Although the property sector is making progress with technological transformation, full proptech adoption is still some way off.
But brokers and advisors are taking the lead in adopting proptech solutions and data strategies.
That is according to the third annual Global Proptech Survey from professional services network KPMG .
Most real estate companies are pursuing digital investment and collaborating with proptech companies for improved efficiencies and enhanced decision-making (65%) and cost reduction (47%) rather than customer engagement (40%) or revenue generation (30%), says the report.
Brokers and advisors are ahead of owner or developers and property investors in almost all aspects of digital transformation. These include employing digital experts to lead their transformation, having an enterprise-wide digital strategy in place, using proptech solutions and adopting data strategies.
This is down to the highly competitive nature of the real estate advisory industry. “To maintain their competitive edge, companies are increasingly using technology to differentiate themselves. They have started to invest in integrated systems, cloud-based solutions, smart-building technology and the automation of the more manual aspects of their businesses to free up their teams to focus on value creation and client service.”
Larger companies (those with more than US$5 billion in assets) are more likely to have proptech and digital solutions seamlessly integrated into their core IT systems. In fact, one in four smaller companies do not have a digital and or technology innovation strategy at all, in comparison with 6% of larger companies.
Skills gap and caution holding back proptech
The main factors holding back further engagement with digital is a skills gap and the real estate industry’s culture of caution and conservatism. “Culture is important here. Currently, there is a cultural mismatch between real estate – an industry that is reluctant to let go of its traditional practices – and the innovative, ‘move fast and break things’ culture favoured by experts in digital technology. The ‘dinosaur’ aspects of the real estate industry may present a considerable barrier to progress.
“Proptech companies noted the need for real estate’s culture to change. Companies should aim to create and sustain a culture of innovation that attracts people with the right skills and enables them to thrive. Employees need to feel empowered to try out new ideas, challenge the status quo and broker new partnerships and collaborations with proptechs.”
Employees also need to feel they have the freedom to fail when trying to innovate. One of the most common themes in survey responses from both property companies and real estate technology companies was the importance of experimenting more, says the report.
The survey shows that most of the people leading digital transformation at real estate companies (65%) do not have a background in digital technology from outside the industry. A significant number (40%) come from a real estate, construction or finance background. This suggests that they may need additional professional development to ensure they have the necessary capabilities to perform effectively.
“Given the cross-industry ‘war for talent’ – and the white-hot competition for digital, technology and data skills – real estate companies need to up their game to attract the necessary capabilities. They can do this by investing in upskilling their workforce or by fostering a culture of innovation that acts as a magnet for talent. Or they could do both.”
Optimistic about growth
As for the future, proptech specialists are hugely optimistic about the growth of their market. Of the proptech respondents to the survey, 87% believe that the real estate companies they work with will increase spending on proptech solutions in the next 12 months. No proptech respondents expect investment to halt or decrease.
In the next two years, proptech companies expect significant digital disruption in a number of areas. Real-time asset performance data is most ripe for disruption, followed by building optimisation, transactions and customer data.
Above all, the industry’s mindset needs to change, the report concludes. “Currently, many property companies want digital solutions but aren’t prepared to budget for them. These companies are insufficiently focused on the opportunity to improve customer service, and they are too nervous about the risks of digital investment.
“Instead, they should see digital transformation as an opportunity to experiment more and learn from the results. For many, the first step should be bringing aboard the appropriate expertise – to ensure that their digital future is in the right hands – and then developing a strategy for success.
“After that, the way forward will involve starting small, experimenting with innovations and becoming more agile in the process. In a fast-moving future, this agility will be essential for survival.”