Investors Pour Record Dollars Into Real Estate Tech Startups
July 8, 2019
Startups are rushing into the real estate technology field to shake up the way the industry does business, and investors are devoting a record sum of money to get these operations off the ground.
In the first half of 2019, venture investors poured $12.9 billion into real estate tech startups, according to CREtech. That surpasses the $12.7 billion record for all of 2017, the research firm says. In 2013, the total was just $491 million.
Some of the world’s largest commercial property owners and brokerages are getting into the “proptech” race. For example, Brookfield Asset Management, which uses and invests in proptech, began investing in startups last year. One of its investments, VTS, provides commercial property owners with online tools for managing leases. Another one of its investments, Honest Buildings, helps owners manage capital projects. “Innovation is causing revenue to go up and expenses to go down,” Ric Clark, chairman of Brookfield Property Group, told The Wall Street Journal.
As home and rental prices moderate, the industry may see salaries start to level off. These new startup firms believe that technology can be a way to keep expanding the industry's bottom lines by cutting cots or making buildings more appealing to tenants, the Journal reports.
Landlords of malls and shopping centers are testing new products to stay competitive in the bricks-and-mortar sector, including facial recognition and artificial intelligence products. Coworking firms like WeWork Cos. has put more pressure on traditional landlords to innovate, such as by exploring mobile apps for office workers.
Since 2014, more than 20 proptech startups have joined what’s known as the “unicorn club,” which means they are worth more than $1 billion, according to Fifth Wall. From 2011 to 2014, only one firm was credited for reaching that status: Airbnb. But as big money pours into shaking up the real estate industry, these startups still have to convince users that the benefits and extra costs are worth it. As Robert Reffkin, chief executive of Compass, once said in 2015: “The reason there’s a graveyard of technology companies in real estate is they try to disrupt just to disrupt.”
“Commercial Property Joins Tech Revolution as Spending Soars,” The Wall Street Journal (July 2, 2019) [Log-in required.]
Updated: May 07, 2021