why I think that is. In the past seven-years I have met over 800 Proptech founders globally, addressing all the verticals in real estate, which is the plan, build, sale lease and management of property assets via the digital transformation of legacy analogue systems. And we are still very much in the foothills. I have also worked with 112-Proptech founders as clients, with 12 getting to exit. So I have very much a commercial vantage point, rather than having a foundation in a more academic environment.
In fact in the UK 60% of Proptechs were born in 2017, so whilst there is now a growing framework of research institutions getting funding and getting intakes of Proptechs, it is a fairly recent phenomena. Yes tech has been exploding since well cloud computing in 2004, but the sub-genre Proptech is a relative new comer.
And for clarity let’s begin with a quick definition of what a research institution is, to my mind it is a physical place that nurtures and engenders scientific research, think universities, UCL of course, or it could be government backed institutions and more commonly in the case of Proptechs – a research institution could be somewhere like Bruntwood Birmingham Sci Tech who I was involved with on their Serendip accelerator a couple of years ago.
Bruntwood partnering with Legal & General describing themselves as a ‘research institution offering high quality office and laboratory space, a range of scientific services, and specialist business support which enables companies in the science and technology sector to form, collaborate, scale and grow.’
So, coming back to the question – Have you seen many Proptechs cooperating with Research Institutions?
Well I did a straw poll and asked 800 Proptech founders had they any association at any point with Research institutions and just 79, said yes, so just 10%.
But as time progresses I feel that this figure will grow as more and more cash is put into the realestate revolution. Though it is dangerous to hypothesise, if we say there are 14,000 Proptechs on the planet, clearly there is a big marketplace for closer cooperation between Research Institutions and these SMEs. Interestingly across the pond (America) Proptech often pops up on the college curriculum, but it is a very synthetic syllabus, more abstract than of the commercial world.
There are of course a lot of examples where Research institutions are grinding out papers, journals and books on Proptech, Said business school etc, with Proptech 3.0 (2017) being the most downloaded report, and there are an increasing number of university courses which help to give a formative framework to graduates.
But the hard part is transferring high level thinking and analysis into commercially viable Proptech businesses hoping to be the next Unicorn, or even producing repeatable monthly revenues of £5,000/month with a burn rate of less than £50,000 would be a start. With my day job – commercial ideation – is all, I care little if you are splitting the atom, neither will investors nor paying clients, if you do not have a defensible Saas model that can scale, then you are just following a pipe dream.
Where does that leave us? Maybe PEIF holds some clues
Earlier this year I was the host and MC for the London Proptech Show, and on one of the panels I moderated I was lucky enough to meet Dr Olayiwola Oladiran lecturer of Real estate from the University of Sheffield, and doing some background work I read his 2020/21 PropTech Education Integration Framework (PEIF) study, which touched upon the problems of why Property Technology was not firmly on the curriculum. He wrote and I quote,
‘The accelerated growth of digitisation in real estate operations and practice has led to the emergence of a contemporary real estate specialist area commonly referred to as “PropTech. Despite the tremendous growth in the deployment of digital technologies and IT systems to solve real estate problems, there has been a disproportionate growth in scholarly work, particularly in PropTech education.
The higher educational system is a major real estate education vehicle; therefore, integrating PropTech in real estate higher education has the potential to further transform the PropTech space. This creates real estate professionals with adequate knowledge, skills and behaviours through exposure to PropTech which can then be applied in practice.
There is currently no evidence-base through which PropTech can be integrated in the real estate higher education curriculum.
Creating a PropTech education integration plan has the potential to provide real estate students with the requisite knowledge and skills required to get actively involved in PropTech and to develop tools to improve the various real estate operational and market inefficiencies.
Educators should support students to develop the ability to critically evaluate the effectiveness of PropTech technologies and identify potentials for further growth and development beyond their current scope of utility. Educators should move from passive standard lectures to more active problem-based learning approaches.’
Clearly the message here being that education lags way behind the Proptech SMEs that are being formulated cradled in accelerators, scale ups or by groups of individuals getting VC/P/E funding to do it themselves.
How do Proptechs cooperate with Research institutions?
Of the Proptechs who do engage with Research Institutions – How they do it.
Well from personal experience I was involved with Bruntwood in Birmingham, based to the rear of Aston University site, and a number of Proptechs entered an accelerator backed by the Research Institution and some construction corporate bodies – think Balfour Beatty etc.
What was on offer to the Proptechs:
Six months of tailored business support, Access to office space at Innovation Birmingham, Tailored investment readiness programme, with support from experienced investment coaches, Support from an Entrepreneur in Residence, and access to Bruntwood SciTech support network, Business development opportunities and introductions to potential customers, Growth focus – business support, e.g. IP, marketing, HR, partnerships, Funding advice and grant opportunities
On this particular accelerator project entitled Serendip – the focus was on addressing quality concerns raised around building envelopes installed during past construction projects. And building owners wanting certainty about the quality of workmanship and materials used in external wall build-ups, as well as interior spaces such as ceilings and surface voids.
