In recent years, PropTech has emerged as a dynamic new force within the real estate Technology space. usually speaking, PropTech is a collective term for global digital transformation occurring within the real Estate industry. PropTech seeks to bring new workflows to bear across this broad sector. This trend has dramatically accelerated in recent years, fueled by an explosion of venture funding and a steady infusion of startups that have risen to the challenge of transforming yet another ‘traditional’ industry. There are a significant number of VC funds, hedge funds, and incubators focused on PropTech, funding, and powering the present startup wave.
Broadly speaking, there are many trends at play in the PropTech sector. For this discussion, i will focus on the real Estate industry, specifically although this broad sector additionally includes Construction, Building Management, and other related fields.
The market trends in PropTech can be roughly sorted into 2 categories:
1) Innovators who wish to disrupt and fundamentally change the method that residential and commercial real estate is bought and sold by eliminating brokers and realtors. this is the ‘consumer-centric’ model.
2) Innovators who wish to bring new technologies to enhance and transform the traditional business of real estate. this is the ‘broker-centric’ model
In the consumer-centric model, PropTech innovators are seeking to replace (or eliminate) traditional real estate brokers and Realtors with a lean and efficient transaction process geared directly towards consumers. Naturally, this is a huge threat to the conventional real estate business model.
The broker-centric innovation models seek to transform and enhance the real estate transaction model through innovation wherever the real estate broker or agent remains at the center of the transaction. the traditional brokerage community has embraced this second trend.
It is value noting that over ⅔ of the funding and development within the PropTech space falls into the consumer-centric category due in part to the broader market share and opportunity size.
For the consumer-centric startup, there are significant challenges posed to any disruptor of an outsized and well-established trade section that's threatened by technological change.