But what exactly does 2018 have in store for us?
It’s impossible to know for sure because we work in a wonderfully fluid and dynamic industry, but it’s always fun to have an educated guess.
To that end, I’ve gone out and gathered the thoughts and predictions of some of PropTech’s most astute and knowledgeable minds.
I’m sure you’ll agree, there are some really fascinating, often plucky, predictions here, so, in no particular order, let’s get stuck in...
1. Sohail Rashid, Founder and CEO of View My Chain
“Our unique position of being able to access performance data across the whole of the market confirms our view of the current residential property sector; transaction volumes are lower, fees are reducing, competition is increasing whilst consumer expectation is greater.”
“This will quite rightly make estate agents more price sensitive which is a challenge for PropTech businesses that are suppliers to estate agents, if you are providing a solution with a clear, tangible and short-term ROI then it’s a massive opportunity.”
“If not, then this is a challenge. Therefore we may see a number of PropTech start-ups pivot and/or disappear but I do expect the quality of those that remain increase. I think when we enter 2019 we will see less but bigger and more profitable (and ultimately, more successful) PropTech businesses left.”
“With regards to online estate agents, there is no doubt that this will grow across 2018, most likely by at least another 25%. This a maturing area of the sector and we see this now going through a period of consolidation. I would not be surprised if we see a significant acquisition in this space during the next 12 months.”
2. Ed Mead, Co-Founder of Viewber
“My prediction for 2018 is simply that whoever cracks the AVM model will seriously change the face of the business.”
“Question for agents is what can they outsource that's going to enable them to compete, and I think sales progression will be seen as another area ripe for consideration in 2018. If they continue to bury their heads in the sand 2018 will see them getting left behind more than ever.”
3. Neil Cobbold, CEO of PayProp
"2018 will see a number of technologies shape the industry and while some people are still waiting, I think the industry will need to start adopting and quickly. With the first property in London being advertised as only accepting bitcoin offers I think we will see more cryptocurrency and blockchain movements into the sector during 2018. This will obviously impact the legal profession and so we may see step changes as they cope with these adaptations to the property market.”
“Data will be a further expanded commodity for PropTech firms in 2018. As buyer and tenant rights reach the forefront, empowerment becomes the buzz word again for the industry and I think developments from credit agencies including rental payments in credit files, to advertisers expanding points of interest in marketed properties, we will see more PropTech firms expand their data offering. As people get ready for GDPR compliance from May 2018, this is the perfect time for PropTech firms to enhance their offering.
“Lastly while I would like to think they would make a big impact with so much money being spent on PropTech solutions in the Asia Pacific region I think we may see the start of the drones and Augmented Reality impact the property market more towards the end of 2018.”
“While drones are now starting to be used for property advertising, an article last year showed how the Asia Pacific region is looking to develop smart cities with drones having a variety of applications from security to inspections and augmented reality has made leaps in the last year and is definitely one of the most talked about developments of 2017."
4. Richard Kennedy, UK Managing Director of Re-Leased
“In respect to the adoption of PropTech in the property industry, 2017 was a year for the “early adopters. PropTech, just like any new technology product to an industry will go through the typical 5 stages of adoption; Innovators, Early Adopters, Early Majority, Late Majority, Laggards.”
“2018 will not be ‘flick the switch’ year for PropTech. However, it will be a very positive year in respect to building momentum. There will be more awareness, more education, more substantiated ROI and more property players looking over the fence of their competitors.”
“2019 is when the deal flow will become exciting and 2020 is the year to look out for. Established companies, as well as smaller, more agile companies will he putting tech at the very centre of their company strategy for coming years. This will see lots of opportunities for established PropTech players who offer a great solution that works with the market.”
“Other PropTech companies who have built a ‘solution looking for a problem’ will continue to struggle and I think some well-funded startups will fold this year.”
5. Daniel McPeake, Founder & CEO of Go-OffMarket
“Tech enabled services for Estate agents seemed to burst out of nowhere and become the norm overnight. Dividing agents and creating new choices, online-hybrid and High street all give the consumer more. And more is always better, right?”
“If fact there has been so much innovation in the last 24 months, that could it be that the industry is now over crowded? For example, as an agent of 22 years, there are only so many management systems I can try before I need to choose one. I believe 2018 will bring more, but this “more” will be in new areas. As the industry gets swollen, new gaps will appear and the nimble proptech entrepreneur, who is not tied to antiquated juggernauts, will shine a spotlight directly into these gaps, growing the industry and giving consumers more.”
6. Toby Wilde, Director of Estate Agency Partnerships at Sprift
“We see that the increased demands by both buyers and sellers for a more transparent house-buying process, hold Estate Agents who are early adopters of proptech in good stead. A core driver of proptech is to bring in increased efficiency whilst raising customer service levels, which can mean the difference between life and death in a challenging market.”
“The opportunities offered by GDPR, Build-to Rent and Buy-to-Let tax changes, are there to be fully taken advantage of by the tech savvy.”
7. Curran McKay, Director of Business Development at Canopy
"2017 ended with a flurry with acquisitions & mergers as the industry began consolidation which I believe will continue in the year ahead.”
“As online agents competition intensifies & agents begrudgingly accept the reality of the lettings fees ban, this will be the year that PropTech companies that support & work with agents, truly move into the mainstream and become as indispensable as Rightmove or Zoopla."
8. Mike Reed, IT Director, OPS Active
“For the Residential PropTech sector in 2018 I think we will see a sharper focus on illustrating how the various systems can help lower operating costs, and reduce risk. Especially with the increasing regulations and continued drive to ban fees. Software and solutions that are not showing how they can reduce agency costs will quickly find out how tight the purse strings at agencies are and start falling away.”
