The head of a new ‘disruptive’ online mortgage service says 2017 will see more major estate agency and other property businesses backing online models, of the kind seen this year with the investment by high-end firm Savills into budget internet agency YOPA.
Back in June Savills revealed it had made an undisclosed investment in YOPA in a bid to buy a stake in digital technology and gain exposure to a wider range of sales and rental sectors than its traditional high-end involvement.
Now Ishaan Malhi, founder and chief executive of online mortgage firm Trussle, says there will be more of the same in the next 12 months. He believes the need for more digital innovation applies across the property industry, not just with estate agency.
“Large operators are cottoning on to role of start ups, and we will be seeing more incubating, acquiring, and funding as a result” he told the Daily Telegraph for an article on the increasing use of technology in residential property sales and lettings.
Referring to companies like Foxtons and Countrywide - quoted by the newspaper as having lost 47.5 per cent and 56.9 per cent of their share value in the past 12 months - Malhi said: “They can’t rely on the old model” which he described as “broken and backwards.” He added: “The average age of someone operating in the property sector is typically older, and I feel like they have defended themselves with traditional ways of doing things as a reason for not innovating.”
The article - which also quoted extensively from Dominic Wilson, co-founder and managing partner at Pi Labs, and John Goodall, chief executive of peer-to-peer lending platform Landbay - said an increasing number of online services were challenging different elements of the real estate industry, from mortgage provision to property selling.
The plan is to take a slice of the huge industry that is currently flagging and “ripe for change,” according to Anthony Codling, an analyst at City consultancy Jefferies, also quoted in the piece.
Codling describes 2016 as having been a watershed year. “The pace of change is increasing and the awareness [of PropTech] has grown a lot”. He says that in the first three quarters of this year there were $2.1 billion invested in the PropTech sector across the world, compared to $1.7 billion in the whole of 2015.
The article also refers to Purplebricks, contrasting its share price performance with much of the traditional bricks and mortar estate agency sector - the article says the agency now controls 65 per cent of the online residential market.