Chapter 1: PropTech, An Introduction

Why is a focus on PropTech vital?

Previously viewed as a latecomer to the tech revolution, PropTech is now vitally integrated into the world’s most significant real estate markets. PropTech companies are also prominent startups in the most populous cities of developing markets. Further, in the high-value markets of Monaco, New York, Hong Kong, Singapore, Paris, and London, PropTech companies can be found easing friction in each type of transaction. Short-term and medium-term furnished housing stays are now facilitated by the advances of PropTech. Yet the landscape of the contemporary business world is not characterized by inevitable growth and stability. This is to say nothing of how market investors like Silicon Valley Bank can cause significant disruptions in the broader marketplace. Although there has been a well-predicted market consolidation over the course of the past year, the world of PropTech companies remains staggeringly diverse, including companies involved in addressing the most pressing challenges of the world today. Without a doubt, PropTech will continue to have a significant impact on the world we live in for decades to come.

Where is PropTech most relevant?

PropTech emerged from a combination of innovations in the major American Real Estate markets of New York, Washington D.C. and California in the 1990s. Although Real Estate lagged in the initial dot com tech boom of the 1990s and potential initial growth was stymied by the global recession of the early 21st century, PropTech finally took off in the second decade of the 21st century, quickly spreading throughout Europe, Latin America, Africa, and Asia, including significant markets in the Middle East.

In this year’s barometer, we will continue our emphasis on significant regions for PropTech. However, we will also feature special focuses on key European markets, including France, the United Kingdom, Spain, and Germany. In our subsection on Asia, readers will find that PropTech is impacting the East Asian hubs of Japan, China, South Korea, and Hong Kong, along with new Southeast Asian players, such as Indonesia, Malaysia, and Singapore. India, along with China, has been a significant player across the tech sector, and the same is true for PropTech in India as well. In Africa, South Africa and Nigeria are the most significant new hubs for PropTech, while Colombia, Brazil, and Chile have been attracting attention to Latin American markets. In the end, as technology has become increasingly integrated into each element of our daily lives, it seems safe to say that PropTech is increasingly everywhere, all at once.

What is PropTech?

PropTech is a portmanteau of the terms “property” and “technology.” An alternative name for PropTech might be “Real Estate Technology.” However, through a combination of technology, real estate, and platform economics, it is important to clarify that such industries as “Construction Technology,” (ConTech) which might not automatically be presumed to be part of our consideration of Real Estate Technology are indeed part of the map of the PropTech universe.

Of course, PropTech technologies could be relatively simple user-facing software applications (apps) that facilitate searches for vacation rentals. However, complex data-analysis algorithms or business-to-business applications that facilitate the ease of real estate transactions are considered PropTech. Additionally, various forms of financial technology (FinTech), which might be used to facilitate the processes of applying for, evaluating, and providing mortgages – often referred to under a subcategory of companies called “Mortgage Tech” – are also part of the PropTech universe. Similarly, any FinTech software company that facilitates investment in residential or commercial property would also be considered PropTech. In last year’s barometer we summarized the field of PropTech through examining four key categories of companies (Building, Investing, Living, and Managing).

Like last year, we have selected the aforementioned four categories to classify PropTech companies. These categories help us develop an elaborate analysis of the PropTech industry. Additionally, in our efforts to provide a better understanding of market dynamics, we have introduced a second form of classification this year, based upon a given company’s primary shared niche within the entire marketplace, as described by “industry vertical.” Thus, we also consider PropTech companies in terms of four non-overlapping, industry verticals: Business to Business (B2B), Business to Consumer (B2C), Financial Services, and Information Technology (IT).

Our second method allows us to get the broadest possible and most accurate currently available data on the PropTech industry. Our dataset also occasionally includes companies whose primary industries might be Healthcare, Energy, or Materials and Resources, but because of the nature of the deals they have been involved in, are entering into the PropTech marketplace. Furthermore, because market investments are increasingly cross-industry, we took into consideration the measurement of a specific element of a company, such as a subordinate company or business, which might operate in any of the fields of Real Estate Technology and Construction Technology, to add these to the existing dataset. Attention to such market dynamics is further illuminated through our case studies this year.

Who does PropTech impact?

Everyone should be familiar with the latest trends in the PropTech industry. You could be a government employee, who is searching for a short-term stay; you could be a young professional, traveling to a new city on a business trip; you could be a university student, seeking out an apartment or flat to rent by yourself or with mates; you could be looking for a place to settle with your family or for your parents when they retire; you could be an experienced investor looking for a market opportunity or a young business school student attempting to learn about emerging industries.

PropTech is so interwoven with our daily lives that we do not often think about it. Even for laborers in very different industries, the nature of PropTech will impact their lives, simply because the real estate market is so interwoven with the economy of every country on the face of the earth.

If we look at the countries where the cost of real-estate to income is the highest on the face of the earth, we might find some markets we expect, like Hong Kong, South Korea, Argentina, and China, as well as some we do not, such as Ghana, Iran, and Cambodia.

From Shanghai to Silicon Valley, from Miami to Monaco, the innovation of PropTech impacts us all. Therefore, we have composed the 2023 PropTech Barometer to speak to the widest audience possible, from industry leaders, students, and government officials to the general public.