Property companies remain positive about the growth of the proptech sector and are ready to seek investors in over the next year.
The Proptech 2017: Trends and Transformations report, launched by FTI Consulting and FUTURE: PropTech, surveyed 202 UK real estate professionals, including 99 from the proptech sector.
The report showed 47% were actively seeking investment, while a further 34% said they would consider investment, with £1.29m of investment sought in the next 12 months.
Over the past two years, £1.16m has been raised; however, the majority of respondents (64%) felt that the proptech sector would experience a boom.
Venture capital and private equity sources were most popular, accounting for 43% of investment secured by respondents in the past two years.
Peer-to-peer and crowdfunding sources were also appealing to 13% percent of respondents, but accounted for just 2% of the investment achieved in the previous two years.
With regard to funding amounts, 13% sought between £250,000 and £500,000, and 11% were looking for up to £2.5m – yet only 8% and 6% respectively had secured this.
Of the companies questioned, residential, offices and retail, were the most dominant. Half the proptech companies identified as “micro” operations, with a further 43% SMEs.
Nearly a quarter of proptech organisations viewed their growth objectives in the next year as retaining or increasing their headcount, with 39% citing investment into new technology, 84% revenue growth and 25% internal expansion.
The report found residential, office and retail proptech had been most widely adopted, driven by online agents such as Rightmove and Zoopla, as well as startups serving the increasingly popular smart homes concept. In the office sector, specialist platforms for portfolio management and market analysis, and using data to boost revenue streams and open up new markets, were boosting proptech take-up.
For retail, online marketplaces and services relating to payment and customer experience were the drivers.
Challenges to the industry still stand. James Morris Manuel, EMEA sales director, Matterport, said: “I don’t think it will be a ‘gold rush’, exactly. Post-Brexit concerns for the short-to-medium-term prospects for the UK property industry may actually temper some of the activity, and we’ll certainly see some consolidation, and if we’re honest, not all proptech firms will succeed.
“The opportunities for success among the most creative and insightful proptech innovations will
certainly continue.”
According to respondents, two main challenges for the adoption of proptech were a lack of understanding of the benefits (72%) and resistance to change (72%); while 26% felt that growth was hampered by there being too many proptech options to choose from. Lack of certainty over ROI, cited by 47%, was also a key factor.
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