The project types are varied but most prolific are hospitals and more recently build-to-rent schemes. While different in usage both of these building types share the type of defects most commonly found, being incomplete, substandard or non-compliant passive fire protection and separately envelope construction, particularly cladding including fixing system, insulation type and fire resistance.
The project brought together Proptechs utilising robotics, data services, construction oversight plays etc. The framework of the programme was very much institution led, feeding into the explicit needs of the construction companies. The win for the institution are they are in the mix of generating new knowledge and technologies.
One of the Proptechs got follow on of funding within 12 months of the accelerator – this may or may not be due to their inclusion in the accelerator. But the Burntwood’s of this world are scarce Vs number of Proptechs exploding across the world.
In what Fields do Proptechs cooperate with research institutions
As to is there a polarisation as to what verticals Proptechs collaborate with Research Institutions, I have seen focus across the spectrum. Going back to my sample group of 89 Proptech Founders in the mix with research institutions, here is my A – Z of what they cover and the technologies employed, bear in mind some of these are outside of the UK.
3D Modelling, Artificial Intelligence (AI), Asset Management, Augmented Reality, Augmented Valuation, Big Data, BIM, Biometric Security, Bitcoin, Blockchain, Broker Free Listing Search, Coliving, Commercial Real Estate, Compliance, Construction Management, Contech, Conveyancing, Co-Working, Cyber Maturity.
Data Protection, Data Valuation, Design, Development, Digital Twin, Drones, ESG, Facility Management, Geolocation, Geospatial, Indoor Mapping, Infrastructure & Sensors, Inventory, Investment & Finance, Investment Platforms, IoT, Legal Tech, Leasing Management Software, Lending Tech, Lettings, Listing & Search Services, Long Term Rentals/Sale, Search,
Management & Maintenance, Marketplaces, Money Transfer/Remittance, Mortgage Tech, Modular, Online Agent Brokerage, Online Agent Lettings, Online Agent Sales, Online Agents, Open Banking. Payment Operations, Platforms, Portals, Portfolio Management.
Real Estate Investment, Real Estate Tools, SaaS, Sales & Marketing, Shared Economy, Shared Services, Short Term Rentals, Smart Building, Smart Buildings, Smart Cities, Smart Cities & Mobility, Smart City Sustainability, Smart Homes, Space as a Service, The Shared Economy, Valuation Tools, and Virtual Reality.
No wonder adoption of all these new technologies and solutions is so difficult, with such a huge and confusing list of things here, the digital transformation of realestate is its own worst enemy, it is just so complex. Proptech is a vast sprawling vista of different new technologies operating within the sphere of property, it is not just digitization, it is re-imagining and interconnecting all the strands within the sector.
Current megatrends up to 2023. The only certainty in the world map of Proptech, (with London only second to New York in the proliferation of Proptech start-ups) is nothing is certain. At present around the world the real estate sector is pouring investment into: – Artificial Intelligence (AI), Big Data, Building Information Modelling (BIM), Internet of Things (IOT), Virtual Reality (VR), Augmented Reality (AR) ESG (Environmental, Social and Corporate Governance) The Shared economy.
What is your favourite example of a successful collaboration?
As to is a successful collaboration it depends how you measure this, certainly a number of Proptechs raised funding after collaboration with Research institutes, some quote over 50%, but I have no hard data if that was as a consequence of being part of this ecosystem, or not.
And answering whether an SME is more likely to scale up or get to exit, again it is too early to start to draw any conclusions as the UK Proptech scene is such a new thing, and exceedingly London centric too, which may skew the true picture.
For me – and I am known for my strong views, by its very nature Proptechs which are SME’s looking to grow into large companies, are often at odds with the academic focus of research institutions. Frustratingly, it is as if they speak different languages and have different outcomes hard wired into their DNA.
As I try to explain to founders, it is the tiny UX that the end client comes into contact with that matters, all the math, coding etc means zilch, the digital transformation of real estate is just that, and producing a commercially viable company comes first second and third if success is to be grasped. I deal with data scientists and many I would see as polymaths, but it would be great if every so often they had taken a course in how to run a business, as this core functionality is usually missing when they have burnt through a couple of million pounds of funding.
If anyone reading this has any input into the topic please contact me directly on this link.
Housing market slows
The figures are now in for the first two quarters of 2023, and the volume of agreed sales and exchanges is dipping, dangerously low. Much has been made that the 2022 housing market with 1.3M completions was a one of market and we would see a more normal 1.18M completions in 2023, this now seems not to be the case.
Lastest figures show that less property is being sold and less property is getting to completion, the 6% plus interest rates for new buyers looking to enter the marketplace has bitten, add in the CALC and other headwinds and many agents are saying that hardly any new inventory is coming on, houses listed in the past few months just stick there, though well priced sub £325,000 properties are still moving, and in London the sub-prime market is still active.
With yet another interest rate rise likely by the Bank of England and with the traditional hiatus during July and August when the UK goes on holiday, key will be the September housing market and as importantly the cost of home finance, as another rate hike may well kill off the sector until 2024.
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