Amid all the disruption, uncertainty and challenges that took hold as a result of the COVID-19 health crisis, the proptech industry entered 2021 on a high note, according to venture capital firm MetaProp’s latest Global PropTech Confidence Index.
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The second half of 2020 saw investor and startup confidence skyrocket to new levels, marking a notable change from the first six months of the year.
“For years, we hypothesized that a challenging real estate cycle would accelerate the industry’s proptech engagement. Based on the quantitative and qualitative Index results we see COVID-19 was an additional accelerant,” Aaron Block, co-founder & managing partner of MetaProp, told Commercial Property Executive. PwC sponsored the Global PropTech Confidence Index, which was presented by the Real Estate Board of New York and The Royal Institution of Chartered Surveyors.
The Investor Confidence Index in the last half of 2020 hit a record 9.2 out of 10, a substantial jump from the mid-year 2020 score of 5.9 and a notable increase from the previous high of 8.8 seen in mid-2019. Investor interest has increased simultaneously with the expedited adoption of technology amid the pandemic.
Furthermore, Proptech companies took center stage in the public markets in the second half of the year. Airbnb completed its IPO in December and a number of special purpose acquisition companies went public with the intent of buying proptech companies. That trend has continued this year.
Private investment in proptech also saw notable activity in the second half of 2020. MetaProp noted in the report that the proptech market’s growth and maturity has entered a new phase.
The Startup Confidence Index saw an all-time high as well, jumping to 7.7 out of 10 at the end of 2020, up from 4.7 at mid-year 2020, and rising over its previous high of 7.3, also seen in mid-2019. Not only has the pandemic hastened the adoption of technology in real estate but it has also propelled innovation and growth. Additionally, according to the survey, startup founders have grown confident that healthy investment activity will translate into an easier capital-raising environment over the next 12 months.
The view ahead
While all signs appear positive for proptech, no road is without its potential obstacles. According to the Emerging Trends in Real Estate 2021 Report, a fear of missing out on the emerging trend of proptech had been partially fueling its acceleration, but with companies now carefully eyeing costs, “the focus is on necessity rather than finding the next unicorn.”
And like many other sectors, proptech is subject to the unknowns of the remote work trend that came to the fore as a necessity for many companies during the pandemic.
“More than two-thirds of the startups’ employees are expected to work from home over the next 12 months,” Block said. “The remote work survey results are in line with our investment team’s market observations. However, it could mean additional challenges and forced adaptation for office landlords in major markets.”
Regardless, the numbers for proptech do tell a promising story. According to the MetaProp survey, 94 percent of investors believe the pandemic will further accelerate the adoption of proptech in the real estate industry and 59 percent of investors plan to make more proptech investments over the next 12 months, marking a sizable increase from the 33 percent who claimed the same at midyear 2020.
Additionally, the number of investors who anticipate more pitches from startups over the next 12 months rose to 65 percent at year-end 2020, from 46 percent at midyear 2020. And there is an increasingly green aspect to players in proptech, according to the recent survey. “It’s great to see ESG, energy efficiency, and carbon neutrality continue to add to the proptech success story,” Block added.
Read the full report by MetaProp.