Why fintech matters in the Proptech 3.0 era

Published: January 30, 2019 1:04 AM

Second, larger players will place a heavier emphasis on acquiring technologies—through corporate venture capital, partnerships, direct product purchases or technology integrations.

More APIs from vendors and governments are accessible to startups and property professionals to generate additional accurate and timely insights, and comparable valuation estimates for better investment decision processes.

By George Thomas  

Although innovation has not been widely associated with the commercial real estate space, the tide is changing, thanks to technology. Computing is now faster and cheaper; Big Data and Machine Learning advancements have led to more automation, and cloud computing has enabled affordable, scalable and modular services. According to our research, over $7.8 billion had been invested in property technology start-ups worldwide between 2013 and mid-2017, of which, Asia Pacific had received around 60% of funding.

This rapid acceleration in innovation and subsequent investment is driven by modularity and scalability. This powerful combination—where we can mix and match and connect things together, affordably and quickly—unlocks endless possibilities of what can be done. Yet, so much of proptech’s potential is still at its infancy stages.

Amongst the trends that we have seen, one category that has captured growing venture capital interest has been the capital and financial solutions for commercial real estate—what I would describe as where fintech meets proptech. This is an area that has been historically underserved by startups and funding, partly due to regulatory and market acceptance or business model challenges, but likely not for long.
In this so-called fintech meets proptech space, we are seeing new capabilities being pioneered by startups that could soon be integrated into mainstream offerings. To name a few: New ways of raising capital, whether through crowdfunding or innovative rent-to-own schemes, are being tested right now in mature markets such as the US.

More APIs from vendors and governments are accessible to startups and property professionals to generate additional accurate and timely insights, and comparable valuation estimates for better investment decision processes.

With smart buildings, owners and investors may have an opportunity to generate additional revenue streams by monetising their data using analytics to gain useful business insights.
Coupled with advancements in security from improvements in hardware, blockchain and smarter Machine Learning algorithms, Proptech 3.0 is set to take off. The next generation of real estate solutions entails the meshing of many technologies, data and processes. The combination of fintech and proptech begins to tip the scale and increase interest in ROI metrics including cost savings, efficiency gains, and new revenue potential.

What does this mean for property players, particularly larger companies? First, with greater competition in the marketplace, all companies in this industry will need to place a greater focus on delivering better customer service in the most cost-efficient way possible. This will necessitate the need for software and services that will provide higher transparency to their property portfolios, clients, and asset utilisation.

Second, larger players will place a heavier emphasis on acquiring technologies—through corporate venture capital, partnerships, direct product purchases or technology integrations. Third, companies are realising that high quality data are required to apply algorithms and AI to automate their business processes. Therefore, key players in the industry will likely invest greater capital and time in data and security.

There’s no better time than now as our industry picks up the pace with technology adoption. With the crossover of fintech and proptech, we can expect to see more non-real estate players entering the property space to occupy a share of the market.

The writer is chief information officer, APAC, at JLL.

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