COMMENT I remember my impression when I first entered the proptech sector in 2012, after having spent 30 years in the real estate PR business. This was a really small ecosystem, and super local.
One would think the proptech universe emanated out of San Francisco’s Silicon Valley, as the historical centre of tech and innovation. But proptech was actually incubated in New York City. Why? Because that’s where the first venture dollars were coming from – mostly from wealthy NYC real estate tycoons and angel investors in the form of commercial real estate professionals. Most importantly, NYC was the centre of the proptech ecosystem because it’s also where the world’s largest real estate market is.
As the ecosystem grew, location became less relevant as great start-ups were being born in Chicago, Philadelphia, Miami, Nashville, Austin, Dallas, Los Angeles, San Francisco, Seattle, and many other cities throughout the US.
Local presence
The old adage of “location, location, location” holds true not just for real estate but for proptech as well. The “buyers” of these solutions often want the start-ups to have a local presence to assist with onboarding and customer support, and to provide a high-touch service. This will never be an industry where you can be a faceless, anonymous and purely digital solution without the human touch. While commercial real estate is the largest industry on earth, it also historically invests the least in R&D and so it simply doesn’t have the experience, expertise or bandwidth to easily on-board tech solutions.
Fast forward to 2022, and the most important trend I am seeing in our young ecosystem is the emergence of a truly global proptech industry. With more than 10,000 start-ups now competing for market share around the world, some of the greatest innovation I am seeing is in places like the UK, Netherlands, Germany, France, Spain, Sweden, Singapore, Australia, South Korea, Latin America, Africa and many more.
Local clientele
The expansion is being driven by two major trends. First, many US start-ups, particularly the most well capitalised, are now setting their sights on additional markets and opening new offices to derive their local clientele; and second, the same challenges facing real estate companies in the US also are confronting companies around the world. Those issues? Supply chain, labour shortages, rising interest rates and inflation, and tenant demands for cleaner, safer and more digital experiences.
Local environmentalism
In times of economic duress, technology is always the big winner as companies seek out ways to operate as efficiently as possible without having to invest in significant additional costs.
One area where the US is clearly lagging is sustainability, with Europe way out in front in legislating and demanding stringent decarbonisation targets. While the proptech sector is entering a period of slower growth as a reflection of macro-economic challenges globally, one bright spot will be climate tech investing, and Europe will continue to lead the way for the foreseeable future.
Michael Beckerman is chief executive at CREtech and CREtech Climate
