By: Ramon Sadorsky
Confidence is all-important in the world of high finance, and in the wake of WeWork’s high profile failure over the past year, investor confidence in the property technology industry has dipped over the last few months.
According to a survey prepared jointly buy Metaprop NYC LLC, a venture capital firm focused on real estate Technology based in New York City, the Real Estate Board of New York and the Royal Institution of Chartered Surveyors, confidence has been drained. Just 45% of proptech investors told researchers that they intend to make more investments this year than they did last year. That number had reached 64% six months ago.
WeWork’s dismal public offering was a wake-up call for many in the industry.
The proptech industry became the latest buzzword and investment niche a few years ago. The category includes everything from building management technology, such as sensors to capture real-time data on temperature changes, to platforms such as Opendoor, which uses computer algorithms to buy and sell homes over an app,” reported Crain’s New York Business. “Investors are likely to shift away from asset-heavy companies like WeWork, which had an innovative business model but imploded in part over huge losses and no clear plan to profit, and focus more sharply on technological innovations that can disrupt the real estate industry, according to” Aaron Block, co-founder of MetaProp.
Still, optimism about the future is holding firm. “To me, this period’s results demonstrate proptech’s resilience,” said Block in a press release. “Both proptech investors and proptech startups clearly believe that technology-led innovation will remain a growth engine and value driver for the real estate industry. I’m particularly encouraged by the investors’ consistent optimism.”
“Reflecting that optimism, 80% of investors responding to the survey said they expect to see either more acquisitions or about the same number of acquisitions in 2020 compared to 2019,” the statement said. “
As the space begins to mature, more proptech startups have been stepping up their hiring and hitting elevated yearly revenue numbers. With startups continuing to flood in the market, consolidation will remain high, MetaProp says. An increasing sentiment in the ability to raise capital is met with concerns of bloated valuations from around the space.
“The Global PropTech Confidence Index shows continued strong investor interest in PropTech,” said Christopher Beach, REBNY’s CTO. “This report demonstrates that New York City remains a global hub for technology development and innovation, providing the solutions needed to address the challenges facing the real estate industry.”