“For all those that have not started work for GDPR or have a plan in place, their year is going to be filled with an untold amount of joy. For me though, I would like to see focus on PropTech that will assist agents in the residential lettings sector lower the cost of operating and reducing risk. The start of a standardised API model for ALL PropTech companies to use that covers more than just a portal feed.”
9. Michael Valentine, Co Founder & COO of EyeSpy360
“2018 is a year that will see even some of the most traditional agents embracing PropTech across the board, not necessarily through choice but as a must have, especially in light of adverse changes in the market. The reality is that PropTech has the potential to save companies significant chunks of their expenditure. It will become clearer that technology does not change what they do, it enhances how they deliver their service to an increasingly tech-hungry clientele.”
“I also believe that there will be a significant reshuffle amongst online estate agents in relation to their popularity and the resulting market share that they hold. The real winners will be those who offer true value, whilst maintaining just about enough of the traditional real estate model to ensure a fair and beneficial conveyancing experience. It will also be critical that online agents do not take advantage of customer ignorance with upfront payment models. In some cases, these models have removed their motivation to offer any proper value to their clients after listing a property.”
10. James Davis, CEO of uPad
“There will be substantial advancement in the use of PropTech within resi lettings; noting so much of the sector is antiquated and there are the grass roots of an expected seismic shift online already appearing. There is growing demand for a tech-enabled full range property marketplace, fulfilling the needs of UK landlords.”
“PropTech in our business has allowed Upad to let properties far faster than the high street – helping reduce landlords largest cost after taxation of void periods. And the Upad model has favourable unit economics to investors through automation and a fully scalable ops process.”
11. Eddie Holmes, UKPA Chairman
Here are three trends gathering further momentum I think we will see in 2018:
Role of government
“Public policy will continue to enable PropTech businesses by driving transparency into the residential marketplace. Primarily this will take the form of ever-increasing free-to-access datasets being released which will offer more information to consumers and opportunities on which technology businesses will capitalise.”
“The property sector finally started to embrace technology in 2017 and this trend will increase. Those residential firms who have not yet participated in the PropTech movement will actively seek ways to create competitive advantage against those who have already made their bets. Will we see those early adopters win out or will fast followers learn from their mistakes and succeed instead?”
“By the end of the year we will see a number of PropTech businesses “fail” – that may mean being swallowed up by competitors or simply going to the wall. Logic dictates that there are too many businesses operating in many PropTech subsectors for them all to succeed. Sadly, that means some investors will lose their shirts in 2018.”
12. Kenny Alegbe, Co-Founder of Homeshift
“While many will already know that the fees ban will change how agents operate with a focus on new sources of revenues. Another trend we're seeing is that consumers, both landlords and tenants, are now demanding digital solutions throughout their interactions with Agents. The consumer world is moving on and in previous years Agents could have ignored the need to be digitally focused.”
“We predict 2018 being an inflexion point where Agents will start taking up digital solutions in order to thrive! Technology will be a friend to Agents rather than a foe in 2018!”
13. David Graydon, MD of Hoozzi and Classic Folios
“2017 saw the continuing entrance to the market of new start-ups and the expansion of existing players. Moving into 2018 that trend will continue, with significant investment starting to appear in the sector as funders see Proptech with the potential to provide better returns as Fintech and InsurTech markets are becoming saturated. For those already in the market, we will start to see some consolidation and existing players looking to make strategic alliances. As part of this play, we will see great point solutions being more suited to meet end-to-end customer needs. Certainly, we will be aiming to provide the best of breed Proptech solutions to our customer-base to target pain or gain points.”
“Of the existing players, we will continue to see the more astute companies like CBRE and JLL adapting quickly or acquiring to make sure they keep ahead of the curve. For sales and lettings, we will see the continued use of technology as well as more business models are being decided by the consumer, i.e., whether they’re after purely online models or hybrid solutions. In our market of residential developers, we have seen a slow adoption of technology, but this will continue to change, particularly in the build-to-rent areas, as product continues the move to service models.”
“The adoption of new technologies will only continue to grow. To name but a few…
- AR/VR being adopted in line with ease of use for the consumer and the development of less cumbersome technology
- Blockchain and Bitcoin will only be adopted widely when it becomes easier and faster to transact. It has the potential to make a big impact but only when technology matures past 2018
- AI. There is real potential here as the big players like Google, Amazon and IBM are making these available to the market. It will be interesting to see how quickly the industry finds uses for them
- Drones seeing further use and adoption
- Data collection and analysis will really start to allow those who have it to build on their gains and will be a key area now in 2018 and beyond
- It should be noted that the introduction of legislation presents challenges but also opportunities for agile players as well in 2018 e.g. GDPR.”
14. Sandra Jones, MD of Dataloft
“Transaction volumes are down and fees are under pressure – 2018 will be a challenging year for estate agents and there is likely to be consolidation in the sector with business polarising to the most professional firms, covering larger territories.”
“What estate agents need to survive and thrive in a more competitive market is proptech that gives them an edge over competitors. For agents that means proving local expertise, demonstrating professionalism and reducing overheads. There is no room for tech for the sake of tech when the market is tough but tech that makes a direct contribution to the business strategy is essential. In 2018, expect the rise of products that tick those boxes.”
*James Dearsley is a partner in PropTech Consult, digital transformation specialists for the real estate sector. To sign up to James’ Sunday PropTech Review, click here.