It’s that time of year again where we start saying goodbye to 12 months of hard work and start looking forward to the next.
It’s been a remarkable year to say the least, but I want to save my annual roundup until 2018 is officially over.
I have, however, started thinking about what the next year is likely to bring. It’s already lining up to be a memorable one, in both good and bad ways, and many of the PropTech patterns we have observed over the past few years are set to continue.
There is going to be a lot to learn, a lot to overcome, and a lot to improve-on in 2019, but, unlike many of the projection articles I’ve read recently, I don’t believe it’s going to be a troubled year for PropTech.
In fact, I think it will be quite the opposite...
UK PropTech will survive whatever Brexit brings
Let’s get this one out of the way. Brexit is certain to cause trouble for UK property. Given the most recent developments on ‘the deal’, the process could be even more damaging than we thought.
A so-called ‘disorderly Brexit’ could thrash house prices by up to a third, and the general sense of unknown in our economy is sure to make real estate investors think twice.
However, I absolutely believe that UK PropTech is strong enough to withstand anything that Brexit brings. In many ways, it could even speed up our pace of innovation (more on this later).
Our creativity and reputation for innovation and ingenuity is infallible to economic downturn because British inventions are not only applicable to British markets. We will continue to nurture brilliant minds and therefore produce brilliant products and services. This brilliance will always attract investment.
In the same way that Brexit is not going to stop great British musicians from creating great British music for the world to enjoy, it will not stop creative entrepreneurs from doing what comes naturally.
The only real damage I see a disorderly Brexit causing PropTech is the inevitable elongation of timelines, but even this will remain an annoyance rather than an obstacle.
Take for example news only announced yesterday (December 11) of Ask Porter, the London-based AI property management platform, receiving ‘significant’ backing from Google. On the same day that the now cancelled commons vote was due to take place, Brexit clearly isn’t worrying one of the world’s largest private technology investors.
Let me say one thing, however. Europe will actually struggle in 2019. I have seen so much going on around the globe but Europe is operating as lots of single markets and silos.
There is going to be a huge challenge as each market looks to grow and work outside of its geographical boundaries. Each market is small and different.
If PropTechs have built for their local market they must now, immediately, start to look at developing for broader markets otherwise they are going to have trouble.
Disruption will start giving way to innovation
Disruption has been an important word since the conception of PropTech. But the word is starting to wrap itself in negative connotations, and ‘disruptive’ business models are showing cracks.
The elephant in the room is online agency - a totally disruptive business model which in recent weeks has been exposed as incredibly vulnerable. I think one thing we’ve learnt from this is that just because something disrupts the traditional norm, it doesn’t mean it’s good.
It may garner a lot of publicity and early momentum, but if the foundations are rotten with bad ideas, structural integrity will not last long.
The alternative to disruption is innovation. The phrase that springs to mind is, we’re not reinventing the wheel.
Property remains desperate for more innovation yet tires of disruption. The best of PropTech innovates upon existing processes and practices and works to eliminate unnecessary inefficiency.
The key word there is ‘unnecessary’. Online agents got this wrong when they tried to eliminate inefficiency by eliminating the agent. When that proved flawed, they tried to re-incorporate some bastardised and limp version of the agent, tied to a disruptive business model of fixed fees that has since been proven largely unsustainable.
On the other hand, companies who have chosen to innovate rather than disrupt are enjoying great success by providing tech-driven tools, such as BIM, data modelling, AI property management software, and modular construction, to help professionals and end-users alike.
One of my favorite things about the PropTech industry is the mutual support that is shared between companies that are considered to be doing good, valuable, and genuinely useful work. These companies don’t get headlines in the Daily Mail, but they keep attracting investment and impressing users.
In 2019, I expect more of the most flawed models which are currently vying for attention in property will be weeded out as our industry matures.
Potential challenges will actually act to fuel greater innovation
The impending fees ban is already birthing innovation to try and help professional recoup some of the losses they are going to endure; the housing crisis is birthing companies which can help make construction faster and cheaper; and GDPR made way for companies who now help ensure you total compliance at all times.
When faced with challenges and potential barriers, PropTech innovation reacts by ramping up: it does not cower. As we head into uncertain economic, social, and political uncertainty, we can find a silver lining in the way that entrepreneurs and technologists will react. Much like how the horrors of WWII forced Turing to invent his eponymous machine and inform the direction of computing forever, increased regulations and economic downturn will, in 2019, only inspire us to work harder, think smarter, and innovate faster.
What’s more, PropTech could even act as a small remedy to the UK’s political retreat from the global community. PropTech is a global solution to a local problem - many of the issues that we in the UK need to address may best be done so by an overseas company.
At a time when international business relations are predicted to experience strain, PropTech could actually start rebuilding small bridges and companies from all corners of the world are invited to help improve the UK property market.
This also works the other way as UK-based innovation continues to be applied to solve pain points in property markets around the world.
Collaboration and consolidation will increase
I said this last and I will said it again. This is a must if we are to see PropTech truly succeed. There are over 6,000 PropTech businesses around the world. This is unsustainable and needs to be addressed in 2019. Far from being a negative, this should be addressed as an opportunity.
As we are pushed harder to innovate and overcome, teamwork and collaboration will take centre stage. As such, we will see new levels of industry consolidation as companies join forces to become greater than the sum of their parts.
Current competitors will realise mutually beneficial partnerships to better aid the industry; large, powerful companies will acquire nimble startups whose technology can help them quickly realign their model to stay successful in a rapidly changing landscape; and, inevitably, those who fail to look for similar ways of galvanising their business will be left with bigger and more savvy peers to compete against.
South American and African markets will emerge into global relevance
My global travels throughout this past conference season have taught me a lot about the global state of PropTech as I mentioned earlier in my remarks about Europe.
The UK, Europe, US, and Asian have long been the PropTech powerhouse nations, and the Middle East has recently started to prove its own potential. It’s my prediction that in 2019, South American and Africa will begin to emerge as influential and innovation PropTech forces.
Take South America firstly. Whilst it has huge economical pressures, it also has a huge opportunity with both the regions mentality (they are starting to get the changes going on) and infrastructure (their mobile broadband speeds are superior to ours). They also have a significant Spanish and Portuguese speaking population meaning the route to and from Europe is obvious.
They have the potential to become fast followers in their own markets - copying business models that have worked successfully elsewhere and just adapting them for their own market. This is partly why I also see Africa as being interesting for 2019.
Whilst they are at the start of this journey, fewer than 1% of global PropTech businesses are based there, they are hungry for change. Someone said to me only yesterday that a business that is online and selling real estate is seen as PropTech in some area of Africa, it is the fact they are starting to take notice that interests me.
I have already, in the last two weeks, been invited to speak at two events (one in Nigeria and one in South Africa) in the region and, whilst they will be slow to the PropTech party, they will learn fast, adapt and deploy. It will not be a super power for that I think we can be sure but it will grow quickly in 2019.
All in all, 2019 will bring less air miles for me and more time to focus on what is important out there. The family yes, for sure, but also how PropTech is actually being applied. Less PropTech bullsh*t and more PropTech use case. Amen and Merry Christmas.