On behalf of The University of Oxford, Professor Andrew Baum has overseen the compiling of an academic study of the PropTech industry.
This is the first academic study to focus on PropTech and, as such, is a milestone moment for the industry.
However, and here’s the thing, while there are some very interesting aspects to Professor Baum’s report, I believe there are also some significant flaws.
PropTech 3.0: Professor Baum, The University of Oxford
Let’s start with the good stuff because, as I said, there is plenty of it.
First, I should emphasise that I very much welcome and applaud the very fact that this report exists. At 95 pages, each one of which is dedicated entirely to PropTech, it certainly endeavours to be a comprehensive and open-minded study. As a result, Professor Baum delivers some really interesting stats and insights into the industry.
For example, Baum estimates that 15% of all venture capitalist investment, across all technologies and industries, is going directly to the PropTech industry; roughly $30 billion.
As PropTech is an industry still coming of age, not yet fully developed, this figure, at first, seems extraordinary. But Baum is confident in his numbers. He states, and I agree, that the property market is the largest asset class in the world and such high levels of investment into its emerging partner industry should not come as a surprise.
This report is at its most intriguing when it analyses the property market’s liquidity, which Professor Baum states will be a huge factor of PropTech 3.0.
“An improvement in the liquidity of unlisted holdings can be expected,” he says. And the more I think about it, the more interesting the prediction becomes.
It’s a prodigious idea, to free up property assets so that they can be freely traded, and such developments are already being spotted on the horizon of the commercial world. IPSX, for example, is a firm that enables commercial developers and property owners to sell shares in a portion of their property and then trade it like a true liquid asset.
Now for what I believe are the flaws in Professor Baum’s report…
Those of you who know me, or are at least familiar with the PropTech ecosystem infographic that I have spent the past five years compiling, will know that the best I’ve been able to in terms of classifying PropTech’s various facets, is break them down into 27 separate categories. Any less than that and I don’t think you can fully represent the industry.
So, when I see that Professor Baum has split the whole industry into just three categories, it’s fair to say I’m sceptical; here’s one example of why.
Baum’s three sub-sectors are:
1. Smart Real Estate
2. Real Estate FinTech
3. The Shared Economy
Which are driven by three horizontals:
This means that every PropTech company and innovation must somehow fit into one of these; I say this is impossible. For example, Baum classes Virtual Reality as part of FinTech. I have tried to think of some sort of rationale for this decision but one escapes me.
I speak regularly about the importance of appreciating that PropTech is just one small facet of the property industry, but it is also an industry which itself is made up of dozens of smaller industries. By failing to address this, the report overlooks a major characteristic of its subject.
Can any report that makes such broad and general strokes be considered comprehensive?
I’m not convinced. That’s why, in my opinion, while this is certainly a moment in the PropTech timeline that should be celebrated, due to its homogenous attitude towards classification, it falls short of being the all-encompassing study that it seeks to be.
It’s a great start, but there’s still a lot of work to be done.
To hear an in-depth conversation on Professor Baum’s report, check out the PropTech Consult podcast.
Here is a video interview with Professor Baum: