By Michael Baxter, Fresh Business Thinking
It is changing slowly, but maybe proptech is close to seeing an uprising, at least that was one prediction from a recent proptech roundtable hosted by The Great British Entrepreneur Awards and haysmacintyre.
Not much really, just an uprising. Proptech, it seems, has been something of a laggard. Technology is changing the property sector; but slowly. Maybe it is dominated by investors who don’t want to shake up the status quo. But, bit by bit, change is occurring, or so it was suggested a the roundtable.
Technology, it seems, is enabling smaller property developers to access information, suggests Zoe Wright, of LandTech. “It’s about democratisation,” she suggests.
That is just part of the story. From developers to estate agents, investors to tenants, tech is creeping in; but oh so slowly.
But then again, the ultimate prize is massive.
On this theme, Akshay Ruparelia from Doorsteps.co.uk didn’t mince his word: “I think tech will change the world, and online estate agents will change the world,” he stated with enthusiasm.
Maybe it is the human element that is slowing down the move towards to proptech. Jon Dawson, from haysmacintyre, who chaired the roundtable, wondered if there was an analogy with how we have adapted to Covid. “We need to adopt the technologies quickly [to deal with the virus and manage remote working], but we rely on humans interacting with the technology.
Akshay Ruparelia agreed: “tech needs to sit alongside humans,” he said.
The adoption of proptech probably matters for the UK economy. And in this respect, Jon Dawson provided some hope. He cited research from the British Property Foundation that the UK could be a global leader in proptech.
But what about disruption? “If current estate agents don’t get on board then will other players simply take over?” he asked.
Covid has helped the adoption of proptech. Estate agents have been forced to do more online; investors who might have previously been reluctant to adopt technology have been thrown into the world of zoom and remote working. Maybe that cultural shift has permeated the way all of us view this age-old property industry and the relevance of proptech.
But for Dominic Stinton, chief strategy officer at Built-ID, it is something bigger than that. “I am new to property,” he says. He worked in advertising before and argued that “some of the practises we've seen are akin to the dawn of the digital age, when brands tried to replicate face to face or analogue experiences, rather than using digital to reinvent the customer experience.”
He has a theory, which he admits has a conspiracy theory feel about it, but suggests that “populists would say property has been dominated by an elite, and it is to their advantage for the industry not to change.”
But how much longer can the industry suppress an uprising?
As Jon Dawson remarked, peer-to-peer lending has taken fintech by storm.” So, in that case, might proptech be transformed by new lending practises?
“It is not possible to have less liquidity in the property market,” says Duncan Kreeger, of TAB. He added: “There is a huge opportunity, to no longer rely on banks for property funding.” Instead, crowd ownership may emerge. He continued his argument saying that for some investors, crowdsourced funding provides the opportunity for investors to have an asset-backed investment which they can physically see. He speculated on whether we would see graded tenants with companies such as large supermarket chains ranked as ‘lower risk’ tenants.
David Williams is an award-winning company director and educator. He suggested that it might be possible to buy stakes in an investment in specific properties. That may not solve the liquidity problem altogether, but partially solve it, at least.
“You will need less sophisticated investors; it’s a timing thing. It’s an uprising” he said.
So that’s two panellists who used the word uprising to describe proptech and the future of property.
Paper, cars and blackholes
Part of the problem may relate to the nature of what property is. A big proportion of the UK property landscape is the form of Victorian or Edwardian housing. The property is old — is there a psychological mismatch with digital technology?
Dominic Stinton draws an analogy with a car. Like the estate agent network, car dealerships are typically conservative (with a small c.) But as cars change and they contain more digital technology, as if they are like computers on wheels, then the model changes. Tesla now sells direct. Maybe, houses will eventually be akin to computers on foundations.
Dave Bexon, an experienced entrepreneur in property and proptech commented on how shocked he is that the transparency of the property sector is so far behind others. “You can order a pizza, and you know where it was made, who is delivering it and when it will arrive. You spend £400,000 on a house, and the equivalent detail falls into a black hole.”
“Covid has been a catalyst for changing this.”
Then there is paper.
We are now at the start of the third decade of this century, and still paper seems to rule the property transaction roost.
David Williams suggested that blockchain might change this. An immutable distributed ledger, showing the history of a property’s owners, for example.
But in one respect property is different. People feel an emotional attachment to their home in a way that is quite unique for inanimate objects.
For Charlene and Paul Costello, of Upload Abode, this emotional aspect is important.
Paul said that “property is definitely an industry that lags behind other industries with tech.” Only with Covid has Upload Abode began to see competitors emerge.
Charlene explained: “We currently have a very buoyant property market, so there isn’t the emphasis on making that change to technology. You still see agents who are using smartphones to take pictures. Yet for most people, their property is their biggest asset and selling it is an emotional thing.”
Just like Akshay Ruparelia, both Charlene and Paul see technology working hand in hand with human interaction.
Grant MacCusker, of Letting Cloud mirrors those sentiments. He said that for the rental market, in Edinburgh, it is often suggested that properties sell themselves, that all estate agents need to do us take photos with their smartphone and upload them.
But he adds that further south, where it may be necessary to work a little harder to rent out properties, agents employ professional photographers, and they run videos and virtual tours.
Jon Dawson asked Grant whether he felt the lettings market was ripe for change. He acknowledged that we might see the market shift towards shorter term lettings with minimal contract periods and shorter notice periods should either side wish to terminate a letting agreement. This would be akin to the shift that is being seen in parts of the commercial property sector with shared office spaces becoming ever more popular.
The new model
Duncan Kreeger agrees, “There is less drive among the millennial generation to own their one homes and get on the property ladder. My suspicion is that people will want to make less of a long-term commitment than in the past. They will want to move aground more often.”
He speculates that there will be a demand for property with more facilities on site, with much shorter notice periods.
Many panellists also agreed that demand will increase for properties with a more communal feel.
Indeed, Dave Bexon wondered whether cities will see something of a Renaissance. With the rise of remote working and the hollowing out of city centres maybe we will see the greening of cities.
On this theme, Dominic Stinton returned to his idea of an uprising. Just as retail has been disrupted, he believes this will occur with property, with people wanting more well-being, green spaces and digital homes.
But who will make this shift happen?
Michelle Buxton, of Mallcomm, said that at the moment institutional investors own most of city centres retail and commercial space. “There is still a skill gap in understanding of what proptech can do for them.
“There are still significant hurdles, but Covid has moved things forward.
“Before Covid, people wanted to do things in isolation.”
She suggested that this is changing in two ways: in city centres, the Covid emergency leading to empty city centres has forced collaboration. Out of the large cities in towns and the countryside, there is a massive call for more community, as more people work from home.”
There was a broad consensus that investors and property owners want to support this change; maybe there is more of a question mark over how.
The Rashford effect
But for Ian Jones, of Ordiff there is an analogy with Marcus Rashford, the football player who recently became involved in a call for providing meals for children at school during the Covid crisis.
He says that “ten or twenty years ago he would never have stood to for a cause other than football.” This changing attitude is applying elsewhere. People want things to be different, and as a result, they will change, or so he suggested.
So that’s a Marcus Rashford effect, the democratisation of property development and an uprising. It seems property was changed slowly by tech at first, but gradually proptech is creating radical transformation of that most traditional of industries.