Menu
Chapitres

Chapter 5: Competing Industries

Investment

Figure 29: Investment, Real Estate compared to competing industries (FY 2021-2022)

Figure 29 shows us that major investments are still consolidated in FinTech, Transportation, Artificial Intelligence, and HealthTech. FinTech is by far the most financialized market, but also retains the most invested in industry companies, with a total of $86.8 billion. The next three largest sectors – being Energy, Retail, and Blockchain – barely make up the same amount of investments counting them together.

$86.8
Billion

Similarly, the next four industries – being Real Estate, Marketing, IoT, and Security, make up a significant market share, a total of $77 billion of investments. Yet as individual sectors, they are clearly much smaller than FinTech. What this means for future predictions, however, is that FinTech is the most exposed to market pressures or any declines in the market. Other industries, such as Real Estate, marketing, IoT, and Security are less exposed, and would therefore make comparatively stable investments in the case of a market downturn. FinTech may have much of the glamor, but PropTech offers greater comparable stability.

In order to ascertain a broader sense of market trends, we also ran comparisons of several factors of the Real Estate market with other industries. For instance, we compared acquisitions by sector, acquisitions over time, narrower comparisons of acquisitions between Real Estate and a few other sectors (such as Artificial Intelligence, FinTech, and Health). Next, we compared investments of Real Estate compared to several other sectors, while more closely examining investments by category of company.

Acquisitions

Figure 30: Comparison of acquisitions by sector (FY 2021-2022)

What we see in Figure 30 is that the trend of market consolidation in FinTech, Artificial Intelligence, Health, Marketing and Security are still making up a significant portion of acquisitions, combining to cover almost 50% of all acquisitions. The next 39% of all acquisitions are occurring in Retail, IoT, Transportation, Video, Insurance, and, finally, Real Estate. These trends show us that while market consolidation in Real Estate is a long-term trend, especially with relation to PropTech, the acquisitions represent only half of those in the competing Healthcare and FinTech sectors.

Acquisitions

Figure 31: Comparison of Acquisitions by Sector

Figure 31 also gives us a raw comparison of acquisitions by sector of the economy, so that we can see the nature of acquisitions in competing sectors side-by-side with the Real Estate market. What we are seeing is that the number of acquisitions, and therefore the market consolidation, in Security, Retail, Health, FinTech, and Artificial Intelligence are all significantly increasing trends. Around 2010, only Security was showing the beginning of this trend of growth in acquisitions. Around 2015, we saw major increases in the raw numbers of acquisitions in Health, Retail, and FinTech. Although acquisitions in Real Estate and Artificial Intelligence did grow, we don’t see major growth in acquisitions among these sectors until 2016 through 2020. That said, the acquisitions in Artificial Intelligence have shot upward in the past few fiscal years, and Real Estate has still not consolidated by the same amount.

What Figure 31 means for us, is that we can predict Real Estate will significantly increase in the number of acquisitions in the coming year, following market trends, even if still a bit behind these other key sectors, including even smaller sectors, such as Blockchain, Video, Regulatory, and 3D Printing.

Notably, each of these smaller sectors are very technology dependent, with a large number of startups. What this all means is that the geography of mergers and acquisitions is ripe for savvy PropTech investors. To help us narrow the analysis a bit, we focused on just six competing sectors in the past couple of years, in an attempt to examine the short term trends of technological growth.

Figure 32: Comparison of Acquisitions by Sector (2015-2022)

Figure 32 shows us a few very important market trends. The analysis is of the raw number of acquisitions among five key sectors (Artificial Intelligence, FinTech, Health, Real Estate, Retail, and Security) from 2015 through 2022. In fact, while the raw numbers of acquisitions in Retail and Health are still very high, the data shows that those sectors may have consolidated to the extent that the numbers continue to trend downward in coming fiscal cycles.

Furthermore, even as market trends in Security and Artificial Intelligence show the long term trend is an increase in raw numbers of acquisitions, the numbers year to year are more erratic. Market consolidation in FinTech is also relatively erratic, although the trend is more stably upward when compared to Security and Artificial Intelligence.

By comparison with these five sectors shows that Real Estate is a more stable sector and consolidations have been increasing more slowly. However, the overall trend for acquisitions is much more consistently upward.