PropTech Insider recently surveyed a number of property technology executives, venture capitalists and influencers about what they think is in store for the industry in 2023, Commercial Observer reports. Responses varied from a continued focus on environmental, social and governance (ESG), a significant drop in venture capital investments in proptech and more merger-and-acquisition (M&A) activities along with other predictions.
The questions, posed in late October included:
- What makes you most excited about proptech in 2023?
- What real estate sector will proptech affect most?
- Will startup investment and M&A decrease or increase?
- What keeps you up at night about proptech in the coming year?
Respondents could answer any or all of these questions. Below are a handful of their responses.
Proptech could impact property affordability
“We’re most excited about the potential proptech has to positively affect housing access and affordability,” 1Sharep Capital co-founder Gregor Watson told PropTech Insider. “Supply remains the most persistent barrier to home affordability and ownership, exacerbated by high mortgage rates and inflation. In the U.S., we are still 2 million to 6 million units short in supply to support demand. We believe policy will play an important role in building up inventory, in terms of impact on zoning reform and subsidies.
“We are most excited about technology’s role in enabling faster, more reliable ways to bring density to neighborhoods where zoning has been reformed; bringing speed plus certainty to permitting and approvals; changing the approach to rentership; and reducing the cost to build, in large part by easing labor constraints.”
Proptech’s could help developers stand out from the pack
Meanwhile, April LaMon, CEO and co-founder of community branded app platform Alosant, noted that proptech could help developers better differentiate their projects as competition increases and the market gets tighter.
“Creating branded experiences that live between residential sales and the resident experience will be important as builders and developers aim to cement contracts and reduce the rate of prospective buyers backing out,” she said. “Proptech will also be vital in accelerating the resurgence of retail post-pandemic by helping create a sense of place.
There will be increased pressure on proptech startups to build sustainable businesses with a clear path to generating a profit. We saw a lot of proptech investments take a tough hit in the last 12 months. I think that’ll put pressure on founders to test their market fit and the willingness of the market to pay for the solutions they are providing.”
Proptech could lead to more industry consolidation
For Maurice Grassau, CEO and founder of real estate document and data platform Architrave, proptech next year offers the opportunity to continue consolidation within the industry. Grassau predicted that bigger players will emerge in 2023, which will bring more value to clients.
“(Next year) will inevitably induce a survival of the fittest scenario, where only the solutions with proven ROIs will succeed,” Grassau told PropTech Insider. “These pressures will also likely create a wave of proptech mergers and acquisitions, with the aim of maintaining growth and momentum with additional resources.
“I predict that the office, retail and industrial sectors will feel the most significant effects of proptech innovation in the future. After a prosperous 15 to 20 years of making money relatively easily, we are now experiencing something of a downturn. Consequently, the demands of asset management have grown. To succeed, asset managers must increase efficiency to stay ahead of the competition. Cost efficiency through technology and automation will play a key role in dealing with the cost pressures that asset management faces.”
Grassau also noted that proptech investments in 2023 will likely decrease as venture capitalists look to save money to help out companies that are currently in their portfolios if necessary.
Proptech could help businesses navigate economic difficulties
Prabhu Ramachandran, CEO and co-founder of smart buildings operation platform Facilio, feels proptech, and property operations technology in particular, could serve as a “strategic anchor” for companies to survive when the economy is down, Commercial Observer reports.
“We can already see consolidation happening within the property ops space, and this will continue next year as well,” Ramachandran said. “This is evidence of a broader demand for technology products that unifies the power of building automation software and enterprise operations and maintenance (O&M) applications in a single platform, trying to gain more value out of less.
CRE owners are also seeing increasing value in making the transition from legacy computerized maintenance management system (CMMS) to modern connected CMMS, as they value the need to see systems, processes and people through a single unified lens.”
Ramachandran also forecasted that proptech will have a significant impact on CRE and office properties, retail, higher education and health care. Meanwhile, increased energy costs and global mandates on ESG/sustainability have reinforced the need for large retail chains to minimize costs and create a strong consumer appeal.
“Within office space, we will see more owners moving away from siloed, site-level O&M to a cloud-based portfolio-level strategy to differentiate and deliver value to occupiers, increase efficiency gains, and scale automation of tasks,” Ramachandran said.