Following a business breakfast I hosted at TH Real Estate, with Saïd Business School’s Professor Andrew Baum, interest in PropTech and innovation has gone through the roof at Holtby Turner. So much so that we have set up a dedicated Innovation and PropTech practice area, led by my colleague Richard Moss.
150 tickets went in just three days, clearly reflecting the buzz is loud on the subject. But is it hype? No. As expert panellists James Dearsley, Alice Breheny and Faisal Butt made very clear: ignore digital disruption at your peril.
It’s interesting that some of the predictions discussed at the breakfast are now coming true. For example, British Land launched their co-working brand Storey, to compete with established players such as WeWork. Meanwhile, Andrew predicted WeWork would start buying up real estate, which it has just done in it acquisition of 120 Moorgate.
Echoing Andrew’s views – who knows which innovation will stick or fail? Projections are almost pointless (unless you are investing in PropTech start-ups, obviously). I completely agree with Andrew and James, in that the real upside to start-ups disrupting real estate is in making us all really think about our businesses and the way we work.
If the very disruption itself prompts real estate to improve efficiency and services, then we all win. Starting to think adaptively can begin immediately, innovation expert Nathan Waterhouse told me – even if the massive changes you envisage don’t materialise as ambitiously as you’d like them to – it all counts. Organisations become innovative, first and foremost, in the way they think.
That really ties into a key point James made about PropTech innovation. It’s first and foremost a mentality shift; digital transformation is a mechanic, but the innovation and change begin internally.
Our property advisory clients left feeling reassured about job security when the truth about AI in machine learning and robotics unravelled: we are years away from mass automation. Same applies for online platforms replacing key professional services’ business lines. Whilst online platforms such as American PropTech start-up OpenDoor appear more likely to provide successful residential valuations, it looks unlikely to happen in commercial real estate. It’s simply not in landlords’ interest to release information about their buildings’ present lease conditions.
PurpleBricks probably provoked the strongest opinions in the Q&A. Or maybe it was because I was the compère and in the middle of what became a fairly heated debate.
Some argued the platform’s business model of upfront fixed fees reduces the critical sales incentive. Fine if you sell the property after the first sweep of the market – from the people who are actively looking on Rightmove, but if that doesn’t work, then you’re on your own. PurpleBricks also got criticised for poor off-market transaction potential due to insufficient client interaction online. And yet their market cap sits at £1.6 billion as I type… they’re clearly doing something right, but is it sustainable?
Who are the main startups and disruptors to watch, and why?
Appear Here short term retail rentals and pop-ups are booming – in the UK and now stateside. They are a service-first organisation with major appeal. Despite a sceptical response from the audience, Virtual Commercial is growing and wants to become the UK’s first online commercial estate agent. Its flat fee, £999 starter pack gives property owners one place to manage leads, enquiries, viewing schedules, advertising and even a free phone line 24/7. Again, service, service, service.
The newness and novel technology startups offer also comes with a major drawback: risk.
But there’s a startup to help! Early Metrics rate a startup’s credit risk as part of a novel due diligence service for investors and JV partners. Now, there’s no excuse not to be involved.Disruption is coming to get you whether you’re ready or not!
Download a copy of Andrew’s report here: PropTech 3.0: the future of real estate