Confidence among property tech startups reached a record high this year, but where can the industry expect to see the most innovation in coming months?
Shedding light on investor and startup intentions, VC firm MetaProp’s latest Global PropTech Confidence Index showed that confidence among both groups has continued to grow as the sector matures and property undergoes digitisation.
Investor confidence hit 8.9 out of 10 in mid-2021, while startup confidence was 8.3 – an all-time high.
Why is confidence so high and what sectors are set to benefit from that confidence? Here are six takeaways from the report:
- Investor confidence is high, but has fallen 0.3 percentage points from the end of 2020. Confidence has been driven by continued IPOs, M&A transactions and large private venture funding rounds (all of which have also risen startup confidence). But the decline came as a result of a slowdown in the SPAC market, with several SPACs still looking for a merger target.
- Some 41% of investors said their property tech portfolio companies are performing above expectations – an all-time high and up from 13% in mid-2020
- What areas of innovation are investors most interested in? Smart buildings (43%), architecture, engineering and construction (19%), space management (14%)
- What sectors are investors most interested in? Offices came first at 30%, followed by mixed-use (22%), multi-family/build to rent (21%) and industrial (11%)
- What is the biggest change investors expect in property innovation in the next 12 months? Consolidation, growing acquisitions and greater adoption were common themes. One respondent said: “Maturing of the ConTech landscape. We will see more companies break out into the Series B and Series C phase compared to the past.”
- What markets are startups targeting? Residential comes out on top, with 48% targeting single family homes and 57% targeting multi-family. More than half (53%) are looking at office tech, while more than a third are targeting mixed-use (38%), retail (37%), hospitality (34%) and industrial (33%). Senior housing had the least interest (20%).
Aaron Block, co-founder and managing director of MetaProp, said: “The flywheel of innovation activity within the proptech industry now appears to be firmly established.
“It is remarkable to witness how quickly this space adapts to the dynamic needs of all those who interact with the real estate market in some capacity, from the first-time buyer of a single-family home to an asset manager with thousands of units in their portfolio.”